Transcripts For CSPAN2 Consumer 20240705

This hearing is just under four hours. I spent. [background noises] the committee will come to order. Without objection the chair is authorized to declare a racist of the committee at any time by this hearing is entitled semi annual report of the bureau of financial protection. Without objection all members will have five legislative days within which to submit extraneous materials to the chair or inclusion in the record. I now recognize myself for four minutes to give an Opening Statement. Thank you director for being here today. As the director you wear a lot of hats. You are a member of the federal Deposit Insurance Corporation and the Financial Stability oversight consult. This committee spent a lot of time understanding how regulators reacted to the failures of Silicon Valley macon signature bank. Given both the fcic have equal rolls in the failures i am looking forward to hear about your involvement in the decisionmaking process. As we said the fdics chair grunberg and pfister bar testified before this committee there was and continues to be a lack of transparency surrounding regulate decisionmaking that first weekend in march. Was there an ideological lens that impacted your response . Did your views regarding consolidation lead to a delayed resolution and greater uncertainty in the Financial Sector . What spent more time on this when we get the questions returning to your job today your agency is responsible for regulating and enforcing Consumer Financial law. Clear rules and expectations of how to comply with those rules benefit all participants in the Consumer Financial marketplace. Under your leadership they are doing the exact opposite. First your agency identifies consumer harm and what instance for specific products. Extrapolate harm occurred everywhere everyone should be under suspicion. In fact every act is presumed abusive until a Court Decides maybe they arent. Use compliance bulletin circulars and advisory opinions do so doubt and confusion in the marketplace. The abilify entire marketplace simply because they are politically unsafe in your opinion. The practice of name and shame first verify later is not Consumer Protection. Is mccarthyism. This harms consumers in the economy at large while propping trial lawyers. Let me be clear that is not the mission of the cfpb. Finally i will turn to what appears to be most recent appointment as an appendix are present by his reelection campaign. The president started talking about junk fees current hyper partisan campaign about their efforts to clamp down on you gas a common junk fees. Look it is an easy target know it likes fees to be clear some patient requesting to ensure people not getting ripped off. The indiscriminate label fees as abuses is a blatant attempt to pander to americans have been hung out to dry in the fighting economy. My democratic colleagues will likely change the favorite top. Explain away the need for fees. Unit wells relies on fees placement the government. You enter most National Park to pay a fee for even cfpb charges fees on rating of information act request. Why did the cfpb believe the same cost these fees cover or the actions that are designed to deter do not exist in the private sector. I will finish with this. The currency operates in an opaque increase in the partisan analytically manner. Spiritless under richard his legacy lives on with you director. Cfpb is directly over stepping his bounds in serving as a judge, jury, and executioner in the consumer marketplace. That is why Committee Republicans advance a package of bills reform structure and funding stream and the cfpb to ensure transparency and accountability to the American People. Let me say one thing on the rulemaking of credit cards really want you to talk about this director. We do not understand how it is protecting say to a credit card borrower who is always on time and never pays light which is 74 raise your own data. 74 of americans of credit cards never pay late. Why is Consumer Protection to pay a higher Interest Rate beitler in the late fees on borrowers who never pay late . Then i yield back. We will not recognize the Ranking Member the full can be the gentleman from california performance rubin statement. Thank you very much. Good morning and welcome director. I am so pleased that you are here this morning to share with us the success and all of the good your group has been doing. As we predicted focus on how to strengthen Consumer Protection and avoid a catastrophic default. Republicans are focus on undermining the only federal agency with a Singular Mission of protecting consumers. As we speak extreme maga republicans are teaming up with predatory payday lenders to challenge the constitutionality of the cfpb funding and a Supreme Court based on a french legal theory. Every single other court that has validity of cfpb funding but just not like maga republicans who continue to deny the Election Results for their continuing to deny these facts also. Let me state the facts simply the constitution is clear. Congress can fund the executive branch and clean the cfpb, banking regulators and other however it likes and has done so for nearly 250 years. This attack is that another destructive effort by republican to undermine all types of Government Programs including and especially social security, medicare, and a lot else. Lets take a look at last month. I was proud to lead a brief one year old 44 and former members of Congress Supporting the cfpb against this reckless challenge. Republicans are also venting legislation to undermine the operations of the cfpb. These efforts are direct attacks on consumers and the safeguards that protect them and our nations ever evolving Financial System. Despite these intact cfpb record under director chopra speaks for itself. Cfpb has successfully embedded junk fees. Believe burning of medical debt on consumers, Credit Reports, but back against housing discrimination and redlining and held large Financial Institutions like wells fargo accountable for repeatedly breaking the law and harming people across america. Cfpb has returned more than 17,200,000,000 harm to customers. That is what 80 of people including 75 of republicans support the cfpb but the agency to continue its job. Republicans should start listening to their constituents who can tell them what a junk fee is and explain why they need to support this critical agencies work. Additionally cfpb new Small Business mending rule implementing section 1071 will go a long way to finally root out discrimination and Small Business lending will open new funding opportunities to Small Businesses start up, grow and thrive. Some partner tracking data minority and women owned businesses as well as lgbtq owned businesses. We especially focus on during pride month we are focus on that now. Democrats will reject republican efforts to use the Congressional Review Act to eliminate this long overdue rule. Republicans refused to stand up for consumers including lgbtq Small Business owners. They continue to protect the interests of large corporations. I yield back. Quick to gently time the chair around recognize his vice chair of the subcommittee on Financial Institutions and Monetary Policy for one minute. Thank you, mr. Chairman thank you director chopra for coming to speak with us morning. Unfortunately since last february here it does not seemed like much is change. Cfpb sought Unaccountable Agency of centralized leadership on a constitutionally questionable funding structure. The Supreme Court is currently looking into the latter im hopeful the decision will show us a path forward for the agency under regular appropriations. Industry feedback has been near unanimous. The bureaus acting little to no regard for the downstream effects of the rulemaking on consumers or Small Business. Its wide reaching Disclosure Rules industry circulars and opinions issued across various media including enforcement cfpb has collected a wealth of consumer data and in march of this year we were informed of a significant breach of the bureau that compensated blood to hundreds of thousands of consumers. This race important questions over whether congress and the American People can trust the bureau to look out for your best interest they are not even willing to protect the information they collect. Consumer Financial Protection Bureau is deeply troubled and desperate perform the best time to hold up your account. Today it was 12 years ago. The second best time is now prepared to sometimes the chair recognizes the Ranking Member sir foster for one minute. Thank you mr. Chair. Thank you for being here today. And everywhere Consumer Financial transactions become increasingly complex and often times daunting cfpb serves as a beacon of protection ensuring individuals are treated fairly in the marketplace. A real example of government doing things to make peoples lives better. Our technology ability to transact more efficient so to the scans in the fraud schemes that we should take advantage of our constituents cfpb protects the most sensitive parts of our population. Focus on the protection of older adults and vulnerable groups from Service Members lgbtq individuals. The partnership of advocacy organizations their actions against Companies Selling laws protecting Service Members and others demonstrate the dedication of safeguarding those who may be more susceptible to financial exploitation. But does all of this will come in under constant attack. The coming onslaught of impersonation the opaque Global Advisors your job will not get easier so thank you neil back. Quick the general times expect a look in the testament honorable rosie chopra director of the Consumer Financial protection beverage director chopra we thank you for your time. Recognition for five minutes to give an oral presentation of your testimony. Your written statement over them a part of the wreckage are not recognize for five minutes because chairman barr, Ranking Member waters and members of the committee thank you for holding the steering today. Please report cfpb continues to deliver tangible results for the public ensuring consumers are protected maturing honest businesses are safeguarded and preparing for the future bigticket Artificial Intelligence reshape industry. I want to share a few observations about the state of household Balance Sheets in the United States as well as some highlights of our work. Americans families continue to benefit from a resilient labor market Consumer Spending is quite robust borrowing has accelerated rate of inflation in key categories such as vehicles and others have contributed to rising levels of household debt. Americans now own 17 trillion in mortgages, auto loans, student loans, credit cards and other consumer loans. Rates are higher than they were a few years ago and some families are paying much more. Overall current indicators of distress on Consumer Credit remain fairly muted. There are modest science of increased delinquency rate will continue to monitor the impact of changes in Interest Rates and home prices closely as well as other changes that might impact large population. We are on high alert shocks to the system of Financial Stability. The failures of Silicon Valley Bank Signature bank and First Republic highlight significant vulnerabilities in the banking system. Regulators took a series of extraordinary actions that limited the follows the broader economy but it is clear policymakers need to take steps to avoid the need for emergency measures in the future. With respect to congressional directive cfpb has made major progress to propose, finalize and implement acquired rules on Credit Reporting for survivors of human trafficking, Small Business lending data transition and more. We are reviewing old rules to find opportunities to simplify your proof them. We built on the work of my predecessor to publish more advisory opinions and guidance that helps small firms looking to develop new products and services. We are focusing more heavily on supervision of nonbank Financial Firms that have not always been subjected similar oversight at local banks and Credit Unions figure activating unused authorities to minimize regulatory arbitrage by nonbank firms seeking to gain a competitive advantage we have shifted the focus of our Enforcement Program away from targeting small actors and putting more attention on large and repeat offenders. Since then we have recovered 4. 6 billion in refunds and penalties we are handling an average of 10,000 Consumer Complaints per week and obtaining successful resolution individuals outside of legal proceedings. But equally important is our work to address how technology is transforming Financial Services. Think the u. S. Has a choice are we going to Harness Technology to maintain and enhance relationship banking, drive more competition and protect privacy or will we continue our lurch toward assistant marked by surveillance that is fully automated and controlled by just a handful of firms . Cfpb is working to ensure broad benefits for consumers and businesses alike when it comes to Technological Progress. One of our most important initiatives is to accelerate the shift in the United States to open banking allowing consumers to more easily switch and gate access to new products while protecting their financial data. We have been leading a number of efforts in Artificial Intelligence and we are working to bring more technical talents inside the agency. We are taking steps to guard against algorithmic bias and we are working to ensure data brokers respect longstanding loss on the books the work of the cfpb in an age of big tech in Artificial Intelligence is never been more important. Thank you chairman for the opportunity to appear before he look forward to your questions. Ask thank you director. I will now yield myself five minutes to ask some questions. As an fbi Board Members are involved in the decisionmaking related to Silicon Valley bank in its resolution. During the weekend of march 9 did you express any views to fdic chairman rutenberg, any member fdic board of directors come in the fdics staff or officials and administration regarding the class of banks that should or should not be considered as a viable buyer Silicon Valley question bank barely particularly the most efficient way to contain any follett is to ensure there is continuity the Bank Merger Act specifically talks about Financial Stability. It was important. Brexit you express an opinion that a larger wall street too big to fail banks should not be in the class of institutions that would be eligible to purchase the bank . Oxen think we would have taken any potential buyer. We did not receive a bid because i appreciate your answer. And i ask because ftc commission you submitted a comment to d. O. J. And bank mergers criticizing those it occurred to the 2008 financial crisis quote policymakers competitive orchestrating several more maga mergers conveyor banks. We also note use procedural gains december 2021 to try to force a Bank Merger Process review during the justice Silicon Valley Bank Failures an opportunity to take your personal views on maga mergers and implement them in a row or crisis . What you are referring to a talk about where there was tremendous government assistance. It was a different situation. Humor faces on the fastest Bank Failures in history project structure one more time did you in any way try to influence the analysis of the bids . We did not receive any bids that we can for Silicon Valley bank. We stopped to get as many bids as possible. Fdics law requires minimizing costs the Deposit Insurance Fund and that is what we did. Youre on the fdic we talked a little bit about this offline. Some healthy mergers can avoid losses i want to take that back to chairman gruber. We need a better merger process to avoid losses. We can talk about that further. Director tried what your new policy statement you include the following as fitting into what will now be considered abusive and a violation Consumer Financial law question ill ask you answer yes or no. A popup or dropdown box . I do not believe that by its own is a violation if its multiple click throughs . Was i do not believe that by its own is any violation. It was used as a series of examples to look at material interference for. What about consumer . That is part of the statutory bequest what if it is unreasonable confusion . And reasonable part of the consumer . That would not be the issue. That would not need the statutory standard the standard as to prompt with some prongs one is material interference with the consumers ability to navigate the second is taking unreasonable advances. What about Customer Support taking too long . Is that abusive . Is that in the policy question. Your confusion is the process of knowing is that abusive is we still dont. If you dont know when you are the director of regrets we have sought in the proposed policy statement to summarize all the supervisory action by state and federal law as well as enforcement saying this is the body of law we have we have common law and the United States that you are speaking to provide much clarity to be responsive. Just because a limited time, these are examples you say you are listing you cannot tell me whether or not these examples constitute abusive. Complying with the new additions the abusive prompt means trying to change when they information or manage Customer Services. This means the institutions of new obligations. Thats a completely disagree with that. Thats not the requirements heres the problem. Like the Supreme Court Justice Potter stewart in 1964 passes test for obscenity. That sounds a lot like Justice Stewart test for obscenity. That is whatever you say it is is not. Congress wrote the words. It is in statute. We have tried our very best to articulate my time has expired but respectfully you failed its what you say thats my problem like this waters is a recognized requester time has expired and i certainly hope you recognize as a start of my questions. First of all i want to go back to at the moment judgment was implying about what you said. What ever you said had nothing to do with the final results were that were accomplished when we were able to save this from bank runs et cetera. Would you like to take a moment to talk about how successful we were with over 48 hours you guys worked very hard to ensure when we work up on monday morning the banks of the safe and secure. And again it would not be bankrupt. If some example of the fine work that was done. I think what happened that weekend was something we should never want to repeat in have to do again. Unanimous votes at the i see board with the concurrence of the secretary and the president decided to ensure uninsured deposits. It was extraordinary something we do not want to have to repeat. It is one of the fastest bank runs in history pushed digitally. Social media the modern age were involved. We are going to have to take steps make sure Financial Institutions will state recently even in times of stress i also think that woke people up to uninsured deposits and there are more places the uninsured deposits exist for consumers we need to make sure people know how to keep their money safe. I thank you very much. Order to ensure events are safe and secure. I want to go to a question i think needs to be given some explanation. I applaud you in the cfpb or issuing longoverdue rules and fomenting sentience with congresswoman and others to ensure this measure was included in the dodd frank so the same kind of transparencies could be made in Small Business lending. So it might collect on the opposite side of the aisle are what the point to Data Collected on lenders would do discuss how you took the concerns of Small Community banks and Credit Unions into accounts . We made substantial changes from the proposal. Including changing thresholds which actually led to thousands of the smallest beds who do not dimensional business lending do not have to report also change the implementation. So the large ones would go first with much more time for the smaller one. We have to simplify it. I dont rule allows small banks and others to Work Together with their Industry Associations to help reporting. We did a lot to make changes. We had to implement the statute as the court directed. Would you also discuss benefits all caps we will see Small Businesses wont transparency reduce costs for all Small Businesses . Some of the Protection Program was a real sign government really lacked in the market also lacked about patterns of Small Business lending. See that with court mortgage dated you invite smaller players to enter the market to fit unmet needs. I hope this data set really is going to be used also to identify opportunity, meet needs and really Work Together with other rules that are currently on the books that people can achieve compliance. Thank you. One thing i am focused on is getting more on the types of Government Programs supporting Small Businesses including sba loans, i believe this kind of data would have congress to better understand the full impact those various programs have been supporting Small Businesses in underserved rules in urban areas. Help us to strengthen them, do you agree . If so would you work with me both want to work with you which of those can be captured partially and give your presentation here today. And i think i was working on behalf of the people of this country than life and is expected arkansas mr. Hills recognize for. Thank you, mr. Chairman director quite heavy for the committee today. We do a lot of work done that with leadership of chairman waters current chairman mchenry in the whole face in the Digital Future for Financial Services. Its a major megatrend across the world. The Building Blocks of the Financial Services including Cyber Protection standards, and Digital Identity a favorite topic of my friend from illinois doctor foster. And privacy. To start out our discussion type about 10 30 the rulemaking talks about open banking eight months of your release outline which is the acronym for 10 30 three. Which shed some light into agencies thinking about the advance of rulemaking. Think you are considering for october. Are you still on track part october release of that role . Yes, sir. Data and training Consumer Rights are cap furtive chairman mchenry which is why this Committee Pastor data privacy act a few months ago. We have a keen interest in your views on open banking in this rulemaking. I thought it was notable the proposal your initial proposal were only covering deposit accounts and card accounts from the top depository institutions were not tackled find the two Services Provided by nonbanks. Even of the bureau acknowledges nonbanks data providers offer numerous consumer natural products, mortgages, auto loans, et cetera. If you committee how you reached the decision for reg for your initial proposal . Next just to be clear open banking is probably going to be when the most important things to work on together to basically about the future of finance and how do we shape and weight is good for consumers, businesses and others. Congressman hill we did not distantly depository institutions. Always said was we asked Industry Experts but be seamless and valuable types of data to get . What they said was its transaction data cash flow data. By getting all the transaction account information we include non blank intent banks we got input that because that is whats going to get a mortgage lender, auto outlet or the ability to save maybe the credit score it should rely on. Maybe i should look at the actual. And they see this as a sequencing just like other jurisdictions have done. To make sure you get this right something the committee wants to collaborate on. In your advance notice does not address liability for data breach or Data Security non compliance. You got a lot of comments include addressing liability. The comments weve got i think institutions who are providing information may want some understanding if there is mischief on the other side they will not be held liable when we propose the rule expects us to address some of that to make it clear. Thank you speaking of data breaches known as more data breaches than the u. S. Government. It is a huge frustration for all of us on this committee recently even the cfpb had a former Agency Employee leak a person identify info and confidential supervisory information which could have potentially impacted to a thousand consumers and 50 Financial Institutions. Whether it is this breach are the one from office of Personnel Management back in 2015 or 2018 the Postal Service or the irs, how in the world can we trust make and the Citizens Trust their government to keep their private Information Private . It is an extremely serious situation. We were done at the Insider Threats. Our systems were not breached or hacked. But we identified that an employee had sent emails to their personal email accounts. We immediately investigated for. Is that now monitoring so you can stop that from happening in the future . Do you not monitor that were successfully . Quickly part of it implementing ways to address this. I will share you the issue of Insider Threats is really serious. Let me share with you that you and the Bank Regulators make that a living nightmare for every depository institution to make sure they do it right through internal and external Penetration Testing. I think the citizens should demand the same of the federal government youll back the suture. The judgment yields. The gentleman from new york is now recognized. Thank you mr. Chairman and Ranking Members waters. Thank you for being here today. I want to say along with many of my colleagues especially Ranking Members waters i was proud to sign on to brief in support the good work on the cfpb. There has been some confusion about the bureaus recent Small Business lending parole so i would like to clarify a few things. Can you tell me why the bureau is doing this rule now . Congress passed in 2011 the bureau did not do it. Then a court order demanded the bureau completed by march 31 and we did. Is not just the cfpbs idea or your idea director chopra questioner. It was a legislative branch idea. Is it true they were substantial changes between the original proposal in the final rule based on input from industry stakeholders . Yes they have acknowledged we made substantial changes including that would reduce the number of local banks that would have to report we have tried our best to accommodate and figure out a way to achieve the statutory objective. We tried our best reflects out of the cfpb rule requires banks to ask customers about their rates race, ethnicity and Sexual Orientation questioner. The statutory makes it clear they do not need to provide that information we did publish an example form that institutions can use where borrowers can self identify checkboxes that they would like to but is not mandatory reflects does the rule allow for customers to decline to provide that information . Absolutely. Arent you allowed banks to partner with other banks trade associations to ill out and report this data . Yes, many of them can use consortia thirdparty they do not want to ask the contractor borrowers to say go fill this out over here. There is lots of flexibility because we heard those comments and wanted to make sure we were responding to them adequately. Well, that all sounds pretty reasonable to me. Is it true Smaller Banks have more time to comply with this rule . Yes. We gave substantial extra time compared to the proposal for those that were smaller in the marketplace. We are actively working with vendors and others to provide partner with them to figure how to make it as smooth as possible. What else do you do to ease the compliance burden on small banks some banks exempted completely completely . Yes we estimate about 2000 will not have to report under this. We visited with a lot of these Association Banks to figure this out. We were again under a court order to do it. We identified places where we could simplify the way in which we are doing is going to leverage technology. And can we understand this will require some effort. We want to work we have to faithfully implement the law this past. So director chopra this requirement was included section 1071 because Small Business lending data is a critical tool to help identify and combat discrimination Small Business lending. Not only that, but this data can ultimately help spur investments and programs to support the needs of americas Small Businesses. Can you briefly describe what benefits we expect to see from this data set and what benefits will have been seen if this had been in place several years ago as congress originally intended . The facts this was delayed so long. There has been costs of that. Efficiencies and other government Small Business lending programs. The paycheck Protection Program as i mentioned with Ranking Member waters. I think we would have been able to make sure we had achieved their lending all over the country and know exactly what is happening to so many Small Businesses, franchisees and more. The Ranking Member of the Small Business committee am a strong supporter of implementation on section 1071. Thank you. A gentle lady yields thats our time for the ductile from texas mr. Sessions is recognized. Mr. Chairman thank you very much director chopra welcome to the Financial Services committee. Cfpb has been engaged in and is engaged and you mentioned it, a lot of data breaches. Data breaches that occur, private sector banks, institutions and the government. What have you learned from those that you have taught the government . Ask one of the things that was a very unique to the recent Insider Threat at the bureau is that we have put in a lot over the years. It was mentioned Penetration Testing others to make sure systems not be hacked we are now at the points can be hacked . That is where the efforts of god and for outsiders. Insider threats i think is one. There is more attention all of the agencies including the cfpb need to guard against better. There are former employee and now former employee emailed themselves the cited emails. This was in complete violation of acceptable use policies what did you do to that employee . Next i am prohibited in talking specifics about Personnel Matter perplexity referred for prosecution . We have referred the matter to investigators including the ig and others. We are cooperating with all of them. They have various authorities that go beyond authority civil, criminal and others. You think parts of the breaches come from internal employees . Well, this recent incident we informed congress about, it was strep a cfpb employee. That is something especially with more devices, phones, recordings. We need to figure out. What have you taught the government in your investigation to help them . I recognize your focus is entirely on beating this deafening sound the Free Enterprise system. Quickset is not sure true surfer good serious sufficient evidence that my statement would be true but yours would be also serve. What if you taught the government . In this incident we have been working out the appropriate agencies on b, others. I think as we have talked to the other banking regulators we recognize all need to figure out how do we allow institutions to give us data even more protective forms . What do we do to Police Insider Insider Threats effectively . I think theres so much Government Employees across the government has in terms of Sensitive Information and ensuring that does not get disclosed is actually critical. Evidently Homeland Security into a large part the secret service have large jurisdictions investigating and prosecuting these. What are your regular conversations with them about what you learn . We have primarily in these situations omb and other guidance is to work with the inspector general. And of course others like the justice department. That is under the justice department. Detroit and provide all evidence to them. They have to conduct their own investigation. But as a policy matter i do think we want to contribute our learnings on Insider Threats may be an issue across the board that we all have to carefully combats. Especially with new technologies that individuals have access to director in fact i think you and that you are the director i am not. You and i could have different ideas about what we believe the focus should be but i would hope you could put a major focus of Data Security off the think you have learned and be a leader in the field i am not arguing or not today. But i believe the major focus of your 1600 employees could be almost singlehandedly across that until we defeat those going to steal our intellectual property for personal data and other things. Mr. Chairman thank you for this time. Director chopra i think he reports i think the general addendum of california mr. Sherman is not recognized. Im strongly endorsing the statements the acting chair made in his Opening Statements. Mr. Chopra you are indeed continuing the legacy of director in your work. Congratulations. Cfpb importance is demonstrated every day. Nothing proves it more than the efforts the incredible efforts made here in washington to silence and defeat you. You are the most effective Consumer Protection organization i think the world has seen in the area Financial Services. And it is critical that we win this case before the Supreme Court. I say we because i joined the Ranking Member and so many others in the brief to make sure you get the same kind of funding that the fed has had for well over 100 years. As you point out in your Opening Statement you secured 4. 6 billion in refunds. Penalties against violators and that is just the tip of the iceberg. Every time you collect a fee you get many, many other companies to change their policies are not to engage in policies they might otherwise do. And as you point out you do a 10,000 Consumer Complaints every week. I want to thank you for focusing your Opening Statement to issues important to me. First thank you for your work on the transition some 16 trillion of instruments including claims of dollars of home mortgages that are going to that transition. Second you mentioned pace lending. As to pace lending i want to commend you for your new regulation as required by law truth in an ability to pay determinations. The battle is not over the industry will fight back in the hope you will stand strong. Under section 1071 are requiring disclosures on Small Business lending to women owned businesses, minority owned businesses i know you have pledged to help lenders especially small lenders implement that rule. I am told some lenders have submitted questions over a month ago and it scans not just annoying television commercials. Arch a lot of money. They blanket leaking test everything on your Credit Report. Your Credit Report score goes up for a little while. Release most of those are accurate and then it is back down. What are you doing to deal with the scheme where you get your Credit Report improved for a little while . We are looking at our all the ways in which Consumer Credit report issues and cspan stands. We brought a number of Enforcement Actions here we do work with the federal trade commission, state ag to bring action. We do not want to play or whack a mole. We want to figure out what is the way consumers themselves can know how they can dispute inaccurate information. We want to make sure fraudsters are not parking or placing debt on Credit Reports that are not even owed. There is a lot to work. Quickset will furnish you wanted to start advertising what percentage of the customers improve the score four, they should not be claiming temporary improvements. Lets see, under section 1031 you are dealing with privacy. Data aggregators and syntax are not subject to allow the federal supervision the banks are. What steps are you taking to protect americans from misuse of the data but aggregators and syntax . We have started as i mentioned in my testimony, to put more emphasis on non bank supervision. Especially these firms that touch sometimes millions and millions of consumers who have not been subject to similar supervision. We want to make sure that abuse you mentioned or its not collected for one purpose but monetize for completely different one. Its going to be a challenge. But we are starting by making sure were targeting your supervisory resources. Finally, i hope you would look at these four profits debt relief agencies that keep you from talking to your bank first. Because often you can resolve it. Parts of jon from missouri is the recognized prefix thank you, mr. Chairman. Mr. Chopra welcome great lesson hear hear we discussed your schedule the fact you do not meet with people from industry. We charge are scheduled, make some comments about sent you a s you fill in the blanks and tell us who actually did meet with people in the industry you did not respond to your response with a letter but did not respond and explain your lack of data and schedule. So from that i consume two or three things here. Number one the letter was to myself thumbed her nose at us and said youre not worthy of a response or else we were correct and that you are meeting with industry people as they tell us or both which i think is probably the case very disappointing. Let me just say there are many Industry Associations. We have been down this before the problem is you do not meet personally in your staff does frequent site meet personally. But you dont your schedule does not back that up. I want to move on reclaiming my tyvek. Allow the judgment to answer requests i reclaim my title into much of the subject here. One is regulation legislation by regulation. Directive clearly chosen to regulate my press release guidance and enforcement action instead of the rulemaking governed by the Ministry Procedures act. While of the ap allows a Public Notice and comment on post rules which israelite entities an opportunity to provide feedback and share their concerns or incorporate agencies rules to produce workable policies. Since public statements are not rulemakings, or official actions in the guidance to issues not legally binding, our Financial Institutions and firms within their rights if they do not adhere to proclamations . As i could not hear. Public statements are not role makers or official actions and the guidance you issue is not legally binding or financial within their rights to proclamations . They do not create new obligations. What of the pieces of feedback this committee has given his concerns about using enforcement only. I have continued a practice for my predecessor to issue more informal guidance. It helps give transparency about what the approach the agency is taking. Its not intended to create any new progress it does not answer my question. My question is are the firms within their rights to not adhere to your proclamations or are these guidance . Accepted by the statute or regulation for. Is not my question. There within their rights to not adhere to your proclamations and your guidance is that correct . And think im trying to be responsive i think the answer is yes they only have to look at statute and regulation. These other forms, we got input from the Consumer Bankers Association a few years ago that they wanted to see more guidance. For clarification you are using these guidance and official actions but. I think were trying to do as the market is so dynamic and changes so much that we often have entities think i need to hire a lawyer . I know youre trying to do director. But it is not enforceable. That is my point speak was just trying to restate existing law for. It is not enforceable is that correct . That is right. And guidance is not enforceable, correct . Was it is not providing legal pigments clarifications official documents or bulletins here that is not a compliance bulletin thats not enforceable, correct . What sin does not provide obligation for. Was not enforceable that your stay be agree with that . Lexi has been wonderful finally got there. Its very disconcerting you got bulletins to their compliance bulletins and opinions which is great just clarifications for folks this is not enforceable. This is very concerning to me because you turn around you threaten different entities all of the time you become the greatest extortionists in his country by what youre doing with these actions when you issue press releases, make up new words like junk fees junk fees is not legal term not enforceable turn. Ive checked it with attorneys i looked at the people decide work to financial legal dictionaries this is not enforceable term you made it up to give yourself more authority to be able to have more impact on things. And extort more money from people progress i completely and respectfully disagree with that. Every action we take the space of laws this body has enacted through legislation but the junk fees is not a legal term it is not enforceable term. Just like guidance is not enforceable. And yet you try and impose that on people. Extrapolate from the authority using a term junk fees to be able to have new authority you cannot create authorities out of thin air. Only congress can give you that authority you are creating yourself a yield back to gemini is a jump from your is now recognized prefix thank you, mr. Chairman ricky member waters. Thank you director chopra for being here. And listening to some of this debate i cannot help but say thank god we created cfpb. Singularly focused because i hear the interests of other groups at the people there to advocate on their behalf. Most of the industry has someone to advocate on their behalf. What i dont understand is why it is so bad to have an agency at which you represent to advocate by half of the American Consumer. Throughout history we have seen the consumer be ripped off, take it advantage and why we have to have labor unions. Because we know weve seen folks on their own do not see a move in the benefit of everyday people. There has to be someone to advocate on their behalf. To look at it. To make sure the Playing Field is level for consumers not to harm business. But to level the Playing Field. So that the consumer has a voice and say dont rip us off. This is a bad product. I lived it. In the financial crises of 2008. That is what you are here who said we could never allow that to happen again in one of the proudest moments of my career here is work with Ranking Member waters and others to create the Consumer Financial protection bureau. So i thank you for doing your job. Your job is to advocate on behalf of consumers, no one else. That is your job. Singularly focused helping the American People. Helping the American People. You help all, not just democrats for your helping the American Consumer who is a democrat who was a republican, was an independent no matter where they are rural or urban. Thank you for doing that. Out of this recent bank study dominated the media and the medias attention and this committee particularly this spring. Opportunity to speak with the potential regulars with oversight of institutions and continue to look at what should have been done to prevent. But yet weve not had the opportunity to speak with you in the aftermath. The voice and advocate for the consumer. So, from your perspective have the recent bank that is highly or a strong cfpb now more than ever . As you reference in your own community in almost everyones the financial crisis was absolutely devastating. Victims of financial crises the first ones are often those who can least afford the shock. And so we had to take extraordinary steps to mitigate some of that damage. But also people are now learning about deposits and safety and insurance. There are places where people may be holding their many that are not insured. We are going to obviously ensure any instability in the financial world in the financial does not impact the consumer as you say. The failure of quite as well the force merger with ubs was a big concern to figure out how could it affect our Mortgage Markets are other load markets and others . The National Credit Union Administration to propose a rule to make the automated home evaluation process fail. I believe its taken the right direction. Im curious with aoi the most automated appraisals. I think its trying to make sure the a. I. And algorithms to compute homes do not bacon any sort of discrimination and i think everyone deserves a fair and Accurate Appraisal and thats what the proposal to implement federal law seeks to provide. Thank you. The gentlemans time is expired, the gentleman is now recognized. To give mr. Chairman and director will come back. I have a number of things to hit. I was curious when my colleague friend chill was asking you about the breach, it seems like you were downplaying it. You said an Insider Threat that you mention in the person sent some emails and later another question you indicated it was a set of emails. Would you classify the incident that happened as a minor incident. A music into mediumsize or Major Incident that was extremely serious. There is no question about that. Glad to hear you back it up. I apologize, i dont want to underplay in any way we have done and worked hard to follow all of the steps notification. I understand that. I was back conferring with our attorneys as to exactly how much we could talk about publicly because we dont want to get in the way of an investigation, you dont and i dont and i do have some concerns. , you were notified in march and let the committee know and may about what you call a Major Incident and we asked for a briefing on that. A briefing was granted at the staff level and when our attorneys asked your prefers, i dont know who they were. Maybe they were attorneys that maybe they werent but when they were asked basic questions did anybody at cfpb speak to the individual, staff from your agency could not answer the question and referred Committee Staff to speak to the inspector general. Your staff explained only why cfpb knew about the breach with a different employee. You talked about that and Committee Staff asked about the identity of the other employee in circumstances surrounding the employee raising concerns. Your staff could not or would not give a single answer to any of the basic questions. Cfpb staff emphasized there was no reason that the information was inseminated because as my understanding what i been briefed on i do believe is Public Information as of yet. This was a Major Incident with significant consequences potentially. However, when they were press taken from the only evidence to sustain the claim, so far there had been no suspicious activity. From a perspective i wont go into all of that but we have all seen what is happening with equifax and others that have had that you have been a part of punishing others that have had serious data breaches and im glad to hear you say it is serious and that you are cooperating with law enforcement. We also expect that you fully cooperate with this committee in congress at large and our subcommittees that are called oversight investigation for a reason. These are basic questions that we are asking you and we expect full and complete answers. Your staff cannot get basic answers. Sometimes there wasnt any answer, no answer at all. It makes me wonder. Im sorry to be suspicious. I know how d. C. Works. It makes me wonder, your dismissive attitude towards congress in previous hearings and previous interactions, did you send someone who intentionally did not know what was going on so they would not pass information on to us, where they somehow opaque in their answers for some reason im not expecting you to answer that. Im not looking for specifically response. Making sure that you were put on notice and will be following up and we expect their answers to questions to be answered one last thing the barrows website provides a Fund Transfer that you made to the fed for every quarter of the financial year, your knowledge has the fed ever denied the funding request. Not to my knowledge. Has the fed provided feedback on a quarterly budget request has the fed told you that the request was too high or too low . I believe the feds feedback is when we should request it because liquidity purposes. The last time the shared fed of the funding process in july of 2020. It was done at the request of german under chairman are you aware of any of the cfpb budget. My time is up but i have a letter for the record to be submitted. It was a letter. Without objection. We wanted to make sure that was regarding concern. The gentleman from georgia mr. Scott is recognized. Thank you director. There are a lot of problems with the crypto asset for our business. In november of last year you all published a complaint and failed with these complaints, scams, all of them were significant problems. Your analysis that bad actors are leveraging Crypto Assets who specifically perpetuate a fraud on American Consumers. Excuse me. From october 2018 and september 22. You all received 8300 complaints. Director, the cfpb determine whether certain vulnerable groups are at particular risk for rescan . Yes, i believe we mentioned they used to be more common for this to ask someone to buy me gift cards. We are now seeing a shift to a digital using Crypto Assets. We also identified a place where has some interaction of identity theft. It is not always crypto specific but Service Members can be targeted in ways that can really expose them. Let me ask you this. We gotta find some answers. The problems are overwhelming and you all have great people over there to cfpb. And we establish this and we have got to find some answers here. Let me ask you Financial Education. This is being put on paper. Its really important. Financial education and literacy. There is different ways in which Digital Technology have generated a. I. And you could have voice cloning in ways it can sound like a Family Member is calling pretty could have different ways in which digital images look like reality and we can make sure we harm people. That is very good, what you said, director can this committee give. We are concerned about this, can this committee get a clear commitment from you today that the cfpb will use a portion of more than 600 million in unallocated civil penalty funds to support Financial Literacy. Financial education for our consumers and a program this can get to. Weve got to arm are people with the weapons. They are the ones being targeted. We have to put some arms on them. With the full armor of protection. That is what it is therefore. Will you commit to doing that today. We will commit to using funds for Financial Education purposes. We may use other statutory funds to do that. The fund you reference is also to be used for victims relief who are the victims of scams and we want to make sure that they can receive. We do have other funds and we can share with you what some of our spending will be on Financial Education and but we may want to use our general fund. We want to stop them. I totally agree. There are so many people whose lives are changed. Can this committee get this commitment from you. Im not asking you how much to use. Im saying will you use this money. We will use funds that we have access to for Financial Education but i would love to discuss the tradeoffs about using the funds. The gentlemans time is expired the gentlewoman from missouri mrs. Wagner. Thank you, mr. Chairman and welcome director i would like to followup on a line of questioning, she began the industry outreach and specifically your public calendar. On february 7, 2023 my colleagues mr. Barr sent you a letter requesting specific information regarding your calendar and industry outreach in your response to your letter dated 2021st 2023 and i quote like my predecessor i have continued the agencys commitment to transparency with longstanding policy of publicly posting the calendars of senior leaders. It appears your commitment to following the longstanding policy has been absent, completely absent this year. The cfpb website states that each months calendar will appear at least a few weeks after each month has concluded. But it has been almost six months, 22 weeks since your calendar has been publicly disclosed. There is nothing here. Can you please tell me why your calendar has not been publicly disclosed for half of the year. Im not aware thats the case but if it is the case we will look to make sure that i happen. It is absolutely the case. Im reading to you directly from a letter to congress and a response dated fabric 21st. It is concerning. We would want to do that in a fashion that is responsive and i will take a look directly. Your own website states due to the time insensitive preparation process, each month calendar will appear at least a few weeks after that month. Its not true, moving on. The Comment Period to the proposal to adjust the safe harbor dollar amount for credit card late fees and you see more than 55000 comments and they were submitted, many were weeks prior to the deadline which was may 3. The majority came from consumers. Real consumers and Retail Investors but they were not posted in the comments ill and tell a full month after the deadline closed. What was the reason for the delay in posting these comments was a bureau overwhelmed by volume or did you intentionally delay the posting of these comments. Definitely not when we receive large amounts of comments one of the things we have to do manually is to make sure it does not include account information sometimes people might be able to file a complaint and we do not want it to be a vector of identity theft. I will also share 36 days from the times we publish the proposal there was more than 36 days. I will tell you this should had more than ample time to post some of those over 55000 comments out there in real time. You dont wait until after to delay it further. I consider that intentional and frankly. Absolutely not. Reclaiming my time im seeing an extremely troublesome scene and thats what im trying to get to. The blatant lack of disclosure i dont care future calendar or your publishing comments. I would like to take a serious look at that. I believe we are in line or better than all of our. Agencies. Im concerned of your response cfpb proposal ignores the Important Role that late fees play in consumers paying their bills. If late fees are at a low amount and then effect is nonexistent more consumers will pay, leading to a higher share of delinquent accounts which will be reported to Credit Bureaus and lower Credit Scores. Im not quite have enough time to answer but i would liken writing wisely bureau proceeding with the rulemaking that has no consumer benefit and would result in tremendous harm and consumer. I would like to welcome mr. Lynch. Welcome director chopra, good to see you again. And you are not amenable with industry representatives and Business Concerns as well as in you been exceedingly accommodating on each and every instance at least to my knowledge. I want to put one issue defines junk fees as surprise chargers that customers do not discover until they nearly completed transaction. Booking an airline flight, renting a car or checking out a resort or paying by credit card. Is that your understanding of what a junk fee should be. I think its a term that i hear a lot what are the fees that are not subject to real competition and competitive pricing. Ones that may not be subject to the normal forces of shopping. As more and more retail happens online is the incidence of the junk fees. Each industry is different but we see on the Empirical Research of where firms can be able to use drift pricing and they come later in the process when the consumer has less ability to negotiate. I know is the dividing identified that in the state of the union and he called upon congress to eliminate the hidden junk fees from consumer transaction. I want to talk about Something Else theres been a real shift among Financial Services and firms to use chat bots. I know youve done some work and you issued a memorandum and an executive summary on chat bots and consumer finance. What are we seeing, im just receiving antidotal but my constituents are plated about the fact that we have a problem with the bank that theyre getting hut into the chat bots and sometime the problems are not resolved which leads them to call me and are we meeting our obligations and allow banks to put a chat bot between them the does adequately resolve their problems. This is one use of Artificial Intelligence that we are going to dart seeing more and more and what are the things we identified when the consumer has a straightforward question in a defined answer i and faq there is places where consumers have to provide a lot of account information personally information it is important that that information used to train a. I. , how is it being protected when a consumer has to invoke a right to dispute under the fair credit billing act can the chat bot handled it. Were reminding institutions if they are moving everyone to this they still have to adhere to the Legal Protections and make sure theyre not violating privacy. It can really undermine relationship banking if not taylor appropriately. I understand the more basic questions could be dealt with by a chat bot. I am sure there are personnel savings and efficiency issues that are certainly favorable but as you mentioned when matters become more complex it doesnt seem at this point that the a. I. Chat bot are capable of resolving the complex issues. Is there any thought of providing an opt out when the issue become so complicated that the consumer would habitability to go to a default which would provide a human being on the other side of that. I think that is a place where institutions, Financial Institutions need to be careful of denying access to a human in some form because it can lead to real frustration in a doom loop. Thank you, mr. Chairman i yield back. The gentleman from texas is recognized. Thank you, chair for being here. I am thinking that the Consumer Needs to be protected from the federal government and all the things were talking about. Gets really bad policy. Director the first time you came here you said you would protect the interests of Small Business. I probably serve as small entertainment of the Small Business committee and we dont feel too protected. Every since you joined the cfpb yet burdensome requirement at any consideration in the impact on Small Businesses and small blenders. Talking to Community Bankers back in my district in texas and all over and across the country every Single Person tells me how miserable and terrified that they are that the cfpb Small Business Data Collection rulemaking they are concerned the complicated requirements will tie up Loan Officers and increased compliance and compliance officers which will be passed on to the consumer guys like me that borrow every day, we pay for this. They are considered a push to standardize Small Business loan product and kill relationship banking which is Free Enterprise and capitalism based on. Everybodys concern is going to push the industry to standardize Small Business loans and kill banking. They are concerned this will force their employees to treat privacy and afterthought collect more data on Small Business loan application which is what we dont want to have happen. Right now Small Businesses struggling due to inflation increased interest and ongoing labor shortages in this out of touch rule on these issues. This is our time for Small Business. The rule is an attack on a mainstream americans its only way we look at it which i introduce the review act with congressman barr to help the implementation of the cfpb final 1071 rule. Senator kennedy is leaving the companion to this resolution and has the support of over 45 state and National Financial associations further proving the urgent need the Regulatory Overreach to ensure it does not take effect it is bad business and bad for mainstream consumers. Doctor how would you been working with Small Businesses and helping them to ensure that your regulations and undue burdens on the Small Business owners. How would you been doing that, they dont hear from you. What are the things that we done we focused a lot of our engagement on institutions we dont supervise. I met with 28 state bankers associations and each of them have dozens of members to talk directly to me. We done the same thing with credit union leaks and i believe we hit 20 and i take your point very, very seriously. That we would reduce. Let me get my time back, you dont think it creates a burden on these Financial Institutions. We published what we will believe the cost we tried our best and to figure out what are the ways in which we can limit and we also created significant changes in the smallest bank, 2010. We dont want standardize Small Business. It does trickle down to the consumer. The cfpb funding mechanism. We talked about the congressional oversight given to you by the fed. There are many more Court Challenges for carving your funding mechanism in the bureau do not comply with regular order with uncertainty and markets to the courts to decide. In order to ensure your accountability and transparency to congress of the operation and congressional appropriation in the Supreme Court will you be accepting to the congressional appropriation. We will comply with any Supreme Court decision. We dont agree the solicitor general and seeking reversal and will look forward to result. Gentleman time is expired. The gentleman time expired. The admiration of the texas banking we in illinois have not forgotten the tens of billions of dollars with the corrupted mismanaged banks in texas and california during savings and loan cramer redirected. Some of them argue the innovation in the Financial Services such as open banking have a potential for Consumer Choice increase access to credit for many undeserved american, underserved americans in ways that the reporting system cannot, open banking can provide access to a wider range of data than the Credit Bureau had access which could give a more accurate picture of an individual financial history but also provides a possibility. You shared an update of the cs pb review panel for section 1032 can you give it a rulemaking. We will be scheduled for october we release more on this including the industrystandard studying will play. We will want to make sure the standards are giving the ability for consumers in all Market Participant the ability to switch. I will tell you is not more access to credit, lower Interest Rates for borrowers, higher Interest Rates for savers. Its also going to have an impact on Customer Service quality when consumers has the power to vote with their feet, you will see how her system will give them Better Service as well. Thank you for going on the alert over the threat of a. I. Being used for identity fraud, this is coming like a salami. There is government intervention. Citizens this has a secure Digital Identity. Referred to as a mobile id or digital drivers license and allow you to present and to present digital proof online or offline environment that you say who you are. That is one avenue that can make a difference on. The blade runner laws and requirement that any electronic communication coming from must identify itself is machine generated. You have any comments on either of those two. I completely agree that Identity Verification issue. I think if we can solve as a core part in the soupy big for Market Participants. How we do is a question and you see jurisdictions that have solved Identity Verification get a lot of benefits. In terms of stating who it is its interesting you are seeing a lot of generative a. I. And give themselves human names this is some ways to make it appear that there are an actual person and voice cloning in places across the autonomy some of the generative a. I. Theres a lot more we need to do but people should know are they talking to a human or not. Certainly there going to see the regional accents in the consumable trust. First off i want to thank you for the work that you did on the early versions of a. I. With the fairness versus accuracy. We did highquality work on that. The problem we are facing with generative a. I. And chat box that learn as they involve is much more complicated and you raise your child perfectly within they get exposed to new things as they grow up that will make them do evil things that you never would have suspected. And looking at a. I. That evolves and learns. Machine learning another ways which a. I. Involves. One thing that were trying to do the baselevel is be able to give information of how existing law applies, for example at a. I. And needs to be able to determine if you get an adverse credit decision and what the reasons are. If its constantly changing and you cant do that is not able to comply with existing law. There is not a generative a. I. Exemption in our Consumer Protection law. The gentleman time is expired. To give mr. Chairman director choker, thank you for being here. Chairman barr mentioned something in his Opening Statement i would like to start out with. According to your own data, 74 of americans pay their credit cards on time that is to say that they never paid the late fees. According to your own proposed rule cardholders that do not pay late fees will be paying higher fees, higher interest on interest paying accounts and lower rewards because of the subsidy. Under section 1022 of dodd frank you are required to consider the cost of all cfpb rulemaking. I cant see how this role the rewards irresponsible cardholders at the expense of responsible ones is a net benefit. With that said how did this survive a rigorous costbenefit analysis. I appreciate the question congressman. What you mentioned those were not predictive, that was a potential scenario in the core of what were doing. What was not predictive. There is potential ways in which the market could shift. What im trying to explain the core of what that review is doing and were trying to come push and if institutions have caused how can they make sure its a reasonable cost. Its modern reality. There will still be late fees, its how they make sure these are fees that the user agreed to and what you are proposing and basically taking that away and the contractor and the agreement they made with a credit card. I want to make sure reasonable is that the vfp bees work, that is what is in statute, the statute says the penalties must be reasonable and proportional to the omission. Today not agree to the Fee Structure when it agrees to take the credit card. That is true but the reasonable prohibition what we found Consumer Credit markets, it is not a can fair and competitive market and see and are review if they dont ~ Business Model, in some cases the borrower. They might be a day late for a few dollars off get a large fee. Thats what congress is seeking to prohibit and where the creditor and earlier this year fhs i finalize changes to the lowlevel price adjustment tables that resulted in borrowers with good Credit Scores paying higher rates for their home. This is obviously unpopular with consumers arent you concerned you are sending the same message to consumers with this rule. The 75 pay verizon time. In fact, i think what this will do will help those compete on upfront pricing. Consumers are really smart in the credit card market as soon as an issuer raise annual fees. They look to switch. Its easier to know the full price that way. What we are hoping to do adhere to the congressional prohibition on reasonable fees, the word reasonable is in the statute while creating the ability for more competition upfront. Thank you, my time is expiring but i would think Consumer Education will be more effective. The gentleman from ohio mr. Beatty is recognized. Thank you, thank you for being here i would like to start by thanking you for your work and your integrity and your leadership at the cfpb to protect consumers. We heard about the billions of dollars in consumer to the hundreds of thousands of americans. Those americans in all districts, democrats and republicans. All across the country. Thank you, that means fairness, transparency and competition in our Financial System. Let me say for the record there is no doubt that Consumer Protection problems are rancid in our Financial System and i want to go on the record saying americans would be much worse off than if the cfpb was no longer able to continue its work. I have two questions i would like to get to. Theres been a lot of attention to your schedule and your time. It seems like we alternate terms or congress when we decide to pick on the individual or cfpb. Since i have been here many of my colleagues on this committee. I remember when former congressman member of this committee Mick Mulvaney some of the most disparaging things about the cfpb in the director at that time, he was replacing. He went here and he took a job to be in the same position you are in. If we want to talk about integrity and putting politics over people may be over money but to his calendar in the committee he said he worked three days a week. People are questioning you. Do you work more than three days a week. He said when he wasnt working he loved watching baseball and inputting tv and what of his office so he could watch baseball and protect our people. If we want to talk about you being a constructionist i want to use the hypocrisy and enter into the record for everyone on the other side of the aisle that chose to support beating you up on the calendar when you work more than three days. Let me get to my question. We sent you a letter that i signed on section 1033 of including ebt and other government benefit accounts in that rural. First of all let me say thank you for responding to the letter acknowledging it was an issue and you will continue to look into it. I dont know if you have anything to add to the committee about these benefits being considered within the scope of the final role. One thing a bunch of these rules mortgage products and others were raised. With ebt and other government benefits, part of what were doing, we want to talk to the department of agriculture and others that administer these. We really want to understand any technical issues that go along. I completely share your view. Our chairman mckendry in the ranking on the sub we havent had a diversity hearing and for 53 of the cfpb. For the minorities and with contracting out. And Legal Services and contracting et cetera. And in fairness im giving equal opportunity the director prior to you and do you hold meetings with democrats and republicans and talk about diversity. I want to thank her for the work that she did and i also think you work more than three days a week. I dont know what her calendar was i want to commend you for the work that youre doing and not much has changed for the record you cannot receive 10000 complaints weekly that you respond to. You cannot do what youve done with a. I. You cannot do what youve done with algorithm and you cannot do what youve done with Bank Failures. Again, thank you in my time is up. The gentleman from tennessee. Of what i think the Ranking Member and director choker thank you for being with us today i would begin to respond director choker. In cfpb versus brown the 11th Circuit Court of appeals found the cfpb assertion of work product to avoid identified witnesses or facts supporting and the cfpb violated rule 37 and civil procedure applied. Director will you commit reminding your staff and counsel and you must abide like the rest of us. Litigation often can be very heated. That was brought many years ago that was a decision, an overwhelming number of matters that weve been respected by the courts. I appreciate that commitment to make sure your staff with the civil procedure to the agency. The following passage of the dodd frank, special advisor Elizabeth Warren testified the bureau would be accountable to congress. I heard testimony. Special advisor warren said the cfpb is subject to the requirements of the limitations of the administrative procedures act. Director chopra isnt it true you have routinely acted unilaterally and arbitrarily without engaging rulemaking in compliance with the apa like you did with update section of the Examination Manual or by using the paperwork reduction act to seek approval for a junk fee timing study just to name a couple. Second special advisor warren stated that the cfpb is the only banking regulator that is required to conduct Small Business impact panels to gather input from Small Businesses about the potential impact of proposed rules. Isnt it true that you had bypass the Small Business regulatory enforcement fairness act process like you did in your notice of proposed rulemaking for nonbank registries for repeat offenders. We completely comply with all of it. In fact we publish the analysis and the, on the analysis that you also mentioned administrative procedure act and i heard the suggestion a number of times its absolutely false. We provide more information based on feedback from this committee to make sure entities. Specifically and criticize the agency for not doing that. Then special advisor Elizabeth Warren said the checks on the cfpb rulemaking are more stringent than other banking regulators because they can veto any rule issued by the cfpb have ever overruled the cfpb rulemaking and dont you serve. I believe it to begin some review many years ago and they absolutely have the power to do some. Finally, special advisor warren said the cfpb is a significant source of accountability because it faces constraints. Has the fed ever ever denied her screen is the cfpb director budgetary all that you respond to the record by time has expired. I can answer for the record i would remind them to director comments to the chair. The gentleman from california mr. Vargas is recognized. Thank you very much i direct my comments to the chair. Of course the Ranking Member i would prefer her to be in the other seat. Its been a pleasure to be here, director think youve got a great job we all your great dad into debt of data center gratitude. Ive been here for quite some time and sometimes people say ridiculous things but today was particularly fun you said youre the greatest extortionists in the country of all times. The greatest extortionists, is that true are you the greatest. I just want to say to this discharge to the best of our abilities as we swear an oath to our constitution. I want to give you an opportunity. The Free Enterprise system. In fact we made emphasis about the importance of new entry, the ability for new players not to have to stumble through and hire somebody highpriced lawyers. Our country benefits when consumers have more choices and honest businesses are protected for those who violated the law. Heres a tougher question. You were accused from Kevin Mccarthy or joseph mccarthy. Whats a different way. I was told. Well leave that for another time. The speaker is protected and disparaging and using personalities. The accusation was mccarthyism. You heard it, i heard it and it wasnt defined. I wanted the definition. I will be happy to move on i do not want to despair weve been friends for 23 years. Thank you. I do when asking about this, most of the questions on the other side have been about the industry and the industry is not pleased with and they dont like because some your policies is it your job to please industry. The execute to enforce the law and supervise fairly we go overboard and i think i exceeded the types of engagement have engaged in in there certain times particularly with the Law Violation that there will be a disagreement. What is your duty to the consumers. Our duty is to ensure the competitive market into faithfully discharge. I think youre doing a great job, how much money. They got back to the consumers over 17 billion. Comedy people has that affected. Hundreds of millions. Of course its interesting i dont keep complaints from consumers, just the opposite you guys are doing a great job. I appreciate the job that youre doing now heard remittance i want to talk about remittance their problem the reason for that hardworking americans and other u. S. Residents send money overseas and when they do that they dont know the full cost of those remittances are not easily understandable in some important for your agency to work on. One of the things when you get a disclosure some of these remittances are advertised and has no fee but in reality the Exchange Rates might be adjusted so it doesnt look like theres a fee but theres a cost to it. I also want to say that other nations developed countries have started thinking about to the Central Bank Ways in which consumers and consumer businesses can transfer money more easily there is some work and i believe the fed has an arrangement. We should look at more ownerships like that to have lower cost. Lastly we did talk about diversity and then looked at the numbers and it looks like when it comes to the semiannual report when it comes to latinos the percentage is quite low. And i hope that youre taking a look at that. I will let you answer if i have enough time. I want to make this, every time i come here and hear the accusations that are placed against you or others on the other side there is no protestation from the chair i never hear it and then there seems to be protestation, i dont think that is fair i think youre doing a great job and i hope her a little more careful with her language around here when we accuse people of mccarthyism, extortion is him and all these other things. I yield back. I appreciate. Your time is expired the gentleman from pennsylvania is recognized. Thank you, mr. Chairman. Thank you mr. Chopra. I talked to a lot of things, small banks under a billion dollars, 5 billion, super regionals from pennsylvania, the guys on wall street and im really not happy with your agency. Lets start there i mean across the board the largest banks down to the smaller ones have many concerns. The idea that cfpb is doing a great job. Everything will bank i talked to, im not talking about three out of five. It is 19 out of 20. I assume you have some sort of reviews taking place taking information in on your final rules and speak responsive to the clientele that you are supposed to be helping. Just to be fair the clientele of the cfpb is not the banks. The clientele is the public and often it is true there will be differences with entities. Who serves the public. To the banks serve the public. There is a link in the chain. Of course we want those who follow the law to be able to not getting disadvantaged by those who dont. I hear your concerns. At the end of the day we have to make sure our Consumer Protection. You are going too far lets talk about the 1071 that keeps coming up how somehow that is wonderful. I had a small is this Committee Hearing the other day in red for republican democrat witnesses and we all thought it was terrible that the type of questions. I know in the final rule you retracted the insane information that you wanted to derive not make any required youre asking banks for personal information peoples raise in their sexual preferences and looking out for the public at. That is a statutory directive we were under in order to implement 1071 of the dodd frank requires collection of information on race and other categories and those are types of questions that sometimes enter work with the industry. Work with the industry to figure out the best way to provide guidance and oversight so they can serve the customers fast. It doesnt sound if youre doing i was in the business world. The more you talk to your customers the Better Company you become. That is 1071 is also 13 data points 13 data points in the rule requires 81 and a lot of concern from banks and small banks. Let me make clear, there is not 81 data points. There is a difference between data fields. Im going to reclaim my time. I believe it is 1920. That is information that i have. Let me ask you about screen saving. It should be adjusted 1033 rulemaking because it is serious problem as we all know is this something we can update the screen scraping in the rulemaking address. I actually think that we can. We can set the stage for making sure screen scraping is not going to be part of our financial infrastructure in the future. Its a place we should all talk about because i do think screen scraping is not really a viable longterm way for data sharing. Happy to hear that. Going back to 1071 really quickly. If you all could do it analysis on a compliance cost. Mainly from small banks thats where they amount the percentage of the operating costs. If you could do that and maybe we can talk about that i would appreciate it. Im happy to talk about it including where we created some changes and hurdles. Yes lets talk about it. Great, thank you, mr. Chairman i yield back. The gentlewoman from texas, ms. Garcia is recognized. Thank you, mr. Chair and thank you director chopra for being here with us today. Junk fee, medical depth and discrimination and other major issues. I have enjoyed reviewing the report. Is excellent certainly is reflective of the fine work that you are doing. I like to make sure all americans understand just what it is you are charged to do. Reviewed at fact sheet about the services that you offer for our constituents like free Credit Reports, protection for scams from older adults which is key in my district. Up with a medical billing to impact so Many Americans across our country. Resources on mortgages and borrowing. We are going to make sure the word is getting out effectively. I want to know how the viewer make sure all americans are aware of this there seems to be some confusion here was exactly you are there to advocate for. Just exactly what your mission is . Once we are there to make sure the financial Protection Laws are followed. We are there to make sure we can file complaints and get a result. We are there to take enforcement action to help though tobin ripped off. Got refunds for tens of millions of americans went to help so many margaret our job is to give consumers the ability to have a market that works for them. Get into a challenge with any Retail Outlet of the bank. And i want to tell you, i am thoroughly impressed that you handle 10,000, 10,000 complaints a week. In the note we reviewed seven or 45400 complaints just to make sure the company should make referrals to our responding effectively really responding to the complaint. So thank you for that. I would hope all of her agencies that responsive to complaints against them as quickly as you do so thank you for that. Youre at work first report the representation does fall short cfp beat workforce is only 7 latino converted 13 of unites it senses employees make up the lowest percentage of new hires 3. 6 compared to the other groups. Can you tell me what you will be doing as a number of things in motion we are attracting at all levels. The latino players of the highest levels as well. Plexus customer further and do so but i want to discuss everybody has an opportunity to work for us. More connection to the people we serve. Group in this country certainly have a big market in terms of the growth as consumers. So think about. Make sure you are committed for this problem. Lets turn now to the Small Businesses but thats another area latinos of the highest growth area. Issues with their lending rules, rule on lending . Which part of the reason we implemented is to make sure you are right there so many immigrant minorities and others to start businesses, franchises and others has been critically helpful paycheck protection are we doing on the line which barrier issues . Works here making progress. Thank you pretty yelled back. Recognized mr. Timmons for five minutes. Critics point to get back to the data breach. Describe how to find out about the breach . Another employee identified another indicator. Brought them together. The manager caught is that correct . Its originally going to anything related to the investigation. But it was another manager regards helen since the manager is pushing that to do it involved about exposure, helen dictate . We found some documents that did have consumer names. No information. Was at 24 hours . Seventytwo hours . Or two months . We deny the Contact Information regards to the personal identified but you did not Contact Information . We had very few progress you did not notify the Companies Like you probably should have . So it gives you partnered with the companies. Quick counters he can partner with them . Looks like a look at the time line but assumed request within 72 hours . The answer is no it was not 72 hours progress we tried our best to identify where we had. [inaudible] for. It was not 72 wsrc again you are responsible for enforcing Cyber Security breaches frequency are not actually. Its we do import breach notification requests correct. When you find companies for violent best practices as companies are considered to be an egregious breach did not notify the consumer. Im happy to followup. Of a Company Breach they do not notify anybody within 72 hours you are not going to consider that in aggregate factor in whether to find them and how much . Xo generally speaking rules coverage Financial Institution breaches is enforced by other agencies. [inaudible] for. Allow the judgment answer the question. Arctic you answer the question. So i find it an egregious breach of best cybersecurity practices to have this Information Available to this individual in a way that it is. Do you believe in retrospect the information have been silent we are look at making sure prickly rdf systems in place so theres not the ability to transfer that. The issue can sometimes be is when there is a communication with the entity. Sometimes that is ingested for. How many people have been fired because of the data breach question Excellent Development pause for a moment we fix the clock . Looks to know how much time . The gentleman can continue. Circuit thank you. Exit is really concerning this color above this theoretical authority to force these businesses to give her this information. To protect it. It has been breach they have no recourse. Not going to get a settlement for the not going to get many of number of instances through the data are most about Unemployment Insurance claims the vitamin damage for theres no recourse but Supreme Court decision. What we could tell the individual that has been damaged by the cfpbs incompetence as it relates to Cyber Security breach the recourse . A very serious issue. For consumers we are working with the Financial Institution pursuant to make them pay . Allow the gentleman to answer a question. But the judgments time for. Were not going to write a check to make these people whole . We are work with the institutions. We take your point the Data Collected must be protected. We cant go into details. I replied my time is that the best way to do it . Directorate you are required to appear before this committee. Twice a year. See you again in six months. There may very well be your last appearance before committing. Please do the least amount of damage as possible between now and then for the American People would really appreciate it. Consumer protection financial bureau. You cause damage they will never be made whole foods without manager i yield back. The gentleman from illinois is now recognized for five minutes. Thanks for coming in today. This is not to todays hearing. Whole subcommittee on crypto currencies and onto bills we are discussing. I do make it we did catch my eye issued 22 complaint bullets are looking at complaints related to Digital Assets for the got this quote right lethargic out fraud, scams were significant prominent crypto asset markets it appeared to be getting worse. That was a year ago. Do you care to elaborate . Rented another look at the data set again. I guess i would say fraudsters are trying to use methods of payment that are hard to track. As a common one before. There are other ways more in the Digital World we are seeing Crypto Assets in some ways might tell an elderly person go by this and transferred to me. It can be faster it can be bigger amounts of money. But how we can stop and protect those individuals who have been defrauded in the world and Identity Verification challenge. The fraud against Older Americans has been a pernicious. Of the platforms working with you . The partners in this . Theres not much effort on it. Is the way i understand and i can ask our stafford i understand is been transferred outside of those platforms. Thats not meant a place we have engaged in. Clicking it to be constructive or not. Other consumers are being targeted. Her other consumer groups you can watch . Works disproportionately there are older. When voices can be cloned there lots of ways to impersonate now certainly a romance scam of elderly and others are targeted. Certain widows and widowers are more likely to be peacocks and reminded the predecessor sent here to acknowledge an obligation primary to look the interest of consumers. I am grateful. How much bureau has saved consumer since its inception . In terms of the reforms the others the ability to get a competitive mortgage is totally different now. Weve stopped certain actors from engaging in systemwide harm. We do not have a dollar figure we tell stories we hear stories folks who are not as proficient working through the other particular classes of consumers. They depend on the work you do question request its funny the other weekend i was in virginia someone in the group have mentioned. Do you hear from us people who were ashamed and got over 10,000 dollars. Some people had gotten their home saved. It is not just the financial peace at the huge meta dignity for them. Demo time has expired. Mr. Norman is now directing us for five minutes. Chris thank you for coming director. While the businesses who have been subject to its it is hard to find it was honors. You have the actions did not result in enforcement action . The firm sent to bear to produce the information . You raise a good point which is what is the way in an investigation get the information to ascertain. Without it taking costlier franklin taking a lot of time. We reclaim my time. Prior to that required to provide the company with evidence is been a violation of the law. The statute and may be compared to other cid authorities were hired i believe to state a notification to give a sense of what we are looking for. Text you cite the law . In the notification we will sometime be able to describe particular type of violation. Parts all the time or sometime . I would need to check. But sleep practices is basically silence. The medical debt. And if it differs from other debt. Also the collection of medical debt unpaid medical debt. What gives cfp authority to encourage to report inaccurate information our precious accuracy. Fair Credit Reporting act requires there is a provision related to health as wellin there. You are not altering. It is not have efforts to rewrite portions of the fair Credit Reporting act. When it comes to accuracy of furnishing on Credit Report thats incredibly important responsibility to the states and others. Then with the Credit Report being away they already paid or did not own the first place. Eccentrically write that. We cannot rewrite statutes or try to administer fair Credit Reporting act. There are real problems the junk fees and the credit card late fees and your rulemaking pretty say its not a cat. The persons need to show their work. To approve the fees that could charge. But we have done put in the proposals and the same thing exists currently the feds rule promulgated over a decade ago. With the immunity provisions without any work at all. Based on what it is through. Race as defined by who . Could be through case law. To provide clarity and predictability for businesses. To spell out how they can make sure they can comply with that. When Congress Passes laws with reasonable house going to be interpreted. Eyes of the beholder. The criticism of cfpb it is the fact people getting hit with suits the cids they do not understand. The people are expected without creating their obligation. Countries of Small Businesses are under stress now. The judge one from massachusetts ms. Presley is her five minutes. You good Critical Role you play in protecting consumers. In holding that bad actors accountable grateful to you and your dedicated hundred plus employees. Elder abuse awareness day. Try to protect them from elder abuse. The thank you for all the cfp deed does specifically around biden, fraud, exploitation and abuse. Thank you for all that you do for our most vulnerable. Recent near times review of hundreds of federal lawsuits against companies highlighted how pattern inaccuracies in these reports across the u. S. What problems of quality portable housing . When someone is matched with the wrong reports, it is almost like they have been given a different identity. I can be relied on from accessing rental housing. They were accurate we have found congresswoman people with common surnames are more likely to be victims of this. We have to make sure the laws being followed. Thank you clearly a lack of regulation in the screening industries is an accurate reports of false information. Particular peoples current backgrounds. How did they use them to deny housing for people with a record. 78 Million People in the u. S. One in three adults have a criminal record which means the impact of this discrimination is severe and widespread formerly incarcerated people are 10 times more likely to be homeless and the general public. This is not a coincidence that the policy choice one consequences. Issue denying houses after they complete their sentences a problem he heard about . It has. That is a place for the department of housing and urban housing. Do not have stable housing start to Access Healthcare pursue education additionally a lack of stable housing can crimes of necessity to meet basic needs. Cycles repeat. That is why do they purchase the house number formally after the housing act. What information reporting to criminal background show. Tenant screening report access to Affordable Housing but the pipeline return home and not access i look forward to working with you on that. Theres so much at stake to make sure people who have served consistently reenter. But think of you do day in and day out. I give your express partnership. I wasnt in the human right. We denied stable housing to be with criminal records we wrongfully punish them theyve already completed their sentences. It is essential thank you. And i yelled. A gentle lady yields. I think my colleague previously about people serve their sentences condemn the time for their crime. It was not the question is planning to lead with but is a good segue sent the letter in the in a proper sugar response irresponsibly dealt with we dont want be falsely denied what accuracy big. With landlords. When they are fully accurate it has a very different benefits. There are ways in which people get information about attendant. I will tell you the accuracy standards in it on the screening industry to follow them. Should be accurate. The quest for accuracy is using the law to prevent people from doing screenings in the first place. Jan prior to coming to congress. The Second Chance program once you served your sentencing to be fully integrated into society. Otherwise he got the sentencing wrong. The whole point of acerbic trust. No one was honest about the background and checked it. Should be important. Probably you are more aligned on. You talk about data brokers. You look at Common Concerns that we have that have been bipartisan about privacy have been stolen, hacked, sold otherwise exploited. As encourage a mark 15th l personal consumer information. Could you gives an overview of what youre seeing so far in regard to rutgers industry and how they collect and use personal consumer data . In the 1960s a different name was concerns. One of these firms creating dossiers about us. Fair Credit Reporting act focuses a lot on the three big Credit Bureaus. There are more and more companies that are assembling this information. An especially collecting it digitally. They are selling is being used for all sorts of purposes including employment assurances. What are the new Business Models we are using . We do know there are a lot more of them and many of them maybe doing things that are covered by the fair Credit Reporting act. I hope this Committee Thanks about privacy, data brokers, altogether. Its what we did 50 years ago was important. Its a definite urgent need for legislation for the fourth amended protection privacy is probably the most abusive current portion of the bill of rights. Not that there are not other portions under stress. Spent exploring excessive control or monopolization by handful of firms. Over the last several years a consortium of the finest institutions in the u. S. Sought to exert governance over data ecosystem. Sometimes serving as mandating intermediaries here too. Consumer transactions. Thus decreasing competition and Consumer Choice in the marketplace. The goal in front of the ability the privacy of their own financial data. I implement the statute. I hope we want to propose theres going to be some restrictions on secondary uses. So if you are moving your data to someone, they should only be using it for the purposes that are permitted. Weve got to figure out how to enforce this properly. This also got to think about how an intermediary doesnt take the data, send the data but the music themselves. Its not going to be totally easy but i think we have a framework that will get support. The Data Protection element of this is huge. Text the enforcement mechanism is really the challenge. Is the data act individual data. It will continue to work at the privacy ideal for. Time has expired. We will now ask thank you for being here. Your agency or organizations only financial regulator focus on Consumer Protection, correct . What were called mrs. Not just mortgage fraud in so many other things is that correct . Which is a Global Financial crisis caused by that. That is right a red summer cfpb enjoys overwhelming bipartisan support outside of congress. Something like 75 of republicans actually support the work for Consumer Financial protection bureau. About 17 billion for over 200 million consumers. Im not surprised. I want to look it up i know i referred constituents to the bureau. We read those these small print things i get sent out. Our residents do not know what their rights are. I want to talk about the Credit Card Fees. Ever since you told me what you are doing on that i have been bragging about it. I think it is so important to show the federal governments got your back. This agency we are independently finding that specifically working on this. I thank you all the ends of dollars each year. I read something around roughly 12 billion annually. Thats right for. Director, when i read that what is it like some credit card as part of their Business Plan 40 of their profits you got to correct me. Late fees. They have built a profit although generating prophet to talk about that . Click to think what congress wanted in passing that law is to some commonsense safeguards. They can charge interest, can charge fees and make a profit. Designed to build the business on penalties should want their customers to pay on time. Someone does not pay on time. Yes theyd missed it by a day. Ive got them. Something balanced and reasonable. I looked it does impact some of our working poor communities regarding the late fees. Also been incredibly thankful and again the bureau did not have to do this. Early triggered the Credit Reporting agency on the three major ones to do something. The fact to all did this study that basically said this is the impact of having a medical debt on Peoples Consumer report. Its pretty drastic. I think we saw Something Like 88 billion in medical debt are credit records and affects housing, employment, you name it. Semi things including Auto Insurance rates. Talk about that study . I think days after you all released the study what happened . Shortly after the three Credit Reporting conglomerates agreed to drastically what is showing up. They also delayed when it would show up. Because often the consumer is debating and dealing between the insurance company, the provider, the facility. They can pay something they dont know. Eckersley students across the board. This other types of bills that show up the thing i report. Something around the next decade or so 2005 until now an increase in medical debt. Because basically people are being all this stuff is happening. Do you support prohibiting and banning medical debt . It will be proposing summer safeguards on it. Ill defined. You can sharpen other types of debt. But work on the specifics. A shock to know the va, our va since medical data from our veterans to Credit Reporting agencies for. They have radically made some changes for. Very, very disturbing thank you a yield. Next next little gentleman from wisconsin for five minutes for. Thank you very much mr. Chairman thank you for being here director chopra. I want to dive right in. As you know designation is a Serious Authority that carries with it significant regulatory supervisory burdens. Underscore the importance of analytical rigor into processes part of the designation decision. In your statement accompanying will change its approach to a designation the following quote in 2019 effectively repealed the ability to designate systemically important nonbank Financial Institutions by adding an array of dubious process structures. In your view, do these structures include costbenefit analysis . Works well, let me just say the guidance is up for comment right now. Of course this should be a fair process. I appreciate that. And added an array of dubious process structures. Im trying to get understanding that it include the cost benefit analysis . Whats i was not referring to that. Set up a number of additional hopes. But costbenefit analysis the dubious process analysis. I was referring to the stages that which each level of review. The Cost Component of the regulatory oversight. Speak a lot about junk fees theres been a lot of discussion today about that. Your efforts to extend reach into every americans lives using what i believe a very vague term. It is still not clear to me what you are meaning when you use the term junk fee. Its based on previous explanations sometimes it charges its own citizens junk fees. The proposed restrictions on late fees. I know he likes paint late fees or do not people get into financial distress. The question is to acknowledge his potential tradeoffs associated with cap a late fees . The 8dollar proposal is not a cap on late fees. That is the immunity provision. So companies to charge 8 or less do not have to worry pickwick you are creating a safe harbor 8 or less under that proposal . Exactly. If you are under age safe harbor if you are not on the eight we can explain what we should be prepared to calculate so we get Certain Congress prohibited unreasonable disproportionate penalty fees. We are trying to provide clarity its clear the rule we inherited was way overdue for review. There was so much Technological Progress in changes in the credit card market. Understood. Neglect my original question on this topic. Do you believe there is potential tradeoffs in setting cap . I think will happen will start seeing things rather than a Business Model built on penalties they will compete just like other banks in small banks to offer credit cards which is upfront on annual fee on Interest Rates and others. I think the competitive process will work better. Consumers are smart and more likely to switch it will be healthier overall. You do not think pure Economic Analysis on this for you do not think youre going to lead to more expensive credit . Depends on factors you will see consumer switch based on that. It really depends on the model but we are looking at all the comments we will look at it very carefully and analyze it for. My final 15 seconds ive asked you this before has radically Oversight Authority over Insurance Products or Insurance Companies because we do not regulate the business of insurance for. Thank you very much mr. Curiel back. Consumer time is expired or to the gentleman from north carolina. Thanks so much for being here. I know with five minutes for questions its tough to get everything out in the time you have. I have a few remarks but i want to give you a minute to think about fsa a few things adhered to jump in supplements of the comments youve made him happy to give you some time. Want to start out by saying i was proud to sign onto the brief led by Ranking Members waters supporting but the Supreme Court. We have been attack you today i just want to thank you for all the work youre doing to protect consumers. Do you want to take any time to talk about, need a little more time . Whats i know we talked about the work we have been doing. I also want to make sure were thinking about the future two. We are seeing very big players especially Tech Companies cap in producing the future of money look different, Digital Payments Artificial Intelligence, it is so important think about tomorrow and make sure we do not have prompt in the future that we can address today pickwick thanks so much. Thirteen congressional districts i represent for 10,000 veterans in my district. I want to thank you again for cfpb is doing protect Service Members and veterans. I think its our duty to support and care for the men and women who have served our country. We owe them a debt of gratitude we have to ensure that access to the resources and support they need to late filling and healthy lives after their service print june 2022 cfpb issued a report highlighting complaints by Service Members and veterans about problems with coercive Credit Reporting false medical bill collections. I am very concerned veterans, Service Members that i represent have a tough time navigating the credit recording system. There the melters been injured hospitalized nothing it is not right for medical bills to affect the credit ratings. What transit they and their port how what reliefs or remedies would you recommend support veterans . Credit reporting and let me just share we do see differences between active duty Service Members and their families. Guarded reserve versus veterans each has unique issues. South activeduty the implications in prompt of the Credit Report are very rarely can harm their career. Many of them are subject to pcs orders have to move frequently. That makes it really challenging to make sure they do not suffer problems with the need to move or sell their home. With the veterans va mortgages other va benefits we always want to make sure they dont become a haven for abusing people. We have done a lot of work on Service Members relief act which has a 6 cap on preservice applications. Guard and reserve families are not always taking advantage of it and may not be Financial Institutions with what them to work to honor those. Thanks. Also very concerned about the rise in abusive Debt Collection practices including those that target low income seniors such as zombie mortgage debts, mortgages consumer thoughts were forgiven or satisfied long ago but still exist. I was pleased to see they field hearing on the issue in april. Can you tell us what you learned at the hearing and more about the work in this area to protect homeowners targeted by this unfair collection practices . We heard from a lot of experts but including one homeowner who testified and talked about how they got a mortgage one of the 80 20 piggyback mortgages before the financial crisis. She got it modified and the second mortgage was satisfied but then fast forward, no communication i played for over a decade announcing threatened with foreclosure. I think the second mortgages many people were satisfied are now coming back. We have tried and issued guidance to make very clear when there is debt there is certain responsibilities. We do not want to see this unlawful Debt Collection behavior especially targeting those whose wealth is most of their home equity. Thanks so much neil. Are judgment yields back the gentleman from wisconsin mr. Fitzgerald is not wrecking us for five minutes for. Director thank you for being here today. I wanted to go into different topics. The first being something started talked about at nausea but the credit card late fees. Specifically because corporations the district Kohls Department stores by the best example. I am worried the rule could have negative impact because i do not know what the differentiation is there between bankcards and what you might see with retail. Im wondering if you guys looked at from that perspective. Its a great question. Store credit card youre right the market is a little bit different than the generally available bankcards. They do work with the Financial Institution to issue it to provide the statements in the underwriting for a Department Store like kohls will probably work with them. There is different loan characteristics of it. We certainly try to look hard at those differences when shaping. At the end of the day a reasonable late fee and making sure there is incentives for consumers to pay i think will be good. I will also tell you for those retailers, they incur some real damage sometimes when their customers are not being treated fairly. By the Financial Institution partners. Im hoping the retailers themselves but also see benefit from it for. Thank you for that. Not sure other members had tests on this i think for some members of the committee may be to have the answers they want. But regarding the failure that whole weekend that happened we are 100 days out now. The fdic, the fed, treasury i do not think we have the answers we need from them. What was your role up maybe it was ad hoc and developing as a week and played on. Certainly as a board of their five members of the board that had to steward the Deposit Insurance Fund and take those emergency actions. We are often meeting late contending votes in the middle of the night is a very fastmoving situation. These entities i am familiar with they are also large banks object oversight. We had real issues the decision to ensure uninsured depositors on an emergency basis was a very, very serious one. Do you think it created some stability in the system. But we need to make sure we are ready for future runs like this. And that the system is resilient and properly capitalized report specifically what is your memory about what happened on march 12 that meeting . What happened during that meeting . Was that on the sunday maybe . We were all working roundtheclock. We were regularly in touch with the fdic, the fed with the treasury because those Emergency Powers required the consent of the secretary. Any time theres Major Movement like this obviously theres worries about credit squeeze as well we did Exchange Information about the latest intel that we had. Do not know the specifics of it. But certainly we like to share information for. Do you feel that decisions were made and there was already movement trying to sell or save the banks at that point by the time the meeting happened . I do not member when the meeting was. But certainly the failure Silicon Valley bank happened around 11 00 a. M. On friday. It did not even make it to the end of the day. Signature bank barely made it through and ended up failing on sunday. It is not like a normal bank failure where theres clear awareness wellin advance in the entities could prepare for the resolution in the same fashion and find buyers. The First Republic resolution was quite different. The closure and sale happened over the same weekend but the speed at which sbb occurred was lightning fast. We did not get a valid bid submitted that we can. But over time after the emergency actions we were able to pick. Some going to ask a huge question it may be difficult answered cap a minute. What is your opinion now and where we are at . Not related just to banks but all Financial Institutions is the market stable . And are regional banks in good position . What we have seen his deposit outflows have really stabilized. We are not seeing broad movement. We did see a big hunk of deposits into money markets. Xm happy to talk to you further. Thank you progressive gentleman from new jersey is now recognized for five minutes. But thank you director and thank you gentlemen. Director proves to shut my concern cfpb Consumer Complaint database maybe breeding ground for consumer misinformation. Keeping Small Business can file false complaints against competitors 2021 reported receiving at 1. 3 million complaints. I understand companies have an opportunity to respond to a plaintiff thought up in the database but is there a vetting process in place of the bureau to weed out false complaints submitted to the website so Small Businesses not playing defense for this competitors were trying to get them . Gasper. Can you talk more about that . Erased in a previous hearing and getting back to the staff to make sure i fully understood. When a company is enrolled in the complaint database, when the complaint is received they are actually able to determine is this even our customer or not . That is a key check to make sure there is not any kind of false identification. In some cases more information is needed. After you race today also looked if there any other indicia of this happening we did not see any but we are always looking to make sure that this process regrets before its posted they can stop it from being posted . It is only posted under circumspect consensus. I believe one of the circumstances is actually the customer . X before it even posted you go back to the business and say is this a customer of yours . The way it works is the consumer files it, and almost immediately goes to the entity enrolled in our portal. They are able to respond. I does not show up in the database until well after there is a bunch of checks to limit that the. If its a competitor not a customer they can stop it from being posted . Whats i dont think it would even show up because is not a customer quickset is good to hear. Next i will verify progress up the follow up with you and that that be great. Cfpb officer members of her son note to families of her Community Financial challenges and make sure to make the best Financial Decisions but lester reported members of the reserve and National Guard are paying an extraordinary Million Dollars in interest every year. Not provided the rights under the Service Members civil relief act. Interest rate reductions on loans from active duty. As published December Lester can you tell me little bit of what steps you take them to inform Service Members and Financial Institutions the benefits provided scr a customer concern ensure the report with the Financial Institutions it is tricky for many people may not know the guard and reserve when activated they get the benefits afforded to active duty. There is a database the department of defense makes available. We have shared information about how Financial Institutions can use that. Some cases many of them are automatically giving those benefits at the huge benefit especially for an individual who has been activated. They want to minimize the bureaucracy they have to go through. Of course thank you. He stripped Supreme Court expected to run the constitutionality of the pending mechanisms in the coming months and plays Important Role of protecting consumers from illegal activities the marketplace it is vital we be prepared for all potential decisions of the corporate Supreme Court rules against the bureau or the impact be for consumers and you think its Important Congress acted now to be prepared to properly address potentially unfavorable outcome . There would certainly be and we have heard from many corners of the industry as well if there is a decision through uncertainty into many industry players rely on certainty afforded by especially our mortgage rules we do not want to see disruption in our Mortgage Markets. Especially in the environment that we are in. Im happy to talk to further about it but the solicitor general has filed a brief with the Supreme Court and laid out the argument. You think when you start to congressional action to be prepared is the mechanisms change . I will take that back im happy to take a question for the record. But really we are focused on the litigation. Ask a child to find that suddenly the court rules with the scramble we dont always move very fast here. I have heard stories about Consumer Financial Services Offered by pegylated scammers some of them operate online, offshore, and beyond the reach of state and federal regulators for dissing your place appropriate and unrelated Financial Service operators and he knew give examples of the steps are taken last two seconds . Or some of the key things outside of the insured bank and Credit Union System it is our job to protect against those entities that violate the law. Were devoting a lot of energy using Authorities Congress has given us to supervise some of them. When it comes to offshore and is a very challenging problem. Especially using Digital Technology preclude demo time is expired. The gentleman from new york is now recognized for five minutes. But thank you madam chair and director for coming. Wanted clarification talked little bit about Small Business Data Collection role. I have heard the private sector the Small Business lending Data Collection role would impose 81 requirements anyone new data fields. Missive 15 20 as possible. Parts is a little bit of apples and oranges between data points. I believe theres about 20 data points. The field is little bit different issue is how the input regrets could 81 that appealed to be correct . It is in the way in which it said but its not the point of the statute. 81 new data fields. Along with a timeframe of 18 months for some companies, 36 months for others. I have heard from industry that 18 months with the collection of data get everything ready with its lenders, 18 months is not be too short of a time. And just because i do not see what 18 months other companies are getting 36 months. Are you concerned 18 months could set some is lenders up for failure . And why not just you everybody for 36 . The reason why is he wanted to look at how Smaller Banks, local banks have different issues they have to deal with when implementing some of this. So we focus the 18 months on the largest lenders who have very large and often are big institutions. That is part of the reason we have this phase and implementation regrets the reasons rooting for small banks are for small lenders and hearing from the bigger lenders that 18 months is not in the time to get this done. You considering delaying the 18 month timeframe . Not at this point. We are working to be sure the system is well prepared for it. I will save many of these are quite large entities and have told us to put in a lot of preparation but im happy to hear more from those about any challenges we have set up a group that is working with them on implementation. And again the recently phase it in there will be learnings from the first phase that will help us make sure a much larger group reports. Understand. I know there has been talk already about the data breach. What is cfpb doing to protect from future data breaches . Insider threats or something were going to be putting a lot of effort and were also putting Technological Solutions in place. This is a very serious incident. We want to make sure not just our systems are being safeguarded from being penetrated by outsiders but even insiders have limited access and are not having to transfer things outside of the systems that are most secure. We are working with the established guidance on making sure we mitigate and take steps theres a lot of changes that are already in process. Certainly it serious triplex how many cybersecurity employees you have cybersecurity . Is pretty substantial. I do not have the exact number but within our Technology Innovation group, not going to chief privacy officer of Information Security professionals we get outside support, outside auditors to work with ig as well. One last question is the major cyber incident occurs federal agency theyre required to notify. Do you know if and when cfpb notified about the breach . Was certainly notified and believably notify dhs. I have to look at the time line. You did notify them . Week notify everyone in the guidance. They believe they are listed explicitly. Its okay. Unfortunately cfpb is disband the office of innovation and very few to work to gain clarity. Announcements coming from the bureau. The district is home afforded by the average cost of mortgage has doubled from 5000 to over 10,000 same period of time. What exactly is a beer during to try to lower the cost . Her so much we are doing. We have put out and gotten information about how we can streamline. The two gentlemens time has expired. Now i would like to recognize a gentlewoman from colorado ms. Patterson. Thank you madam chairwoman. Thank you director for being with us today. This difficult committee did a great job. Thank you for the work youve done every dan beat abdicated on behalf of our constituents making sure some of the most vulnerable are not being taken advantage of and that they have a voice in the backstop. I really enjoyed meeting with you in my office to talk about the specific services that you are able to provide. So many of these tools many people do not even know they exist. They do not know what is available. I want to give you some time to kind of highlight the programs and opportunities constituents have. What we should tell our constituents to make sure they know the services that you provide. The focus will be can provide so much individual help is our Consumer Complaint line. Established into law. We are doing as it said 10,000 a week. We hope even if you do not know the name in the individual agency that you know there is a place you can go if you are having trouble with Consumer Financial product or service you can file a complaint it will not go into a black hole. It will actually invoke it most cases believe transfer to the institution. It is such a way we have been able to get people help. But also for the Financial Institutions to know the challenges that are being experience that they can make tweaks to their processes. An mitigate harm going. I urge you all to get the word out. We plan on doing that with some of our constituents outreach so thank you for highlighting that. One of the concerns we have heard that has come up with limiting the junk fees. Talk to thank you for taking this on a recognize you do not have the authority to hundreds prisons. Within the combat is i guess you could say what can you address in this area on what youre doing to make sure thats not the case weve seen a lot of Good Movement and competition to offer lower no fee products with no surprises to really anybody. We dont necessarily need to go through a bunch of hoops. It really is one of the benefits of competition and we see so many institutions offering these products. I believe maybe hundreds of banks with no fee accounts is a big benefit to those who live paycheck to paycheck. Another thing we can highlight for our constituents. There were a lot of questions asked of you with limited time to respond. Issues you can address on the issues that have been raised on questions but my colleague has. There was a question i didnt get to fully answer about the Financial Stability oversight council. There were elements of the guidance from 2019 not related to the law at all. It indicated that there were certain procedural hurdles course you have to carefully consider what congress wanted and obviously we do not want their being the nonbank institutions because of collective calamity for the rest of the market. I also will say again theres been a lot of talk about our motives. Our motives are to carry out and fulfill the objectives you have specified in the law and i take great pride in the work of all the Public Service is here that have helped so many people. I also want to thank your team for doing theirwork. I know they have a difficult job. It couldnt be more obvious with the hearing today so thank you for what youre doing everyday and with that i will yield back. The lady is back and i now recognize myself for five minutes. To mister chopra i am disappointed your written testimony did not mention Financial Literacy or education as one of your priorities. Consider education as one of six primary functions of the bureau, its essential for Consumer Protection and i serve as cochair of the Financial Literacy and Wealth Creation caucus. So i would like to urge you to make use of the Public Private partnerships to enhance potential literacy. According to the civil energy fund and our reportpublished in november 2022 , the total on the allocated balance was more than 481 million. In recent reinforcement actions may have increased the funds unallocated balance to exceed 2 billion. How come you havent used the funds for its intended purpose to enhance Financial Literacy says utah office as director. The Financial Education is a real cornerstone of what were doing in the workforce, thats part of our testimony. Im glad we agree. On civil penalty funds, civil penalty funds serve two purposes. They address and Financial Education. Financial literacy programs. We actually expanded resources on Financial Literacy through our general funds which cannot be used for drastic but we also want to make sure those funds expended are smart that theyre not wasted. That their effective. Im glad to hear that and i want to go the urgency of my colleague across the island mister scott to use a plan for its intended purposes and i asked that focusing on blog posts and press releases you have other tools in your toolbox like that fund to prevent fraud and scams the less please use more of that. Now, are you concerned that the amount of Credit Card Debt by held by americans. I dont say i dont tend to think about the overall amount but it certainly has accelerated. Im moreworried about delinquency , cost and having a competitive cost. I would like to address that issue. In the Credit Card Fee proposal you cite the research that wascoauthored by two former bureau economists and use the bureaus on data. The studies state when the credit card late fee decreases the incentivizes higher usage and greater likelihood of paying late is that right . I dont know the specific study youre referring to but if youre saying theres fees they have some. Thats the study that is based pure reviews at the academic publication. I apologize, i dont have all the facts from that individual study cited but of course. The bureau disregarded that use research and instead you conducted your own analysis. That analysis wasnt purely published in the journal. Thats our understanding. We certainly look at a lot of data sources and study Consumer Credit. I know im happy to take questions for the record on that specifically. Your Credit Card Fee proposal will not reduce prices for consumers. Instead the reduction in fees will relead to higher debt with these individuals. So that crp be acknowledged in the Credit Card Fee proposal that customers would never pay fees late which is about 74 percent of all americans with credit cards will not benefit from the reduced fees and could face higher maintenance fees or higher Interest Payment accounts. I wanted to point that out to you and i want to move on to the next matter. I agree with you, the open banking has the potential of unleashing innovation and more options for customers. But consumers. But cfpb recently issued a request for information soliciting Public Feedback about data open markets. It uses the definition of data broker that essentially covers every consumer hd business in existence. Funds that collect every day sale resale license or otherwise show consumers personal information with other parties but do you believe that Small Businesses of Southern California like hair salons, flower shops should be subject to Bureaucratic Authority since they collect sometimes information from consumers. I think the purpose is about companies assembling fees just like other background reading companies. Other Tech Companies and others so were actually soliciting input. Were trying to make sure we get the right type of input. Your time has expired. Before i ask the next person to ask questions id like to enter into the record the Washington Post fact checker that was dated june 12 2023 without objection. Now i would like to recognize the gentleman from misery mister clifford for five minutes. Thank you madam chair. Thank you for being here mister director. I personally appreciate your availability to all of us. In my real life im a pastor and i do deal with people mainly when they are in trouble. Rarely does someone come by and say the world is great and everything is really nice in my life. And one of the things that people have as a major problem more than anything else are their finances. And there are those who have sought to take advantage of people. In fact they are generally targeted by the socalled Credit Repair Companies organizations which those are, they are so fraudulent that they make bernie made off seem like the dalai lama. And they are specializing in making people who are hurting her more. They are inputting atm machines and we are being victimized when i say we, americans are being victimized by other americans running these fraudulent organizations. Promising to fix bad credit. When in reality theyre going to fix you coming in there and so im thinking right now something more needs to be done im not sure exactly what we can do to stop the financially distressed consumers from being hurt worse but many of those consumers as i mentioned earlier are targeted and theyre trying to get their Financial Lives on track. What is the bureau doing and are you getting a large number of complaints about these Credit Repair Companies who are from my perspective committing thievery. I dont have the exact numbers but certainly people trying to repair their credit , many of them have been targeted. And those who are fraudsters or scammers, theres been a number of Enforcement Actions. I definitely welcome any input on how we can more holistic we deal with this because sometimes going after one by one well after theyve run off with the money wont fix the problem. I think accuracy and Credit Reports and figuring out how people can rebuild without is easily important but we want there to be honesty and compliance with the law. I dont think its something you or your agency can repair alone. There needs to be something that we can do. You know, with this cfpb and local organizations, maybe ministers. Because you know, they hear these on the radio. Theyre not much on 2d anymore. Theiradvertising on the radio. Im hoping we can maybe Work Together on something but i dont want the bureaus sued but im wondering can we do Public Service announcements . Can the agency talking about the mortgage thievery thats going on and of course these credit repair organizations. Can the agency get involved in trying to get public. Actually even the financial industry has helped with warning about some of these things. We try our best to help people understand and give them objective information. What should you do when you have a potential issue like this. It can be hard to get out the words sometimes because people can be microtargeted very specifically but theres certainly more we need to do to make sure people are protected. I may have some ideas ill share with you. Thank you very much. I yield back madam speaker. We will now take a five minu