[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]






 
                   FAKE IT TILL THEY MAKE IT: HOW BAD

                 ACTORS USE ASTROTURFING TO MANIPULATE

                 REGULATORS, DISENFRANCHISE CONSUMERS,

                   AND SUBVERT THE RULEMAKING PROCESS

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                           AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 6, 2020

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-84
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                           



                           ______                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
42-808 PDF            WASHINGTON : 2021                           
                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             ANN WAGNER, Missouri
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
DENNY HECK, Washington               TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
BEN McADAMS, Utah                    LANCE GOODEN, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
              Subcommittee on Oversight and Investigations

                        AL GREEN, Texas Chairman

JOYCE BEATTY, Ohio                   ANDY BARR, Kentucky, Ranking 
STEPHEN F. LYNCH, Massachusetts          Member
NYDIA M. VELAZQUEZ, New York         BILL POSEY, Florida
ED PERLMUTTER, Colorado              LEE M. ZELDIN, New York, Vice 
RASHIDA TLAIB, Michigan                  Ranking Member
SEAN CASTEN, Illinois                BARRY LOUDERMILK, Georgia
MADELEINE DEAN, Pennsylvania         WARREN DAVIDSON, Ohio
SYLVIA GARCIA, Texas                 JOHN ROSE, Tennessee
DEAN PHILLIPS, Minnesota             WILLIAM TIMMONS, South Carolina

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    February 6, 2020.............................................     1
Appendix:
    February 6, 2020.............................................    31

                               WITNESSES
                       Thursday, February 6, 2020

Bagdoyan, Seto J., Director, Forensic Audits and Investigative 
  Service, U.S. Government Accountability Office (GAO)...........     6
Balla, Steven, Associate Professor, George Washington University.    11
Gonzalez-Brito, Paulina, Executive Director, California 
  Reinvestment Coalition (CRC)...................................     8
Naylor, Bartlett Collins, Financial Policy Advocate, Public 
  Citizen........................................................     9
Noveck, Beth Simone, Professor and Director, GovLab, Tandon 
  School of Engineering, New York University.....................     4

                                APPENDIX

Prepared statements:
    Bagdoyan, Seto J.............................................    32
    Balla, Steven................................................    50
    Gonzalez-Brito, Paulina......................................    53
    Naylor, Bartlett Collins.....................................   125
    Noveck, Beth Simone..........................................   136


                       FAKE IT TILL THEY MAKE IT:

                    HOW BAD ACTORS USE ASTROTURFING

                       TO MANIPULATE REGULATORS,

                     DISENFRANCHISE CONSUMERS, AND

                     SUBVERT THE RULEMAKING PROCESS

                              ----------                              


                       Thursday, February 6, 2020

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:38 p.m., in 
room 2128, Rayburn House Office Building, Hon. Al Green 
[chairman of the subcommittee] presiding.
    Members present: Representatives Green, Beatty, Perlmutter, 
Tlaib, Garcia of Texas, Phillips; Barr, Posey, Zeldin, 
Loudermilk, Davidson, Rose, and Timmons.
    Also present: Representative Porter.
    Chairman Green. The Oversight and Investigations 
Subcommittee will come to order.
    The title of today's hearing is, ``Fake It Till They Make 
It: How Bad Actors Use Astroturfing to Manipulate Regulators, 
Disenfranchise Consumers, and Subvert the Rulemaking Process.''
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Also, without 
objection, members of the full Financial Services Committee who 
are not members of this subcommittee may participate in today's 
hearing for the purposes of making an opening statement and 
questioning the witnesses.
    The Chair now recognizes himself for 5 minutes for an 
opening statement.
    This hearing will examine a problem referred to as 
astroturfing, which is the practice of creating the false 
appearance of grassroots support for a particular policy or 
position where none exists, often to the benefit of shadowy, 
well-financed interests, and to the detriment of the general 
public. Investigations have revealed that astroturfing is used 
by unidentified entities to sway regulators who rely upon the 
integrity of the public comments they receive in the rulemaking 
process.
    As we sit here today, according to the SEC Chair, Chair 
Clayton, the SEC has launched an investigation of the 
submission of multiple fraudulent comments in a recent 
rulemaking, comments that were expressly relied upon by Chair 
Clayton and the Commission as indicia of broad public support 
in urging the adoption of the rule.
    As today's testimony will highlight, there is also 
troubling evidence of astroturfing at other agencies charged 
with protecting consumers and overseeing financial 
institutions, including the Consumer Financial Protection 
Bureau (CFPB) and the Office of the Comptroller of the Currency 
(OCC).
    We have learned, and we learn every day of new ways that 
the Trump Administration is working across Federal agencies to 
roll back consumer protections, civil rights, fair housing 
protections, access to healthcare for low- and middle-income 
Americans, minorities, LGBTQ+ Americans, and others. We cannot 
allow this ever-expanding injustice to be compounded by 
nefarious actors who would manipulate regulators by fabricating 
comments.
    Today, we are fortunate to have a panel of distinguished 
witnesses who will describe the Federal notice and comment 
framework; the flaws and opacity inherent in the current public 
comment process; the pernicious impacts of these flaws on the 
rules and rule makers; and the potential of such flaws to cast 
doubt upon the legitimacy and integrity of the Federal 
rulemaking process by this Administration.
    At a time when Americans, more than ever, are questioning 
the propriety of actions taken by Federal agencies and our most 
senior government officials, it is especially important that we 
fully understand the scope of this problem, its implications, 
and what we must do to restore trust in the integrity of public 
comments, rulemakings, and our regulators.
    I now recognize the ranking member of the subcommittee, Mr. 
Barr, for a 5-minute opening statement.
    Mr. Barr. Thank you, Mr. Chairman, and thank you to our 
witnesses for appearing today.
    A key tenet of the Administrative Procedure Act's notice 
and comment period is the availability of a forum for citizens 
and interested parties to voice their thoughts, concerns, and 
opinions on proposed rules that will impact them or their 
businesses. As legislators, we provide oversight over the 
regulatory agencies as they implement the laws we write, but 
public input on pending rules is also important to allow 
regulators to hear directly from all interested stakeholders.
    Today, we are examining the impact on rulemaking of so-
called astroturfing or fake grassroots campaigns. Large 
coordinated letter-writing campaigns are not new. They have 
been a key strategy of interest groups across the political 
spectrum for decades. Because letter-writing campaigns and 
grassroots advocacy are commonplace, regulators don't evaluate 
the comments on numbers alone. They have mechanisms in place to 
de-duplicate comments and extract the valuable observations 
from each comment.
    Recently, the Majority sent Comptroller Otting and FDIC 
Chairwoman McWilliams identical letters about the public 
comment period for the proposed Community Reinvestment Act 
(CRA)rulemaking. The letters ask for information about how the 
agencies vet public comments based on a report that an outside 
group may have submitted fishy comments during a completely 
different rulemaking at a completely different agency.
    When Comptroller Otting was before the committee last week, 
I asked him directly if there was any evidence of fabricated 
comments and how, if at all, such comments could affect his 
agency's development of a new rule. He said that this is a non-
issue, that the OCC has a system in place to review comments on 
their substance, and it doesn't evaluate comments based solely 
upon sheer volume.
    Earlier this week, Comptroller Otting responded to 
Chairwoman Waters and echoed these same observations. Does the 
concern over potential astroturfing really warrant this 
hearing? I would submit that the answer is no. The Majority's 
letter and, frankly, this entire hearing are thinly-veiled 
attempts to slow the rulemaking process on a much-needed 
modernization to help our communities simply because the 
Majority doesn't like the regulators writing the rules.
    While not perfect, the FDIC's and the OCC's proposal to 
reform the Community Reinvestment Act regulations makes 
important strides to bring the CRA into the 21st Century 
without compromising the important and original intent of the 
law to serve communities across the country.
    It provides much-needed clarity for regulated entities to 
understand how they will be evaluated and what activities will 
qualify for CRA credit. It appropriately accounts for the 
expansion of online banking and allows for CRA deserts in rural 
or otherwise underserved areas to benefit from investment in 
their communities.
    I am fortunate to have many great community bankers in my 
district in central and eastern Kentucky. I am proud of how 
they partner with their neighbors to drive the local economy. 
They are committed to helping the low- and moderate-income 
borrowers in the areas they serve, and to make investments that 
will benefit their communities at large.
    These are people who go to work every day happy to serve 
their communities. They aren't simply trying to get, ``double 
credit for doing half of their homework,'' as one of the 
witnesses suggested. More clarity on how they are evaluated for 
the CRA and the modernizations under the FDIC and OCC proposal 
could allow them to do even more.
    As we hear from our witnesses today, I would urge my 
colleagues to be cognizant of potential unintended 
consequences. Do we really want to restrict citizens' 
opportunities to weigh in on important regulations? Is it worth 
silencing groups of stakeholders and infringing upon their 
First Amendment rights, their rights to participate in the 
administrative process, just because you don't like the 
regulators who are writing the rules? Public feedback on 
important rulemakings is critical to ensuring regulators get it 
right.
    And should Congress really be in the business of evaluating 
whether or not a particular comment is worthy of inclusion in 
the record, or whether it should be excluded just because we 
don't like the particular regulators at the administrative 
agency?
    The idea behind the notice-and-comment rulemaking is that 
you invite the public to participate. You may not like all of 
the comments that are submitted. You may like some of the 
comments that are submitted. But the whole point is to have an 
inclusive process that allows for public input on the 
rulemaking process.
    Thank you, Mr. Chairman. I look forward to today's hearing, 
and, if I could, I would like to ask unanimous consent in my 
remaining time to insert four items into the record: a response 
from Comptroller Otting to the Chairwoman's January 15, 2020, 
letter regarding the OCC's protocols regarding comments 
received during the rulemaking process; a response from Chair 
McWilliams to the Chairwoman's January 15, 2020, letter 
regarding the FDIC's protocols regarding comments during the 
rulemaking process; and two studies written by Dr. Balla on 
issues pertaining to astroturfing and the public comment 
period.
    Chairman Green. Without objection, it is so ordered.
    Mr. Barr. Thank you, Mr. Chairman.
    And, finally, I ask unanimous consent to insert into the 
record the opening statement of the ranking member of the full 
Financial Services Committee, Mr. McHenry.
    Chairman Green. Without objection, it is so ordered.
    Mr. Barr. Thank you. I yield back.
    Chairman Green. The gentleman yields back.
    I welcome each of the witnesses, and I am pleased to 
introduce the panel.
    We have with us today: Beth Simone Noveck, professor and 
director of GovLab, at the Tandon School of Engineering, at New 
York University; Seto Bagdoyan, director of Forensic Audits and 
Investigative Service at the U.S. Government Accountability 
Office; Paulina Gonzalez-Brito, executive director of the 
California Reinvestment Coalition; Bartlett Naylor, financial 
policy advocate at Public Citizen; and Dr. Steven Balla, 
associate professor at George Washington University.
    Again, welcome, and thank you for being here today. The 
witnesses will be recognized for 5 minutes each to give an oral 
presentation of their testimony. And without objection, the 
witnesses' written statements will be made a part of the 
record. Once the witnesses finish their testimony, each member 
will have 5 minutes to ask questions. On your table, you will 
see three lights: green means go; yellow is the 1-minute 
marker, which means you are running out of time, and you should 
begin concluding your remarks; and red means you are out of 
time.
    With that, Professor Noveck, you are now recognized for 5 
minutes for your opening statement.

   STATEMENT OF BETH SIMONE NOVECK, PROFESSOR AND DIRECTOR, 
   GOVLAB, TANDON SCHOOL OF ENGINEERING, NEW YORK UNIVERSITY

    Ms. Noveck. Thank you, Chairman Green and Ranking Member 
Barr, for the opportunity to participate today.
    To reiterate, my name is Beth Simone Noveck, and I am a 
professor at the Tandon School of Engineering at New York 
University, where I direct The Governance Lab (GovLab), which 
is a nonprofit, nonpartisan research center focusing on the use 
of technology to improve governance and strengthen democracy. 
At The Governance Lab, we conduct original research that I 
include in the project that we have launched today, called 
Crowd Law for Congress, about how legislatures around the world 
are using new technology to enable public engagement in law, 
rule, and policymaking, and to provide training on how we can 
adapt those models in this country.
    I previously served as Deputy Chief Technology Officer in 
the Obama White House, and the Director of Open Government, but 
I was also senior advisor for open government to Prime Minister 
Cameron. However, I am appearing today in my personal capacity, 
based on over 20 years of designing, building, testing, and 
researching civic platforms for citizen engagement in 
democratic participation.
    We are here today because thousands of Federal regulations 
are enacted every year that touch every aspect of our lives, 
and under the Administrative Procedure Act, the public has a 
right to participate. Participation in rulemaking helps us to 
ensure that Federal regulations are based on the best available 
evidence, not just evidence that supports a single position.
    Obtaining information from a wider audience can make it 
possible to understand whether and how a regulation fulfills 
its legislative purpose. However, technology has created 
challenges for public participation. Regulations.gov has made 
commenting easier, but it has also inadvertently opened the 
floodgates, as we have heard, to fake comments, or what I like 
to call ``notice-and-spam.'' But it has also created the 
challenge of voluminous comments, comments that are then hard 
for agencies to read and parse. A key example is the 2017 FCC 
net neutrality rulemaking, which had 22 million comments. A 
second and related problem is that of duplicative comments; 
only 6 percent of the comments filed in that FCC rulemaking 
were actually unique.
    But there are remedies to those challenges. Using 
artificial intelligence (AI), researchers have developed tools 
that can extract meaning and summarize large bodies of text, 
for instance, Google and Microsoft have already built systems 
that can summarize news as well as legislative bills. The 
recently debuted Indian news abrogation app called Inshorts 
automatically creates 60-word summaries of articles also using 
AI. CitizenLab's software for citizen engagement categorizes 
and clusters the text submitted, grouping similar ideas 
together using an approach known as topic modeling.
    To deal with the issue of de-duplication, Dr. Stuart 
Shulman created a tool called DiscoverText in 2007. Although 
funded by the National Science Foundation, that tool is not yet 
in widespread use in government. And, of course, to handle fake 
comments, as we will hear more about today, many people have 
called for using CAPTCHA and reCAPTCHA, which is designed to 
separate the bots from the humans, and the newest version of 
reCAPTCHA does not even require human intervention--no more 
typing of those squiggly words anymore.
    In short, researchers have cracked problems far more 
challenging than making sense of rulemaking data, and what 
Congress needs to mandate the use of better data science tools 
to make it possible for Federal agencies to make effective use 
of public comments, it has to go beyond fixing the problem 
after the fact and reimagine how public participation should 
work.
    In our research, we are tracking over 100 examples of what 
we call CrowdLaw, innovative uses of new technology that foster 
public engagement to improve the quality of lawmaking. And let 
me conclude with three quick examples.
    In 2018, the German government used a free annotation 
platform called Hypothes.is to sort expert feedback on the 
country's artificial intelligence policy, soliciting expertise 
from experts all around the world.
    Committees in the U.K. Parliament create online what they 
call evidence checks and invite members of the public to 
evaluate the evidence upon which a policy is based.
    And just recently, a few weeks ago in December 2019, the 
Brussels Regional Parliament introduced the use of citizen 
juries. Now, every standing committee comprises 15 
parliamentarians and a random sample of 45 citizens who 
deliberate and formulate recommendations together.
    Imagine if we could introduce these innovations here.
    Although their current attention is focused on the problem 
of astroturfing and cherry picking, the current concern for 
regulators and overseers should not just be who signed the 
comment, but should be to take steps to foster new and valuable 
citizen engagement. Failure to redesign public participation 
for the digital age will only put us further behind the growing 
number of advanced nations that use new technology today to tap 
the collective intelligence and know-how of their citizens and 
to improve the effectiveness and the legitimacy of the 
rulemaking process.
    Thank you very much, and I look forward to your questions.
    [The prepared statement of Professor Noveck can be found on 
page 136 of the appendix.]
    Chairman Green. Thank you very much, Professor.
    At this time, the Chair will recognize Mr. Bagdoyan for 5 
minutes for your opening statement, please.

 STATEMENT OF SETO J. BAGDOYAN, DIRECTOR, FORENSIC AUDITS AND 
 INVESTIGATIVE SERVICE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 
                             (GAO)

    Mr. Bagdoyan. Thank you, Mr. Chairman.
    Chairman Green, Ranking Member Barr, and members of the 
subcommittee, I am pleased to appear before you today to 
discuss GAO's June 2019 report on posting practices regarding 
identity information and public comments during proposed 
Federal rulemaking. As part of our overall review, this is the 
first of several planned reports. Extensive data analytics work 
continues on the identity characteristics of all public 
comments submitted over a 5-year period to the 10 selected 
agencies we have reviewed. Additional reports will follow 
beginning later this year.
    Federal agencies publish, on average, about 3,700 proposed 
rules yearly and are generally required to provide interested 
persons an opportunity to comment on these rules. In recent 
years, some high-profile rulemakings have received extremely 
large numbers of public comments. The professor mentioned the 
FCC net neutrality rule, which received 22 million comments, 
raising questions about how agencies manage the identity 
information associated with such comments.
    The Administrative Procedure Act (APA) governs the manner 
in which many Federal agencies develop and issue regulations, 
which includes the public comment process. While the APA does 
not require the disclosure of identifying information from a 
commenter, agencies may choose on their own accounts to collect 
this information.
    Today, I will highlight our report's four principal 
takeaways regarding how the 10 selected agencies handle 
identity information and public comments during proposed 
rulemaking.
    First, regulations.gov and agency-specific comment websites 
collect some identity information such as name, email, or 
address, from commenters who choose to provide it, and also 
accept anonymous comments. In this regard, the APA does not 
require commenters to disclose identity information when 
submitting comments. In addition, agencies have no obligation 
under the APA to verify the identity of commenters should they 
submit such information with their comments.
    Second, 7 of the 10 selected agencies have some internal 
guidance associated with the identity of commenters, but the 
content and level of detail varies, reflecting differences 
among these agencies. The guidance most frequently relates to 
the comment intake or response to comment phases of the overall 
comment process. For example, among agencies of interest to the 
subcommittee, the CFPB and the SEC have guidance for intake, 
and the CFPB has such also for response.
    Third, within the discretion afforded them by the APA, 
selected agencies' treatment of commenters' identity 
information varies, particularly when posting duplicate 
comments, those that are identical or near-identical comment 
text by varied identity information. Generally, agencies told 
us that they: one, post all comments within the comments 
system; or two, maintain some comments outside of the system, 
such as in email file archives. However, within these broad 
categories, posting practices vary considerably, even within 
the same agency or rulemaking docket, and identity information 
is inconsistently presented on public websites.
    For instance, the SEC posts a single example of duplicate 
comments and indicates the total number of comments received, 
whereas the Center for Medicare and Medicaid Services (CMS) 
posts every duplicate comment individually with no indication 
of the total number of duplicates received.
    Fourth, selected agencies do not clearly communicate their 
practices regarding how comments and identity information are 
posted. According to key practices for transparently reporting 
government data, Federal Government websites should disclose 
data sources and limitations to help public users make informed 
decisions about how to utilize the data.
    In our June report, we made eight recommendations to eight 
different agencies in our review, including the SEC and the 
CFPB, to more clearly communicate to the public their policies 
for posting comments and associated identity information to 
regulations.gov and agency-specific comment websites. The 
agencies generally agreed with these recommendations and 
described actions they plan to take to implement them.
    Since then, the SEC has implemented its recommendation in 
September 2019, and the CFPB has reported planned actions to do 
so.
    Chairman Green, this concludes my remarks. I look forward 
to the subcommittee's questions. Thank you.
    [The prepared statement of Mr. Bagdoyan can be found on 
page 32 of the appendix.]
    Chairman Green. Thank you for your testimony.
    Ms. Gonzalez-Brito, you are now recognized for 5 minutes.

   STATEMENT OF PAULINA GONZALEZ-BRITO, EXECUTIVE DIRECTOR, 
            CALIFORNIA REINVESTMENT COALITION (CRC)

    Ms. Gonzalez-Brito. Thank you, Chairman Green, and Ranking 
Member Barr, for the opportunity to testify today, and I thank 
the subcommittee for holding this important hearing. Good 
afternoon.
    The California Reinvestment Coalition is the largest 
Statewide reinvestment coalition in the country. [Speaking 
foreign language.] Because immigrants require it every day and 
contribute to building our nation.
    The Community Reinvestment Act (CRA) is, as Congressman 
Meeks described it, at its core, a civil rights law. The law is 
meant to address discrimination in lending based on race, known 
as redlining, by ensuring that banks meet the credit needs of 
all communities, especially low-income communities and 
communities of color. The significance of the public 
participation process articulated in the law cannot be 
overstated.
    Through public participation, communities help ensure banks 
meet their obligation under the law. In the OneWest-CIT mega 
merger of 2014, CRC, our members in southern California, and 
local community members engaged in the CRA's public process 
with the hope that, through our engagement, we could ensure 
that the soon too-big-to-fail bank would fulfill its CRA 
obligations.
    As community opposition to the merger grew, Comptroller of 
the Currency Joseph Otting, then-CEO of OneWest Bank, took the 
unusual step of soliciting support for the merger from his Wall 
Street contacts and business partners, where there is a clear 
conflict of interest, by asking them to submit a form letter 
posted on the bank's website to the bank's regulators.
    We were later contacted by an individual, who also sent a 
complaint to OneWest regulators, who was upset that an 
unauthorized email was submitted using his name and address in 
support of a bank merger he seemingly had never heard about 
before. The comment letter submitted in the person's name 
appears identical to the form letter on the OneWest website 
that Mr. Otting had sent to his Wall Street friends.
    The complaint confirmed our worst fears. Our research of 
the letters of support that were submitted in favor of the 
OneWest Bank merger uncovered a number of anomalies. Of 593 
petitions in support of the OneWest merger, nearly 100 percent 
have Yahoo email accounts. This oddity heightened our concerns, 
given Yahoo's relatively small share of the email market.
    In addition, if the timestamps on the email are accurate, 
there was an extremely large number of petitions sent to the 
OCC and the Federal Reserve around 2 a.m. on Valentine's Day. 
In a review of 25 of those petitions, nearly half could not be 
verified by the United States Postal Service as legitimate 
addresses.
    Further research found approximately one-third of emails 
sent to the addresses of these supporters of the merger bounced 
back. How many of these so-called supporters of the merger were 
not supporters at all, or were not even real people, for that 
matter? We do not know.
    Mr. Otting led OneWest Bank during this merger, and serious 
questions remain about the integrity of the public comment 
process during its merger with CIT. Despite our calls for an 
investigation, there never was one. But we do know who 
benefited from this fake support: OneWest Bank did.
    The OneWest-CIT mega merger was ultimately approved by the 
bank's regulators, who cited all the letters of support in 
their approval order. Now, Mr. Otting is Comptroller of the 
Currency and charged with the oversight of the public comment 
process during the CRA proposed rulemaking, and we have several 
concerns.
    First, we fear that two core principles of CRA, community 
input and public participation, are in jeopardy under Joseph 
Otting's OCC. Astroturfing and fabricated comment campaigns 
breed distrust in the system and make it less likely or may 
make it less likely that the public would comment in the 
future. As a result, regulators may have less access to 
information from impacted communities about what is happening 
on the ground, far from regulators' offices. Regulators would 
then be left with the one-sided picture provided by financial 
institutions.
    We are particularly concerned, first, that the OCC 
approach, the public comment process, as it currently seeks 
comment on the proposed rule, would, if finalized, 
significantly harm communities and threaten a return to 
redlining practices. And second, the Comptroller's public 
statements demonstrate hostility to anyone with whom he 
disagrees. His quote in The Wall Street Journal demonstrated 
this hostility. He was quoted as saying, ``If you don't like 
this, you are either economically advantaged by the current 
structure, or you don't understand it.''
    We call on the OCC to focus on ensuring a fair process that 
prevents astroturf campaigns from unfairly manipulating the 
result of its current CRA rulemaking process rather than 
maligning opponents of its proposal.
    Lastly, we continue to call for a full accounting and 
investigation into the fabricated comments and astroturf 
campaign during the 2014 OneWest-CIT merger. Until we know who 
is responsible for the fabricated comments supporting the bank 
that Comptroller Joseph Otting led, and what, if anything, was 
done about it, we cannot--and the OCC should not be permitted 
to proceed with finalizing a regulation that would curtail the 
impacts of the CRA.
    Thank you very much.
    [The prepared statement of Ms. Gonzalez-Brito can be found 
on page 53 of the appendix.]
    Chairman Green. Thank you for your testimony.
    Mr. Naylor, you are now recognized for 5 minutes.

    STATEMENT OF BARTLETT COLLINS NAYLOR, FINANCIAL POLICY 
                    ADVOCATE, PUBLIC CITIZEN

    Mr. Naylor. Chairman Green, Ranking Member Barr, members of 
the subcommittee, Public Citizens' 500,000 members and 
supporters are self-selected Americans who practice and engage 
in democracy on a daily basis. We are the members who figure 
prominently in the phone calls to your offices to vote for 
bills that come before this committee or on the House Floor. 
When some of those bills become law, we are the members who 
participate vigorously in the comment process to help the 
regulators implement those.
    Public Citizen members are public citizens. We are 
especially encouraging of engaging in this committee because 
the financial crash demonstrated how much damage can be done by 
flawed financial policy. The positions that our members 
espouse, we think, are widely accepted across the political 
spectrum: safe banking; the ability of investors to exercise 
property rights; and the concept that racist lending has no 
place in America.
    And so, when we see a rulemaking docket filled with 
comments purportedly from the grassroots that celebrate a 
redlining bank or that argue about reducing property rights for 
shareholders, we are suspicious, and when we scratch the 
surface of these grassroots, what we often find is plastic, is 
astroturf.
    Case in point: Shareholders have the ability to bring 
resolutions before a company's annual meeting. One of the 
popular ones is calling on companies to disclose their 
political spending. Sometimes these resolutions are adopted.
    Corporations don't like this. They haven't liked this for a 
long time, and they have mounted an effort to get shareholder 
resolutions, and Chair Clayton of the Securities and Exchange 
Commission answered that appeal a couple of months ago with a 
proposal to do just that, but he did not say that he was 
responding to corporate interests; no. He said that he was 
responding to Main Street investors, to a military veteran, to 
a police officer, to a retired teacher, to a retired couple who 
had written in.
    Bloomberg News surveyed these seven supposedly randomly 
selected letters and found them to be fake. They were from 
relatives of the corporate lobbyists: the uncle; the brother; 
the in-laws.
    When Chair Clayton testified before the Senate Banking 
Committee, Senator Van Hollen said that he had been duped. We 
think that may be charitable.
    Second case: My colleague, Ms. Gonzalez-Brito, has 
documented the massive fabrication of astroturf comments coming 
out of the OneWest-CIT merger, but why? Why would one engage in 
such fabrication? One possibility is buried into the merger 
document that said that CEO Otting was going to be paid $24 
million if this merger went through. It was in the form of an 
employment contract that said, ``If you last 3 years, you get 
this much every year, but if you are terminated, then you get 
the full $24 million,'' and he was, in fact, terminated a few 
months into the merger document.
    What can be done? What should this committee do?
    First and foremost, as Public Citizen members are frequent 
commenters, what we would like is the glide slope from opinion 
to the landing path into that regulatory agency to be smooth. 
We do not want impediments. That said, we don't want 
competition with fabricated comments. Federal law already 
provides, under 18 U.S.C. Sec. 1001, that it is a Federal crime 
to misrepresent, to lie, to make fabrications to the 
government. Unfortunately, to our knowledge, the number of 
cases that have been brought under that Federal code is zero. 
We think, without penalties, there is no deterrence.
    In the case of Chair Clayton, we have already asked the 
Inspector General to look into why it is that he would be 
informed by seven fake letters. He did not reference the Public 
Citizen letter, the AFL-CIO letter, the CalPERS letter, the 
Colorado Pension Fund letter, or the Texas Pension Fund letter. 
He just happened to have those seven random letters. We hope, 
and we have reason to believe that the Inspector General will 
be looking into that.
    In conclusion, Mr. Chairman, we think that the public 
comment process is important, and we look forward to working 
with you to make sure that the likes of Public Citizen are able 
to continue to exercise our democracy rights.
    Thank you.
    [The prepared statement of Mr. Naylor can be found on page 
125 of the appendix.
    Chairman Green. Thank you for your testimony.
    Professor Balla, you are now recognized for 5 minutes.

    STATEMENT OF STEVEN BALLA, ASSOCIATE PROFESSOR, GEORGE 
                     WASHINGTON UNIVERSITY

    Mr. Balla. Thank you.
    My name is Steve Balla. I am an associate professor of 
political science, public policy, public administration, and 
international affairs at George Washington University.
    For the past several years, along with several colleagues 
at GW, I have been conducting research on mass-comment 
campaigns in agency rulemaking. By mass-comment campaigns, we 
mean collections of identical and near-duplicate comments that 
are sponsored by organizations and submitted by group members 
and supporters.
    We asked three questions about mass-comment campaigns: Who 
sponsors them; what do they say; and how do agencies handle 
them?
    Now, we focus so far in our research on the Environmental 
Protection Agency (EPA), and the EPA is a good agency to start 
with in that it is systematic and transparent in the way in 
which it catalogs and reports mass-comment campaigns on 
regulations.gov. So, when the EPA identifies a mass-comment 
campaign, it creates a record on the website. This record 
includes the identity of the sponsoring organization, if that 
is known. It also includes a statement of the number of 
comments that are submitted as part of the campaign, and it 
includes a single illustrative example of the campaign's 
comments, usually through a PDF or a Word attachment. Our 
analysis is based on more than 1,000 mass-comment campaigns 
that occurred during EPA rulemakings over a recent 5-year 
period.
    So, who sponsors mass-comment campaigns? Well, there is a 
diverse mix of sponsoring organizations. Mass-comment campaigns 
are regularly sponsored by environmental advocacy groups, labor 
unions, and progressive organizations. Collectively, these 
kinds of organizations account for about 75 percent of the 
mass-comment campaigns in our analysis. The remaining 25 
percent are mass-comment campaigns sponsored by regulated 
entities. In the case of the EPA, these would be the 
agriculture industry and the energy sector, most commonly.
    What do mass-comment campaigns say? Again, there is some 
diversity in the phenomenon. Some mass-comment campaigns are as 
short as a few words. They articulate a directional stance in 
favor of or in opposition to the proposed rule, and they say 
nothing else. There are other mass-comment campaigns, however, 
that incorporate arguments, reasoning, and data analysis.
    Now, on balance, mass-comment campaigns shade toward short 
statements of directional opinion; that is, those types of 
mass-comment campaigns are more common than ones that bring 
extensive reasoning and extensive data to bear.
    How does the agency handle mass-comment campaigns? Well, in 
response to comment documents, we find that mass-comment 
campaigns often get mentioned a single time, and the agency 
provides a brief response. By contrast, these standalone 
comments that we historically associate with the notice-and-
comment process that might be submitted by organizations or 
individuals--not duplicates, not near-identical comments, but 
standalone comments--typically get mentioned repeatedly in 
response to comment documents.
    Why would that be the case? It is because the agency is 
exhibiting a practice of responding separately to each 
argument, each piece of evidence that is presented in the 
comment. And so, with more argument, with more evidence comes 
more extensive--i.e., more repeat attention--on the part of the 
agency in the response-to-comment document.
    In my view, these findings demonstrate that the agency is 
able to identify mass-comment campaigns, it is able to catalog 
them systematically and transparently, and it is able to 
respond to them in a manner that is commensurate with their 
substantive content. Contrary to hopes that have been 
articulated about mass-comment campaigns, particularly early on 
in the era of electronic rulemaking, I don't see mass-comment 
campaigns as having had a democratizing effect on the 
rulemaking process. That was one hope 20 years ago.
    I also don't see--and this, again, is contrary to fears 
that have been expressed about mass-comment campaigns--them 
burying the EPA under an unmanageable avalanche of useful 
information. It is my argument that, for the most part, rather 
than mass-comment campaigns bringing fundamental change, 
whether good or bad, to the rulemaking process, what has 
happened instead is that the agency has adopted approaches that 
allow it to readily incorporate mass-comment campaigns into its 
existing rulemaking practices.
    Thank you.
    [The prepared statement of Professor Balla can be found on 
page 50 of the appendix.]
    Chairman Green. Thank you.
    The Chair will now recognize the gentleman from Colorado, 
Mr. Perlmutter, for 5 minutes.
    Mr. Perlmutter. Thank you for your testimony today, and, 
Dr. Balla, I think you could probably ask anybody up here on 
this dais about mass communications and mass-comment campaigns, 
because we all get that, and this is part of the process, and 
you say, okay, I got a thousand comments on right to work, and 
I got 77 comments on healthy forests. They are all identical. 
You just deal with it. So we understand that, and your next 
study should be on what we get as Members of Congress.
    But I think the thing that I am concerned about is, from 
the beginning of this country with Publius and Brutus and the 
Federalist papers and the anti-Federalist papers, we knew they 
were anonymous and they wanted to speak about policy and 
approach to how our nation should be founded. So I am not 
afraid of anonymity, and I am not afraid of mass comments.
    What I am afraid of is liars and cheats and phony 
information that you get because then you are misled. Then, it 
does undercut the trust, and, if it is a bunch of bots sending 
stuff out that is slightly different and requires specific 
answers, I want to know they are bots.
    Ms. Novacek, in your testimony and sort of the research 
that you have done, can you explain how we might ferret out or 
how you would want to see us deal with sort of the bots and 
sort of the phoniness that may come as part of an email 
approach, or it may be just case by case, I don't know? How 
would you go about this?
    Ms. Noveck. Thank you for the question.
    I think you are asking very much the right question, that 
what we need to be asking as a corollary to the issue of, what 
do we do about the fake comments, the related or flip side of 
that is the question of, how do we extract the valuable meaning 
from this corpus of information that we have? We have a large 
quantity, maybe mass commenting, as Professor Balla has 
mentioned, maybe duplicative comments, maybe a large volume of 
individual comments.
    The thing that we need to care about, first and foremost, 
is this issue of, how do we make it easy for agencies and the 
committees that oversee them to extract the valuable meaning 
and to do what was the intent of the Administrative Procedure 
Act when it called for commenting in the rulemaking process?
    What I would do is I would ensure that every agency is 
using readily-available machine-learning tools, first to de-
duplicate the comments, and the software has existed for that, 
funded incidentally by the Federal Government, for more than 15 
years. It would allow us to first say: Let's remove all the 
duplicates.
    Second is then the issue, because, as you know from your 
own work, you can have nonduplicative comments, but it is still 
too much for your staff to read, and they have other things to 
do during the day, is some of these new tools for summarization 
are really crucial. And they are great summarization tools, not 
simply from the Googles and the Microsofts and the sort of 
high-end tech, but they are stuff--specifically, civic 
technologies in the citizen engagement space, and I can name 
you a number of free and open-source or relatively cheap tools 
that exist to do precisely the job that are in use in various 
places to do the job of summarizing citizen comments. I mention 
a few of them in my testimony and show some pictures to make it 
clear how they do the work of helping regulators extract the 
meaning from this volume of information.
    And then, in addition, I would say we have to create 
additional complementary fora for the reason that we want to 
make sure that we are hearing from diverse participants, and I 
mean diversity in every way. Cynthia Farina at Cornell Law 
School has written extensively about the lack of diversity in 
participation. We hear lots from businesses but not necessarily 
from individuals. We hear from people who are white and wealthy 
and educated, but not necessarily people who don't meet those 
criteria, and that is true for all kinds of civic 
participation, and people want to participate more. So research 
that has been done by Pugh and other groups, every survey that 
you look at says people would like to engage and would like to 
have opportunities.
    So, I would like to see us do more to actually create fora 
beyond the fill-in-the box that is available on regulations.gov 
to push out rules, to push out the opportunities to comment in 
the way that, again, other legislatures and agencies in other 
parts of the world and in our own backyard are beginning to 
innovate with using tech to create multiple opportunities for 
citizens to comment, and that can include expert citizens who 
are diverse and have life experience in general.
    Let me pause to let you interject there.
    Mr. Perlmutter. Well, I have 3 seconds, 2 seconds, 1 
second. I yield back to the--
    Chairman Green. The gentleman's time--
    Mr. Perlmutter. --Chair, but thank you very much for your 
answer.
    Chairman Green. The gentleman's time has expired.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you, Mr. Chairman. Thanks for holding this 
hearing, and thank you to our witnesses. I was very interested 
in the witnesses' ideas, and I appreciate your insights into 
this.
    Let me start with Mr. Bagdoyan. Thank you for the GAO's 
work in this area.
    I was interested in your report about how different 
agencies are taking different approaches with this, and it does 
appear from your report that many of these agencies are taking 
your recommendations and responding to adopt policies and 
communicate those policies on how they intake comments.
    Do you believe that the APA itself should be amended to 
standardize this process more as opposed to just responding to 
GAO admonishment, or maybe, in reference to Dr. Balla's 
commentary, different agencies may have different approaches, 
is that the right approach? Which is the right approach: 
Uniformity, or allowing different agencies to approach this in 
different ways based on their own circumstances?
    Mr. Bagdoyan. That is a great question, Mr. Barr.
    I probably won't be in a position to give you an exact 
answer right now. I would point out that the APA does allow 
comments to come in, in any shape or form. The agencies have 
discretion to treat those comments as they best see fit, which 
is, I think, what our report on policy and practice shows.
    I will note, though, that we have ongoing data analytics 
work. It is in two parts, if I may explain it briefly for you.
    The first is a survey of actual commenters to see whether 
they actually sent those comments in. So that will be one 
significant data point for us to analyze. And then, we also 
have ongoing work where we are analyzing tens of millions of 
comments that were submitted to various agencies during the 5-
year period covered by our work, and, based on those results, 
when we combine those results and see what, if anything, we can 
make of those results, then that would generate our policy and 
process procedure and perhaps technology mix of solutions, but 
I just can't comment on that right now.
    Mr. Barr. Let me associate myself with the comments of my 
friend from Colorado about the--I agree with him. The concern 
is false, as opposed to mass or anonymous comments. I agree 
with my friend from Colorado on that.
    Dr. Balla, however, I do want to ask you this: Should 
regulators generally err on the side of openness and 
inclusivity when soliciting feedback from interested citizens, 
given your research into the EPA, for example, being able to 
handle these mass communications in a fairly orderly way?
    Mr. Balla. As a researcher, I am going to argue against my 
self-interest, because as a researcher, I love uniformity, 
because uniformity allows me to access more information, more 
readily, and so that is the way that I can do a bigger scale 
study that would help broaden our general understanding of this 
phenomenon. But my argument is that agencies vary in the scope 
of their regulatory activity, and so a one-size-fits-all 
solution, I think, is quite scary, and I would argue strongly 
against it. So I would argue for a light touch on any kind of 
restrictions that would increase the friction, if you will, for 
submitting public comments.
    Mr. Barr. Right. So, erring on the side of openness and 
inclusivity as opposed to exclusion helps?
    Mr. Balla. Absolutely, because agencies vary in their 
capacity.
    Mr. Barr. Ms. Noveck had some interesting ideas about 
artificial intelligence, and I think she said summarization 
tools. Is there any risk of injecting bias into the process of 
screening out comments, however?
    Mr. Balla. Again, just to echo what Professor Noveck said, 
technology-wise, the solution has existed for a long time. 
Agencies can set duplicate thresholds at varying levels, and so 
they can separate out the duplicate content in a body of 
comments from those pieces that are unique contributions. So 
that technology exists, and agencies ought to be encouraged to 
use that to the extent that they don't yet.
    Mr. Barr. I have many more questions, but my time has 
expired.
    Chairman Green. The gentleman's time has expired.
    The gentlelady from Texas, Ms. Garcia, is recognized for 5 
minutes.
    Ms. Garcia of Texas. Thank you, Mr. Chairman, and thank you 
for bringing this topic to the table.
    It completely baffles me that people go to this end to 
corrupt the comment period, and I especially don't like it, if 
it refers to our Astros in any way, but I understand Senator 
Bentsen's point, because there is a big difference between 
astroturf and grassroots.
    But I want to start with you, Ms. Gonzalez-Brito. I was 
really intrigued with the work that you have done, and I know 
that you mention in your written comments that you have called 
for an investigation.
    Tell us what has happened or what we can do to help?
    Ms. Gonzalez-Brito. Thank you for your question.
    I do want to mention that these complaints were made by an 
individual who had no idea that these comments were made, that 
the opposition to the merger was made without his consent.
    Ms. Garcia of Texas. Right, you cited four examples--
    Ms. Gonzalez-Brito. Right. There were four examples. The 
OCC was made aware of these prior to the approval order, and it 
is not clear that the OCC did anything at the time except to 
ask the bank to respond to these complaints by these 
individuals.
    We would like to know what the OCC did, if anything, if the 
bank did respond. It is not clear whether they did anything 
beyond that. And they definitely did not, in their approval 
order, cite that there were fraudulent comments. So, that is 
concerning.
    We would like the Inspector General to begin an 
investigation and see if the OCC has put anything in place so 
that we are not just dealing with volume of comments, but that 
we are dealing with any fake comments that may come in as the 
CRA proposed rule is being looked at now, and as comments are 
coming in to that CRA proposed rule. So we ask that Congress 
ensure that the OCC is set up not just for volume of comments, 
but any fake comments that may come in as to this proposed 
rule.
    Ms. Garcia of Texas. Thank you, and we will work with the 
Chair to see if we can help in that area.
    Ms. Gonzalez-Brito. Thank you.
    Ms. Garcia of Texas. And my second question is for Mr. 
Bagdoyan. And I just need to clarify. You all had been using 
the word, ``duplicates.'' So are you referring to duplicates in 
the sense of the same person sending to or duplicates in the 
massive emails, or both?
    Mr. Bagdoyan. Yes, that is a great question, Ms. Garcia, 
and what we are referring to is comments that are identical, 
every word--
    Ms. Garcia of Texas. So the mass--
    Mr. Bagdoyan. The structure of the comments--
    Ms. Garcia of Texas. --copy-and-paste kind of comment?
    Mr. Bagdoyan. Correct. Near duplicates are essentially the 
same comment with some variation in the wording or the sentence 
structure.
    Ms. Garcia of Texas. Right. And do most agencies limit 
comments to one person, that you would not get the same person 
sending a duplicate?
    Mr. Bagdoyan. I think it is an open process, and comments 
are accepted at face value as they come in. I don't think there 
is any kind of a screening out--
    Ms. Garcia of Texas. What about the anonymous ones? Those 
are, in my mind, a little problematic.
    Mr. Bagdoyan. Sure.
    Ms. Garcia of Texas. How many anonymous comments do we 
really get, and is there any reason that we might want to 
figure out a way to make sure that people identify themselves?
    Mr. Bagdoyan. The APA allows the submission certainly of 
anonymous comments, and agencies, in the spirit of the law, do 
allow those to come in. They don't really analyze them in any 
specific way, but, as I mentioned in my response to Mr. Barr 
earlier, we are in the process of analyzing a vast trove of 
comments that were submitted over a 5-year period. I would say 
it is in the tens of millions, and we will have, hopefully, 
when our work is completed, better insight in terms of the 
identity characteristics of each and every one of these 
comments, and, if we are able to roll up those numbers, we will 
have a better sense of how many are anonymous and what other 
things are associated with those comments.
    Ms. Garcia of Texas. Right.
    My last question is for Mr. Naylor. You were talking about 
recommendations in policy changes. You told us one, and I just 
felt like you were going to say more. My question to you is, is 
there anything specifically that you think is the single-most 
important thing that we do, and then, also, has there been an 
increase in these fake comments within the last year or the 
last 2 years?
    Mr. Naylor. Thank you, Congresswoman.
    We have not tracked the incidence of fake comments, but, as 
you know, you have an urgent problem right now. Comptroller 
Otting is planning to gut the Community Reinvestment Act. Chair 
Clayton is planning to gut shareholder resolutions, and both of 
these are being based, in part, on astroturfing. So, if this 
committee can communicate in any way that that should not 
stand, then I invite you to do so.
    Ms. Garcia of Texas. Okay.
    Chairman Green. The gentlelady's time has expired.
    Ms. Garcia of Texas. Thank you. I yield back. Thank you, 
Mr. Chairman.
    Chairman Green. The gentleman from Florida, Mr. Posey, is 
recognized for 5 minutes.
    Mr. Posey. Thank you very much, Mr. Chairman, and Mr. 
Ranking Member, for holding this hearing on the Administrative 
Procedure Act in general and astroturfing more specifically.
    The creation of false impressions of widespread 
spontaneously arising grassroots movements is a poor raw 
position to something that is, in fact, a real problem, as you 
all have expressed, and I am glad there are more people aware 
of it.
    Number one, most people believe that their elected 
representatives make all the laws, which is a grossly 
inaccurate understanding of how this place and many State 
Governments work. They are unaware that, in most cases, most 
laws are made by unelected people, unrecallable people, 
unaccountable people, and they do it without having the 
statutory authority that they are supposed to have, and they 
have been able to get away with doing that for decades.
    I have read in multiple sources that the odds of someone 
being hauled into Federal court for a violation of the law are 
1,000-1 in favor of it being a law--i.e., administrative rule 
enforceable as a law--that an unelected, unaccountable 
bureaucrat wrote, not one that lawmakers actually passed. It 
is, I think, the biggest problem with the operation of our 
government.
    If a Federal employee is caught stealing cash, hopefully, 
they are prosecuted. If a Federal employee is caught stealing 
equipment, whether it be a copy machine or a backhoe, 
hopefully, they are prosecuted. But Federal employees routinely 
steal the resources of hard-working Americans, American 
businesses, and American households with absolutely no 
consequence whatsoever, and that is why we need to have some 
authority. And the astroturfers are partners in that crime, I 
believe.
    Every Member of Congress gets a copy every day of the 
Federal Register, which is mostly administrative rules, 
proposed changes to rules, Executive Orders, and they range 
from that thick, to five a day this thick, and I don't know a 
single Member of the House or the Senate who reads them because 
we can't do anything about them. We have abdicated total 
control to the unelected, unaccountable bureaucrats, and the 
only way we can change any rule that they make is to pass a 
bill in opposition to it, and you all know how simple that is 
to do up here, right?
    Dr. Balla mentioned the EPA. The EPA has outlawed the use 
of glider kits based on flawed information, criminal 
information that has been deemed false. They won't change their 
rule. You mentioned it. That is just one of many.
    The FDA. How well-intended can you be, but you want to put 
all of the premium cigar manufacturers out of business so that 
children don't smoke premium cigars. I guarantee you there is 
not a child in the United States of America who has ever smoked 
a premium cigar. They don't have the statutory authority to do 
that. They have been confronted with it, and, instead of 
admitting they are wrong, what do they do? They give the 
industry the finger and say, we are going forward anyway.
    Even the CDC seems to have engaged trolls and astroturfers 
when they want issues put forward.
    The last time Congress addressed the Administrative 
Procedure Act to change it, to try and make it right, they 
basically said, ``You have to do a cost-benefit analysis on any 
rule that causes over a $100 million impact.'' So, if you just 
impact every family in the United States by a total of $99 
million, et cetera, you don't have to do anything, and of 
course a lot of the agencies don't comply with that 
requirement.
    So, it took 8 years to fix this problem in one State, and 
we haven't even started to kick it off here. Maybe this hearing 
will serve as the kickoff, Mr. Chairman, and, if it is, I 
applaud you for that.
    And I'm almost running out of time here. I wish I could 
tell you about how we fixed it in Florida. It is a riveting 
story.
    But, Dr. Bagdoyan, are you aware of any rulemaking 
processes that have gone into litigation based on alleged 
astroturfing?
    Mr. Bagdoyan. I am not, but we can certainly look into it 
and get back to you, sir.
    Mr. Posey. Okay. Dr. Balla?
    Mr. Balla. I am not aware of any either.
    Mr. Posey. Is anyone aware of any?
    Okay. It seems likely that mass-comment campaigns will be 
seized on by a rulemaker when they support a position that the 
rulemaker has already embraced and otherwise ignored.
    Have any of you seen instances of that before?
    Ms. Noveck, you are smiling. I think we all have if we are 
honest about it, but Ms. Noveck?
    Ms. Noveck. It is not a phenomenon of new technology. We 
always like the evidence that supports our point of view.
    Mr. Posey. Okay.
    Mr. Chairman, I see I am out of time, so I yield back. 
Thank you.
    Chairman Green. The gentleman's time has expired.
    The gentleman from Ohio, Mr. Davidson, is recognized for 5 
minutes.
    Mr. Davidson. Thank you, Mr. Chairman. I thank the 
committee and our guests for an important hearing highlighting 
the tension between the way we make our laws, the way we 
regulate the country in the absence of laws, and, frankly, the 
impact on the American people.
    It has been highlighted by my colleague, Mr. Perlmutter, 
really going back to the origins of the country and the ability 
to make private comments. Sometimes, today, that is under the 
biggest attack. I would say, in this committee, in Financial 
Services, the ability to have some modicum of privacy with your 
financial life is heavily diminished.
    For example, when I hear people say, ``Oh, we should know 
the identity of everyone who comments,'' are we really 
proposing something along the lines of the Bank Secrecy Act, 
where you have know-your-customer provisions for every comment 
that comes in? And should every congressional office only do 
that if they are constituents? And clearly, constituents are 
only citizens; so we should discount the noncitizens, right?
    So, when you look at how you go down the way this goes is, 
as has been highlighted, we all receive comments from many 
forums, where people duplicate them. They are individuals. They 
are organizations across the political spectrum. I seem to get 
a lot from some group called the Resistance Movement--resist, 
resist bots. Any number of resist, #resisting show up in my 
comments.
    And I can't imagine there is any incentive for this group 
or group of people, individuals, to dump these comments on as 
we are reviewing legislation, but of course it happens, and the 
same thing happens through our regulatory state, and, as Mr. 
Posey highlighted, it can be really high stakes.
    We have regulators in position, and I really think that the 
remedy has to be that we have to reclaim the Article I powers 
of this body and, frankly, we need to have a government that is 
only big enough to fit inside the Constitution, and Congress 
does the things that are enumerated, and we reserve to the 
States the things that aren't enumerated because there is more 
local control on those things. And I will say there is a clear 
consensus that the Federal Government and Congress should do 
some things that aren't enumerated.
    For example, healthcare. Not an enumerated power. Broad 
consensus, we should have some sort of Federal role there. We 
could amend the Constitution to make it clear exactly what is 
the expectation. Those are high bars, and, in the absence of 
our action here in Congress, we have simply said, well, this 
would be really important, like the EPA. We want clean air and 
clean water; you all figure it out.
    And when they do it, as we saw, Dr. Balla, you highlighted, 
particularly with the waters of the USA action, a regulatory 
agency using something called Thunderclap to spoof comments, 
totally fake comments, the epitome of astroturfing, by a 
regulatory agency to support what they wanted to do anyway, 
causing great harm to industry, to farmers especially, whose 
comments were disregarded, not taken into consideration. And 
thankfully, in that case, the system worked as it should, 
Congress reclaimed its authority, we moved it through the House 
and the Senate, and the President signed it, and we revoked it. 
And in the interim, the courts worked as they should and said: 
This exceeds your constitutional authority; it is outside the 
bounds.
    So, Dr. Balla, could you highlight, given the background 
that you do there, with the EPA, kind of the tension that 
exists and what worked well, and what do we still need to 
address?
    Mr. Balla. Sure. The one question to ask is, do comments 
matter? And I want to separate that question into two parts. 
Does the forum or the venue through which the comment comes in 
matter, mass-comment campaigns versus stand-alone, and separate 
that from the identity of the commenter? And what we find is 
that actually there is quite an overlap in the EPA's context in 
terms of who does mass commenting versus stand-alone comments.
    So, it is hard for us to separate out: Is it the mass-
comment campaign; is it the venue itself, the vehicle of 
delivery that matters, or is it what is actually said? 
According to the Administrative Procedure Act, it is substance 
that matters, not the identity of the commenter.
    And so, to bring this back to the issue of anonymous 
comments, one thing you might be concerned about is, agencies 
can be quite powerful, as we have heard, they have a lot of 
authority, and there are stakeholders who might be in a 
vulnerable position if their identity, when they criticize an 
agency, is revealed. And I think we might want to tread 
carefully about limiting anonymity in public commenting.
    Chairman Green. The gentleman's time has expired.
    The gentleman from Tennessee, Mr. Rose, is now recognized 
for 5 minutes.
    Mr. Rose. Thank you, Chairman Green and Ranking Member 
Barr, for holding this hearing today, and thank you to the 
panelists for being here. I wonder, Dr. Balla, if you might 
continue where you left off?
    Mr. Balla. Sure. Agencies are--what are their 
responsibilities? It is to address the substance, the relevant 
matter in their comment, in their corpuses of comments that 
they receive. They are not instructed by the Administrative 
Procedure Act to pay attention to identity. They are instructed 
to pay attention to relevant matter.
    And so, again, do comments matter? In my experience, if we 
think about the administrative rulemaking process, it is a 
legal administrative process governed by the EPA, but that, of 
course, occurs in the context of a larger political system.
    What does that mean for us? Do we have evidence that mass-
comment campaigns affect the outcomes of rulemakings? I don't 
think we can say that because, in the period between a notice 
of proposed rulemaking and a final rule, a lot of inputs happen 
into the system. There are public comments. There are ex parte 
communications. There might be advisory committee meetings. 
There are all kinds of inputs that can happen in the rulemaking 
process.
    But what I think we can say is that mass-comment campaigns 
have been justified, have been used by both political parties 
amid both Administrations of both political parties to justify 
actions that they already would like to have taken. And so, in 
the context of the Waters of the United States rulemaking, 
Administrator McCarthy came to Capitol Hill and said, ``We have 
heard over one million comments; 87.1 percent of them are in 
favor of this rule.''
    The rule was finalized shortly thereafter, in line with 
those comments.
    Was it those mass-comment campaigns that were mainly 
submitted by environmental advocacy groups like the Sierra 
Club, and the NRDC? Was it those mass-comment campaigns that 
led the agency to that end point? I am quite skeptical that 
that was the case. I would argue that was the approach that the 
agency was already planning to take in the rule and the mass-
comment campaigns provided no legal or administrative 
justification for taking that action, but they provided sort of 
a larger political justification. Thank you.
    Mr. Rose. Beyond the case that we have been discussing of 
the Obama-era EPA and the Waters of the United States 
rulemaking, is there pervasive evidence of agency-generated 
astroturfing?
    Mr. Balla. I am only aware of that one particular case, 
that one particular thunder-clap instance, but that doesn't 
mean there aren't others. I just don't know.
    Mr. Rose. And I direct this question to you and also Mr. 
Bagdoyan. Are there any laws or regulations specifically 
addressing agency staff encouraging or generating comments?
    Mr. Bagdoyan. I am not aware of any, but again, I would be 
happy to look into that and get back to your staff on it.
    Mr. Rose. I would appreciate that. Are there any procedures 
that either of you are aware of in place to monitor or detect 
agency personnel generating comments or encouraging comments 
beyond the normal opening of the comments for public comment?
    Mr. Balla. I am not aware of any.
    Mr. Bagdoyan. I am not either, but that doesn't mean they 
don't exist. I will add that to my to-do list.
    Mr. Rose. Thank you.
    And, Dr. Balla, I am also wondering, is there any analysis 
that you have done or research that you are aware of, on 
selection bias by agency personnel as they prioritize comments? 
Has that question ever been looked at?
    Mr. Balla. What do you mean by, ``selection bias?''
    Mr. Rose. Well, pulling out or providing preference to the 
comments that supported the position that they perhaps already 
had.
    Mr. Balla. That certainly happens in the public sphere, 
right? Again, if we come back to the Waters of the United 
States rulemaking, that is, in fact, what was going on in that 
case, for sure.
    Mr. Rose. And I am wondering, I know one of the panelists 
talked about diverse comments or encouraging diversity among 
those commenting, but I am curious if that doesn't--I guess I 
would fear that that would become just a vehicle for soliciting 
the comments that you want to hear when they are absent from 
the voluntary comment process. Dr. Balla, have you seen 
anything that you can point to for us there?
    Mr. Balla. What I would encourage agencies to do is, if 
they feel that they don't have the information they need to 
move a rulemaking forward, use advance notices of proposed 
rulemaking where you ask general questions and direct 
stakeholders and affected parties towards issues that you think 
you need help, where you have information gaps. So, I don't 
think it is a bad thing for agencies to direct commenters in 
particular areas where they have gaps in their understanding.
    Mr. Rose. Thank you, Mr. Chairman.
    I yield back.
    Chairman Green. The gentleman's time has expired.
    The gentlewoman from California, Ms. Porter, is recognized 
for 5 minutes.
    Ms. Porter. Thank you so much. I appreciate the opportunity 
to join this subcommittee today.
    Mr. Naylor, in December, a few months ago, the nonprofit 
you work for wrote a letter to the SEC asking the Commission to 
investigate some suspicious letters submitted during the public 
comment period on a new rule that the SEC had issued, and that 
rule would shrink shareholders' rights to hold corporate 
interests accountable. And your letter raised concern 
specifically about the actions--the comments of SEC Chair 
Clayton. And he had directly quoted some of these public 
comments to make the case for the SEC's proposed rule. Who did 
the Chair say had submitted the letters, the comments that he 
cited in support?
    Mr. Naylor. It was a Frank Capra moment, in fact, when the 
Chair discussed these. He made reference to a Marine veteran 
and a retired teacher and so forth, and it was with some 
ceremony and reverence that he explained that these were Main 
Street investors that he had surveyed.
    Ms. Porter. Okay. So, he cited an Army veteran and a Marine 
veteran, a police officer, a retired teacher, a public servant, 
a single mom, and a couple of retirees who saved for 
retirement. Bloomberg News investigated and discovered that 
those letters were, in fact, submitted by a trade group, and 
the Bloomberg article is entitled, ``SEC Chairman Cites Fishy 
Letters in Support of Policy Change.'' We believe these 
letters, these comments were actually forged, and your letter 
goes on at length about forced arbitration clauses, how 
damaging these arbitration clauses are. Explain to the 
committee how forced arbitration clauses relate on that 
shareholder proposal? What was at stake here for the American 
public in making this--why is it important to get this right?
    Mr. Naylor. There are only a few lines of accountability 
for corporations. There are the laws that you pass. There is 
litigation to support these laws. There are whistleblowers that 
we saw play out during the impeachment. And there is 
shareholder activism, which is when shareholders decide that 
they are going to make companies accountable. We saw this play 
out, for better or for worse, with Enron, with Wells Fargo, and 
with others.
    In forced arbitration--ironically enough, a former Harvard 
professor, Hal Scott, believes that a certain company, in this 
case Intuit, should bind their shareholders to forced 
arbitration if they believe the company is misrepresenting its 
financial figures. And that is the kind of thing that a 
shareholder activist can do. Happily, shareholders rejected 
that, I think, 98 to 2. So, that is where the two kind of 
converge.
    Ms. Porter. Can you tell the committee what astroturfing 
refers to? It is the title of today's hearing.
    Mr. Naylor. In our opinion, astroturfing is just fake 
grassroots. It is the appearance of grassroots commentary on 
something which, in fact, is the fiction generated by the very 
corporate interests that the likes of us are trying to control.
    Ms. Porter. And in your opinion, would you consider Chair 
Clayton's reference to these fake comments of an Army veteran, 
a Marine veteran, a single mom, and a couple of retirees, would 
you consider that an instance of astroturfing?
    Mr. Naylor. Or if not, beyond astroturfing, he represents 
that he did a random sample across America and just happened to 
put his hand into the jar of comments and selected these. There 
were hundreds, if not thousands of comments from the likes of 
us, all arguing for stronger shareholder rights. These were 
essentially the only ones that argued against that. I would say 
that is a misrepresentation. I think that is something that 
falls under 18 USC Sec. 1001, that says, you are not supposed 
to tell untruths to the United States Government or else there 
are consequences.
    Ms. Porter. So, in your opinion, we could use that statute 
to--
    Mr. Naylor. You should explore that statute.
    Ms. Porter. --pursue the trade groups, the lobbyists who 
are behind these fake, forged comments because the comments, 
what the investigation suggests is that these comments were not 
private individuals pretending to be other private individuals. 
They were actually lobbyists and corporate lobbying entities 
and trade associations submitting fake comments. We could 
investigate them, we could prosecute them, the government?
    Mr. Naylor. I believe that should be explored. These are 
corporate lobbyists using actual people as stooges. They are 
pawns. They are victims in one sense. But the real victim is 
the American public who--
    Ms. Porter. Tell me why you think they are victims?
    Mr. Naylor. Because they didn't write these letters. They 
just happened to be the cousin, the uncle, the in-law who said, 
oh, yes, sweetie, you are a lobbyist, do whatever you like. But 
now the public sees their name is on something that they 
probably do not subscribe to.
    Ms. Porter. Thank you.
    Chairman Green. The gentlelady's time has expired.
    The gentleman from Georgia, Mr. Loudermilk, is recognized 
for 5 minutes.
    Mr. Loudermilk. Thank you, Mr. Chairman. Thank you all for 
being here. I would like to kind of continue on with something 
Ms. Porter brought up, the Bloomberg story. I think, in the 
Bloomberg story, they highlighted seven people who supposedly--
their names were used, but they didn't submit comments. I 
actually have in my hand here, it was the organization that 
orchestrated the comments was an organization of 60 Plus, who 
went back to each one of these people, and I actually have 
declarations of five of those people who say they actually did 
submit those comments. They were able to track them down after 
the story was printed.
    Apparently, when Bloomberg called them about this, they 
didn't necessarily remember or know exactly what the reporter 
was talking about. So, just out of clarity, I would like to 
submit these to the record, Mr. Chairman, these affidavits, 
these declarations of statement that they did actually submit 
those comments.
    Chairman Green. Without objection, it is so ordered.
    Mr. Naylor. That is fair, Congressman, but let me just try 
to restate what I think is--
    Mr. Loudermilk. Hang on a second. I just want to make sure 
that we did that. There are a couple of areas I want to get 
into. We will get to that if I have time. Something Mr. Naylor 
said a little while ago, Mr. Balla, that is a little 
concerning, is he made the comment that the OCC is making a 
rulemaking process decision based off of fraudulent comments 
that they have received regarding the Community Reinvestment 
Act, but I heard you answer a question a little while ago that 
indicated that we don't have evidence of--and then some others 
have commented on this, that there has been no evidence that 
rulemaking decisions, or that these campaigns or false comments 
have actually resulted in the decision in rulemaking.
    My question is, do we have evidence that the OCC and the 
FDIC have been receiving fraudulent comments during the 
Community Reinvestment Act process?
    Mr. Balla. I can't answer that question. I don't have any 
knowledge about that particular case. I just want to reiterate 
the general point that I was making, in that even after decades 
of research on the topic, ``do public comments matter,'' the 
answer is still quite muddled. And so, this has nothing to do 
with the nature of the comment, whether they are mass-comment 
campaigns, fake-comment campaigns; it is going back to pre-
rulemaking.
    Now, I don't want to argue that we need to be paralyzed in 
our ability to make a causal inference between the submission 
of a comment and the decision of an agency, but I do want to 
suggest that identifying that particular connection is quite 
tough--
    Mr. Loudermilk. Right, right. I understand that.
    Mr. Balla. --in a case study context or a large end 
context.
    Mr. Loudermilk. And I remember something Ms. Noveck said. 
Basically, if a comment supports the direction that you are 
wanting to go, you are going to accept it. And I think that is 
just human nature.
    But Mr. Naylor, your comment, if I didn't misunderstand it, 
you indicated that the OCC is using these false statements to 
make decisions on the CRA. Was that correct?
    Mr. Naylor. If Comptroller Otting had any credential to be 
Comptroller, it was the consummation of a merger between 
OneWest and CIT, and that merger was built in no small part on 
astroturf, on fake comments. And so the person who is now 
fabricating, dismantling the CRA, is somebody whose career has 
2 feet into a very serious problem.
    Let me just point out one thing about Chair Clayton's 
comments. Had he said, ``I have seven letters, one comes from 
the brother-in-law of a lobbyist, one comes from the uncle of a 
lobbyist, one comes from the in-laws of a lobbyist,'' that is 
far different than a marine veteran, a retired schoolteacher, 
and a police officer. Thank you.
    Mr. Loudermilk. Okay. Even though they may be the same 
people?
    Mr. Naylor. Same person, but a corporate lobbyist's brother 
is a little different atmospherics than a retired police 
officer.
    Mr. Loudermilk. Okay. Honestly, I do find occasionally that 
lobbyists also tend to be experts in certain careers and 
fields, and they often do have opinions. I'm not defending 
them.
    But Mr. Balla, as you said, these campaigns are nothing 
new, correct?
    Mr. Balla. That is correct. They were--
    Mr. Loudermilk. They have been going on--
    Mr. Balla. --postcard campaigns in the old days.
    Mr. Loudermilk. Exactly. I am running out of time. Mr. 
Bagdoyan, quickly, I was on the Science, Space, and Technology 
Committee when we were investigating when the EPA actually was 
using social media to go out and generate false comments on the 
Waters of the United States rulemaking. You investigated that, 
did the report on that, is that correct?
    Mr. Bagdoyan. That was a legal opinion, Mr. Loudermilk. I 
was not involved with the work, but I am familiar with it, yes.
    Chairman Green. The gentleman's time has expired.
    Mr. Loudermilk. Thank you, Mr. Chairman.
    Chairman Green. The Chair now recognizes the gentlewoman 
from Michigan, Ms. Tlaib, for 5 minutes.
    Ms. Tlaib. Thank you so much. I don't know if Mr. Naylor or 
someone else can help me out. Do you think brothers-in-law of 
lobbyists are experts?
    Mr. Naylor. They can be experts, but as long as you say 
brother-in-law of lobbyist, then that helps establish that we 
are not dealing with average, randomly selected Americans.
    Ms. Gonzalez-Brito. And can I just give an example? In the 
OneWest merger, Mr. Otting solicited support from Wall Street 
vendors, lawyers, and business contacts who had financial 
interest in the bank when he asked for support of the merger. 
And so, in that case, there was a clear conflict of interest in 
those he was asking for support. So, I am not sure I would call 
those experts in the community needs of the bank that he was 
asking for support.
    Ms. Tlaib. No, I agree. And conflict of interest is 
something that can really poison various institutions and 
policymaking, I agree.
    Mr. Naylor, help me out here. If there is a bully in my 
son's class, and his teacher makes a rule against bullying, 
like, you can't bully, it would be wrong if the bullying was 
continuing, and this particular bully, he was literally 
bullying 12 people in the class; would it be wrong if that 
bully paid those 12 kids that he was bullying to tell the 
teacher that they loved getting bullied?
    Mr. Naylor. It has been a while. I think that would be 
wrong, but actually, public--
    Ms. Tlaib. No, it is pretty common sense.
    Mr. Naylor. --policy on that is not well-developed, I guess 
I would have to say.
    Ms. Tlaib. Yes. I understand the Public Citizens Chamber 
Watch investigated the 2015 case by contacting each of the 12 
small business owners to see if their opposition to the rule 
was, at minimum, misleading and so forth. Is that correct?
    Mr. Naylor. Yes.
    Ms. Tlaib. It was revealed that more than a fourth of the 
small business owners were actually lobbyists for the 
brokerage. And I am sorry if I--I was chairing another 
committee, so I apologize if this is repetitive. But it is good 
because truth matters, right? Mr. Naylor, can you describe in 
detail what else the investigation revealed?
    Mr. Naylor. Well, context, and thank you for the question, 
Congresswoman. This was an Obama-era rule that said brokers 
aren't supposed to rip off their customers. They are supposed 
to advise stuff that is in their best interest and not 
something that is going to fatten their own pocketbooks, which 
should be good for everybody, including small business.
    In lobbying against this, the Chamber supposedly found 
several dozen businesses that said they would lose their 
trusted adviser, which I found a little surprising. So I called 
them all and found, as you say, that some of them were, in 
fact, Wall Street brokers themselves. Others didn't answer the 
phone. One woman said that the ability to use her trusted 
adviser had allowed her to grow her business employment over 
the last decade, and I asked her how many employees she had, 
and she had grown it by one.
    So, in other words, these were pawns, as we discussed with 
Congresswoman Porter. The law was going to help them, but the 
Chamber of Commerce, serving Wall Street interests, was going 
to sacrifice these pawns to make a misrepresentation, in my 
opinion, to this committee and the Labor Committee to fight the 
fiduciary rule so that Wall Street could save $17 billion a 
year in inflated commissions that they were then charging.
    Ms. Tlaib. In my district, we don't call it a con. We 
actually call it cheating. It is cheating.
    Mr. Bagdoyan, based on your role as Director of Forensic 
Audits and Investigative Services at GAO, what have you learned 
regarding the ability of a well-funded corporate industry to 
misappropriate the identity of ordinary Americans and create an 
illusion, or what I call misleading, lying, a widespread 
support for pro-industry positions not only during the notice-
and-comment period of the rulemaking process but while lobbying 
Members of Congress?
    Mr. Bagdoyan. Well, a lot of organizations send in these 
mass mailings. I don't have any evidence to the extent that 
that happens and by whom. That is not something that we have 
focused on. Our work has focused on the policy and practice of 
identity information. So, that is what our analysis--
    Ms. Tlaib. You should probably get into looking at this. 
What can we do to help you look into something like this? 
Because we don't want industry to hijack the public process 
that is for ordinary Americans to be engaged in. I just left 
another committee hearing about the Trump Administration 
repealing and changing the mercury standards, basically what 
has been working to reduce 80 percent of mercury output, and 
now they are saying, no, no, no, we are going to go and fix it, 
and now it is open to people commenting. I want moms and 
regular folks to be able to say: Don't do this.
    What can we do to help support you taking a deeper dive 
into this, so that again, this process is really transparent?
    Mr. Bagdoyan. Sure, yes, I take your point, and what I can 
offer, like I have explained to other members of the 
subcommittee, is that we have ongoing data analytics work that 
is focusing on identity characteristics of comments. And we are 
also surveying commenters to see whether the comments they 
submitted were indeed by them, rather than someone else posing 
as them, and our plan is to actually engage into some deeper 
dives into those responses that we do receive.
    Chairman Green. The gentlelady's time has expired. I will 
ask you to put your comments in the record, please.
    Mr. Bagdoyan. Yes, sir, thank you.
    Chairman Green. Thank you. At this time, the Chair will 
yield himself 5 minutes.
    Mr. Balla has indicated that there is a question, in terms 
of evidence of adverse effect emanating from mass-information 
campaigns. Maybe not in those exact words. I would yield time 
to you, Ms. Gonzalez-Brito. Can you give us some indication as 
to whether or not this was evidenced in the case that you 
cited?
    Ms. Gonzalez-Brito. In the case of the OneWest-CIT merger, 
we had a bank that was foreclosing on, in some cases, we are 
hearing up to 100,000 families across the country, that had one 
of the worst reinvestment records in the State of California 
and had a CRA plan that was approved by its regulator that was 
one of the worst in its State. And none of this was addressed 
in the merger order by both of its regulators, and when it was 
approved, the merger was approved, the fake comments that were, 
that the bank's regulator had notice of before the approval, as 
I mentioned earlier, was not dealt with or investigated before 
the merger approval order.
    So, here we have a public comment process in which hundreds 
of organizations and community members commented on, and there 
was evidence of fake public comments. None of that was 
investigated. Fake Yahoo email addresses were generated, and we 
still don't know who was responsible. And the CEO of that bank 
is now running the CRA rulemaking that is happening now. So, 
not only is there an adverse impact on the merger that was 
approved, but now we have a CRA rulemaking by the OCC, where we 
don't know if they have a system in place to ensure that fraud 
is not taking place in that rulemaking. There are a lot of 
questions that need to be answered, an investigation that needs 
to take place, and we want to make sure that the public 
rulemaking process is--that there is integrity in that process.
    Chairman Green. Mr. Naylor, I am looking at your testimony, 
and you have indicated that, with reference to the affair that 
Bloomberg uncovered, that the 60 Plus group was funded by an 
entity. Would you care to express what you have given to me as 
your written statement?
    Mr. Naylor. Well, 60 Plus is a group that is known to the 
public generally as a sometime Koch-funded group that fights 
for the right, fights against regulation, fights for that which 
gets in the Koch business' way. The false front in front of the 
effort to gut shareholder resolutions, we believe begins and is 
generally overseen by the U.S. Chamber of Commerce.
    The false fronts have included something called the Main 
Street Investors Coalition. It's not very difficult to uncover 
because its own website, before it took it down in shame, said 
it was funded by the National Association of Manufacturers. Why 
are these guys upset? Because the one thing about capitalism 
and apparently the CEOs don't like is people showing up at the 
annual meeting and saying they would like the CEO and the board 
to do things a little differently.
    They have been arguing against shareholder suffrage for a 
long time. And to do that, they need to make it look like 
actual shareholders want this, are tired of this, and so they 
created these false fronts, including the efforts done through 
60 Plus.
    Chairman Green. Quickly permit me to ask some questions 
that would necessitate raising a hand. Is there a significant 
risk of misinformation masquerading as legitimate public input? 
If you believe such is the case, kindly extend a hand into the 
air.
    All but one, I believe.
    Mr. Bagdoyan. Yes, Mr. Chairman. I am not in the position 
to comment on that. I just don't have the evidence right now. 
But we are working on it.
    Chairman Green. Okay. I greatly appreciate it.
    Are we adequately policing the comment process? If you 
believe that we are adequately policing, would you kindly 
extend a hand into the air?
    Mr. Balla.
    And can these problems that have been called to our 
attention today be remedied with technology? If you think so, 
kindly extend a hand into the air? We have two, Ms. Noveck and 
Mr. Balla. Let the record reflect such.
    Friends, I greatly appreciate your testifying. The ranking 
member has asked for a privilege. He would like to have an 
additional 1 minute, and I will accord the privilege, without 
objection. And I will have a minute as well.
    Mr. Barr. Okay, I appreciate the gentleman. Let me just 
clear up one thing. From what I understand, we don't have any 
evidence whatsoever that, in the CRA rulemaking process, there 
is any evidence of any fraudulent comments being submitted. I 
raised this issue with Comptroller Otting when he was here last 
week, and he testified that there was no evidence of any 
fraudulent comments submitted in the CRA process, and I want to 
make that clear for the record.
    In terms of false fronts, there may be, in various 
agencies, false comments over the course of this, but I think, 
with the example from the EPA in 2015, you have this on all 
sides, fraudulent comments. It is not just on one particular 
side. You have it everywhere.
    And the final point is, in many cases, the industry 
representatives should have a right to comment, and some of the 
witnesses seem to be suggesting that someone who has an 
interest in the rule--
    Chairman Green. The gentleman's time has expired.
    Mr. Barr. --doesn't have a right to comment on it, and that 
makes no sense whatsoever.
    Chairman Green. The gentleman's time has expired.
    Mr. Barr. I yield back.
    Chairman Green. Thank you.
    The Chair now yields himself 1 minute, and I would note 
with a degree of interest that you would mention Mr. Otting, 
because I did ask him questions when he was here, and he 
vehemently denied any involvement or engagement by his business 
and his associates.
    But I think, Ms. Gonzalez-Brito, you have given us 
information to the contrary. Is it unusual for people who have 
been involved in activities that are adverse to their best 
interest to deny involvement? Is it unusual? If you believe 
that it is unusual for persons to deny involvement in 
activities that are adverse to their best interest, would you 
kindly raise a hand?
    Let the record reflect that no one has raised a hand.
    With this, I yield back the balance of my time.
    Without objection, on behalf of Professor Noveck, I would 
like to offer for the hearing record a report that she has 
authored entitled, ``Crowdlaw for Congress: Strategies for 21st 
Century Lawmaking.''
    I thank the witnesses for their testimony, and for devoting 
the time and resources to travel here and share their expertise 
with this subcommittee. Your testimony today has helped to 
advance the important work of this subcommittee and of the U.S. 
Congress.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    This hearing is now adjourned.
    [Whereupon, at 4:11 p.m., the hearing was adjourned.]

                            A P P E N D I X



                            February 6, 2020
                            
                            
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