[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]



 
                  ACCESS DENIED: ELIMINATING BARRIERS

                  AND INCREASING ECONOMIC OPPORTUNITY

                    FOR JUSTICE-INVOLVED INDIVIDUALS

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

                             HYBRID HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON DIVERSITY

                             AND INCLUSION

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 28, 2021

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-48
                           
                           
                           
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                      
  
  
  
  
                          ______                       


              U.S. GOVERNMENT PUBLISHING OFFICE 
 46-007 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             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            ANN WAGNER, Missouri
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            ROGER WILLIAMS, Texas
BILL FOSTER, Illinois                FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio                   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
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
RITCHIE TORRES, New York             JOHN ROSE, Tennessee
STEPHEN F. LYNCH, Massachusetts      BRYAN STEIL, Wisconsin
ALMA ADAMS, North Carolina           LANCE GOODEN, Texas
RASHIDA TLAIB, Michigan              WILLIAM TIMMONS, South Carolina
MADELEINE DEAN, Pennsylvania         VAN TAYLOR, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   PETE SESSIONS, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
                Subcommittee on Diversity and Inclusion

                     JOYCE BEATTY, Ohio, Chairwoman

AYANNA PRESSLEY, Massachusetts       ANN WAGNER, Missouri, Ranking 
STEPHEN F. LYNCH, Massachusetts          Member
RASHIDA TLAIB, Michigan              FRANK D. LUCAS, Oklahoma
MADELEINE DEAN, Pennsylvania         TED BUDD, North Carolina
SYLVIA GARCIA, Texas                 ANTHONY GONZALEZ, Ohio, Vice 
NIKEMA WILLIAMS, Georgia                 Ranking Member
JAKE AUCHINCLOSS, Massachusetts      JOHN ROSE, Tennessee
                                     LANCE GOODEN, Texas
                                     WILLIAM TIMMONS, South Carolina
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    September 28, 2021...........................................     1
Appendix:
    September 28, 2021...........................................    35

                               WITNESSES
                      Tuesday, September 28, 2021

Cook, Sakira, Senior Director, Justice Reform Program, The 
  Leadership Conference of Civil and Human Rights................     4
Korzenik, Jeffery, author of, ``Untapped Talent''................     6
Martin, Dolfinette, Housing Director, Operation Restoration......     8
Sorenson, Melissa, Executive Director, Professional Background 
  Screening Association..........................................    11
Tran-Leung, Marie Claire, Director, Legal Impact Network, Shriver 
  Center on Poverty Law..........................................     9

                                APPENDIX

Prepared statements:
    Cook, Sakira.................................................    36
    Korzenik, Jeffery............................................    45
    Martin, Dolfinette...........................................    50
    Sorenson, Melissa............................................    52
    Tran-Leung, Marie Claire.....................................    62

              Additional Material Submitted for the Record

Beatty, Hon. Joyce:
    Written statement of the Alliance for Safety and Justice.....    72
    Written statement of the Bank Policy Institute...............    75
    Written statement of the Collateral Consequences Resource 
      Center.....................................................    77
    Written statement of the First Step Alliance.................    84
    Written statement of the National Association of Federally-
      Insured Credit Unions......................................    89
    Written statement of the National Employment Law Project.....    90
    Written statement of the National Low Income Housing 
      Coalition..................................................   107
    Written statement of the Chris Wilson Foundation.............   111


                  ACCESS DENIED: ELIMINATING BARRIERS

                  AND INCREASING ECONOMIC OPPORTUNITY

                    FOR JUSTICE-INVOLVED INDIVIDUALS

                              ----------                              


                      Tuesday, September 28, 2021

             U.S. House of Representatives,
                          Subcommittee on Diversity
                                     and Inclusion,
                            Committee on Financial Services
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2128, Rayburn House Office Building, Hon. Joyce Beatty 
[chairwoman of the subcommittee] presiding.
    Members present: Representatives Beatty, Pressley, Lynch, 
Tlaib, Dean, Garcia of Texas, Williams of Georgia, Auchincloss; 
Wagner, Lucas, Gonzalez of Ohio, and Timmons.
    Ex officio present: Representative Waters.
    Chairwoman Beatty. The Subcommittee on Diversity and 
Inclusion will come to order.
    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 are authorized to 
participate in today's hearing.
    With the hybrid format of this hearing, we have some 
Members and witnesses participating in person, and others on 
the Webex platform.
    I would like to remind all Members participating remotely 
to keep themselves muted when they are not being recognized by 
the Chair. The staff has been instructed to not mute Members, 
except when a Member is not being recognized by the Chair, and 
there is inadvertent background noise.
    Members are also reminded that they may only participate in 
one remote proceeding at a time. If you are participating 
remotely today, please keep your camera on, and if you choose 
to attend a different remote proceeding, please turn your 
camera off.
    Today's hearing is entitled, ``Access Denied: Eliminating 
Barriers and Increasing Economic Opportunity for Justice-
Involved Individuals.''
    I now recognize myself for 4 minutes to give an opening 
statement.
    I am pleased to conduct this hearing today. The United 
States of America has a large population of incarcerated 
persons, with 2.1 million Americans in prison. One in three 
American adults have been arrested and 78 million Americans 
have a criminal record.
    These are our neighbors, our friends, and our family 
members, and we are a nation of second chances. But today, we 
will learn firsthand through testimony of justice-involved 
individuals and their advocates about the nearly insurmountable 
barriers to employment and financial inclusion that justice-
involved individuals face.
    Let me just share this with you. There are 10.9 million job 
openings in the United States, 10.9, and unfortunately, 
justice-involved individuals are too often shut out from these 
opportunities.
    Craig Arnold, a leading Fortune 500 executive, said, ``A 
felony conviction may as well be a life sentence when it comes 
to reentering the workforce.''
    Employers who want to provide opportunities for justice-
involved individuals face a regulatory structure that increases 
risk and minimizes the benefit to the individuals and the firm. 
Federal regulations for employment of justice-involved 
individuals should be simplified to maximize the benefit to 
potential employees and employers while maintaining the safety 
and soundness of these markets.
    The financial services industry recognizes the need to 
include justice-involved individuals in their hiring efforts. 
JPMorgan Chase has exemplified leadership on this front with 
their second chance agenda, hiring individuals with arrest 
records and convictions.
    But here is the part that makes me highlight this. They 
have been able to account for 10 percent of their new hires in 
2019, and they even wrote an op-ed arguing that if you have 
paid your debt to society, you should be allowed to work, and 
that is what the second chance program is about.
    This is also another form of diversity and inclusion, that 
we are family, we are friends, and we all need to be able to 
say we are trying to move the needle.
    Most individuals returning to society from prison are 
released without any savings or job prospects, and often lack 
the funds for housing application fees, security deposits, 
rent, and the list goes on. This reality often leads to 
homelessness and prevents those individuals from building 
relationships with their families and support networks.
    Yet, the criminal justice system demands that they walk a 
tightrope in compliance to avoid violating the terms of their 
release, in many cases.
    Justice-involved individuals also have limited access to 
financial education, financial products, and services. We must 
ban the box of isolation, financial exclusion, and biases, 
which often prevents justice-involved individuals from 
supporting their families and contributing to our economy.
    So today, I am introducing the Fair Hiring in Banking Act 
to empower depository institutions to build pathways to 
opportunity and economic security for those who are seeking a 
second chance and a brighter future.
    I now call upon my colleagues to join me in creating 
pathways to employment and financial access to reduce 
recidivism, strengthen the economy, and stabilize families and 
communities.
    With that, the Chair now recognizes the ranking member of 
the subcommittee, Mrs. Wagner, for 5 minutes for an opening 
statement.
    Mrs. Wagner. Thank you, Madam Chairwoman, and thank you to 
our witnesses for joining us today to discuss the economic 
opportunities and barriers for individuals who have been 
involved with the criminal justice system.
    Gainful employment is a key factor in reducing recidivism 
for justice-involved individuals. In the banking sector, we 
have seen positive steps taken by the FDIC to ensure that the 
hiring practices at an insured depository institution still 
protect the safety and soundness of financial services, while 
also giving those who are qualified, rehabilitated, and ready 
to work a fair chance at securing employment.
    Over the past few years, the FDIC made notable changes to 
the hiring prohibitions listed in Section 19 of the Federal 
Deposit Insurance Act for individuals with certain minor 
criminal offenses, otherwise known as de minimis crimes, on 
their records. In 2018, the FDIC further expanded de minimis 
crimes to cover small-dollar simple theft, and isolated minor 
offenses carried out by individuals 21 years or younger.
    Since then, the FDIC has continued to refine Section 19 to 
protect the safety and soundness of our financial institutions. 
FDIC Chair Jelena McWilliams has commented that Section 19 
should not serve as, ``a barrier to entry for individuals who 
have committed minor crimes in the past, paid their debt to 
society, reformed their conduct, and are now seeking to gain 
employment with a financial institution.''
    In July of 2020, the FDIC adopted a rule which made several 
changes to Section 19. The new rule excludes crimes that have 
been expunged or sealed, reduces the 5-year waiting period to 3 
years, changes the threshold amount for small-dollar theft from 
$500 to $1,000, and expands the exemption for use of fake 
identification from alcohol-related crimes to all crimes 
related to purchases or premises entry.
    I completely agree with Chair McWilliams, and support these 
changes that narrow the scope of crimes subject to Section 19, 
to allow for more individuals looking for a second chance to 
work in the banking industry, and still protect the Deposit 
Insurance Fund.
    Today's hearing is also timely, with a record-setting 10 
million job openings in the United States of America, and more 
than 8 million still unemployed. It is critical that we ensure 
that those who can work, achieve employment, so that they can 
provide for their families and become self-sustainable, 
especially as our economy recovers from the COVID-19 pandemic.
    Access to employment is vital to upward economic mobility, 
and we should carefully examine any barriers that might exist 
while ensuring the integrity of our institutions and the safety 
of employers and employees and the security of our financial 
system.
    Thank you, Madam Chairwoman, and I yield back the balance 
of my time.
    Chairwoman Beatty. Thank you so very much to our ranking 
member. We will now welcome the testimony of our distinguished 
witnesses: Ms. Sakira Cook, the senior director of the Justice 
Reform Program at the Leadership Conference of Civil and Human 
Rights; Mr. Jeffery Korzenik, the author of, ``Untapped 
Talent,'' and yes, I think that is the power of the hidden 
workforce; Ms. Dolfinette Martin, the housing director of 
Operation Restoration; Ms. Marie Claire Tran-Leung, the 
director of the Legal Impact Network at the Shriver Center on 
Poverty Law; and Ms. Melissa Sorenson, the executive director 
of the Professional Background Screening Association.
    Witnesses are reminded that their oral testimony will be 
limited to 5 minutes. You should be able to see the timer on 
your screen or on the desk in front of you that will indicate 
how much time you have left. When you have one minute 
remaining, a yellow light will appear. I would ask you to be 
mindful of the timer, and when the red light appears to quickly 
wrap up your testimony, so we can be respectful both to you and 
the other witnesses and the subcommittee members. You will hear 
a slight tap, and then you will hear that your time is up.
    And without objection, your written statements will be made 
a part of the record.
    Ms. Cook, you are now recognized for 5 minutes to give an 
oral presentation of your testimony.

STATEMENT OF SAKIRA COOK, SENIOR DIRECTOR OF THE JUSTICE REFORM 
  PROGRAM, THE LEADERSHIP CONFERENCE OF CIVIL AND HUMAN RIGHTS

    Ms. Cook. Chairwoman Beatty, Ranking Member Wagner, and 
members of the subcommittee, thank you for the opportunity to 
testify today on the critical importance of creating new 
economic and social pathways for justice-involved people to 
thrive.
    I would like to focus on two key areas of interest to the 
Leadership Conference: predatory lending; and fair chance 
hiring.
    But first, in order to have a more fruitful conversation 
about how to expand opportunities for people exiting the 
criminal legal system, my written testimony touches on the 
factors that put so many people into the system and place them 
at a staggering disadvantage upon leaving it.
    The U.S. incarcerates more than any other country in the 
world, with more than 2 million people currently incarcerated. 
Overcriminalization and incarceration have devastating impacts 
on those ensnared in the criminal legal system and their 
families, and disproportionately harm low-income communities 
and communities of color.
    Yet, the criminal legal system does not produce any 
proportional increase in public safety. Instead, it produces a 
permanent underclass, with more than 70 million people with a 
record who are too often shut out of meaningful educational and 
career opportunities and exploited by predatory financial 
forces.
    This leads to a cycle of legal and economic and social 
hardships carried from one generation to the next.
    In 2019, the Leadership Conference released, ``Vision for 
Justice: A New Paradigm for Public Safety.'' This report, which 
we request be included in the record, outlines an agenda for 
transformation that prioritizes up-front investments in non-
carceral programs and social services and keeps communities 
truly safe.
    One of the many obstacles that justice-involved people, 
particularly people of color, face in successfully reentering 
society is accessing the mainstream financial system.
    As author James Baldwin once noted, ``Anyone who has ever 
struggled with poverty knows how expensive it is to be poor.'' 
This is especially true for people who are facing lasting legal 
and financial consequences and social stigma long after they 
have completed their sentences.
    One particular area of concern is the proliferation of 
payday lenders within communities of color, marketed to people 
with poor credit as a convenient way to handle financial 
emergencies.
    The fees charged by payday loans can quickly equate to 
interest rates of 400 percent or higher for loans that are 
renewed over the course of a year. Payday lenders are also more 
likely to be located near Black borrowers than White borrowers.
    We stand for a simple principle: Before making any loan, a 
lender should be reasonably certain that a borrower can pay it 
back and pay it back on time.
    An important first step would be for the Consumer Financial 
Protection Bureau (CFPB) to reinstate its 2017 payday rule. We 
also urge Congress to enact the Veterans and Consumers Fair 
Credit Act, which would impose a 36-percent interest rate cap 
on consumer loans.
    More directly related to today's hearing is the extension 
of fair chance hiring that would allow more justice-involved 
people to obtain gainful employment, including in the banking 
industry.
    Several years ago, we urged the FDIC to reform its rules 
under Section 19 of the Federal Deposit Insurance Act. In 
particular, Section 19 prohibits banks from hiring anyone who 
has been convicted of a criminal offence involving dishonesty 
or a breach of trust or money laundering, except with prior 
written consent of the FDIC.
    The FDIC's previous statement of policy governing Section 
19 included several troubling provisions that unduly prevented 
justice-involved people from seeking employment in the banking 
industry.
    Starting in 2018, the FDIC adopted several positive changes 
to its policy. Yet, there is still significant room for 
improvement.
    First, the FDIC must revisit its treatment of drug-related 
convictions. As the failure of the war on drugs and its 
profoundly discriminatory impact on Black people become 
increasingly clear, this blanket treatment of prior drug 
convictions is indefensible.
    Second, the statutory language should be revised. The 
language, ``any criminal offence involving dishonesty or breach 
of trust, or money laundering,'' isn't defined and it doesn't 
take into account what type of position the applicant is 
seeking. For example, it doesn't distinguish between applicants 
for clerical and custodial positions and more sensitive 
positions.
    Third, the FDIC or Congress should require the use of the 
Section 19 waiver process less often. For drug offenses and 
many others, the Section 19 waiver process is not a workable 
fallback. Applying for a waiver is a highly burdensome, costly 
process that takes far longer than prospective employees or 
employers are typically able to wait.
    Fourth, we support further reform of Section 19 and of 
similar restrictions under the Federal Credit Union Act, the 
Truth in Lending Act, and the the Securities Exchange Act of 
1934, to limit any restrictions on justice-involved 
individuals.
    And finally, as more and more States legalize cannabis, we 
call on Congress to pass the Marijuana Opportunity Reinvestment 
and Expungement Act, which would allow expungement of 
convictions that never should have happened in the first place.
    We look forward to working with the subcommittee to expand 
opportunities for people leaving the criminal legal system and 
toward a new vision of justice that truly keeps communities 
safe.
    [The prepared statement of Ms. Cook can be found on page 36 
of the appendix.]
    Chairwoman Beatty. Thank you.
    Mr. Korzenik, you are now recognized for 5 minutes to give 
an oral presentation of your testimony.

   STATEMENT OF JEFFERY KORZENIK, AUTHOR, ``UNTAPPED TALENT''

    Mr. Korzenik. Thank you, and good morning, Chairwoman 
Beatty, Ranking Member Wagner, and members of the U.S. House 
Financial Services Subcommittee on Diversity and Inclusion.
    Thank you for this opportunity to testify before the 
subcommittee today, and for holding this important hearing.
    I come before the subcommittee today in my private capacity 
as a researcher, and as the author of, ``Untapped Talent,'' a 
book that shares the business case and best practices of second 
chance hiring and the employment of people with criminal 
records.
    Although I am an employee of Fifth Third Bank, my views are 
my own, and do not necessarily reflect the views of my 
employer.
    The criminal justice system, as previously outlined, is 
estimated to have left tens of millions of Americans with 
criminal records that represent significant barriers to 
employment. Unemployment numbers actually underestimate the 
waste of human capital from justice involvement. Many, and 
possibly the majority of even those with jobs are 
underemployed, that is, they are unable to earn and contribute 
to the full extent of their capabilities.
    We must also recognize that the associated burdens of the 
criminal justice system and its failures are not borne equally. 
For example, tragically, one in three Black men in America is 
burdened with a felony conviction.
    The costs of the failure to create more effective systems 
of reentry is generally thought of in social terms: poor public 
safety; shattered families; and stressed communities.
    We, as citizens, and in particular, those of us in the 
business community, should also understand that this failure is 
of such a magnitude that it also carries a tremendous economic 
cost.
    When the past mistakes of so many millions of Americans 
create barriers to employment, this slows workforce growth. 
Barriers to economic mobility should be understood as drags on 
productivity.
    Even using conservative assumptions as to the work 
readiness of the justice-involved population, the costs of our 
failure to reintegrate people with criminal records into the 
economy should be measured in the hundreds of billions of 
dollars of growth that we forsake.
    The challenge, of course, is in creating viable pathways to 
opportunity that work for the employee, the employer, and the 
general public. Criminal justice reforms are often perceived as 
offering a tradeoff between public safety and greater justice 
for people with criminal records. This is a false choice. We 
should recognize that excessive supervision and restrictions 
can actually reduce public safety by undermining the employment 
of people with records.
    However, good policy should be seen as a necessary but not 
necessarily sufficient ingredient of better outcomes. Even with 
optimal regulation and policy, given the foundational role that 
employment plays in rehabilitation, employers ultimately must 
lead the way.
    Fortunately, we do have the example of numerous pioneering 
business owners that have developed processes that work. It is 
important to stress that one of the hallmarks of these 
successful second chance employment practices is profitability.
    Businesses cannot reasonably be expected to hire people who 
cannot contribute to the bottom line of the enterprise. 
Companies will write checks to charity, but only hire if it is 
profitable to do so. Certainly, without such hires being 
profitable, second chance hiring can never be scaled to a size 
sufficient to address our societal challenge.
    The current labor shortage, where job openings exceed the 
number of job seekers, is prompting employers to explore hiring 
from this demographic. It is important, however, that these 
employers view these workers not as a last resort, but as a 
pool of true talent that must be judged on an individual basis, 
sourced intelligently, and supported appropriately.
    Fortunately, leadership in the business community is rising 
to the task. Among the notable groups supporting the effort are 
the National Association of Manufacturers, the Society of Human 
Resource Management, and the newly-formed Second Chance 
Business Coalition.
    With respect to the industry within the committee's 
purview, financial services, there are special considerations, 
largely, surrounding reputation risk. The success of a 
financial system relies not only upon the actual safety and 
soundness of the institutions but also the public perception of 
that stability.
    However, arguments that the inclusion of workers with 
criminal records in financial institutions could undermine 
confidence in the industry appear to be unsubstantiated, given, 
for example, the very public second chance hiring efforts of 
the nation's second largest bank, JPMorgan, the company the 
chairwoman alluded to earlier.
    Second chance hiring done right is business, not charity. 
Good policy can reduce barriers for these practices without 
compromising public safety or institutional soundness.
    Second chance hiring paves the road to a more prosperous 
economy, stronger families, and safer communities. When wise 
policies are coupled with the talents of the private sector and 
nonprofit partners, we can move toward our national aspiration 
to be, truly, a land of opportunity for all.
    Thank you.
    [The prepared statement of Mr. Korzenik can be found on 
page 45 of the appendix.]
    Chairwoman Beatty. Thank you so much.
    Ms. Martin, you are now recognized for 5 minutes to give an 
oral presentation of your testimony.

  STATEMENT OF DOLFINETTE MARTIN, HOUSING DIRECTOR, OPERATION 
                          RESTORATION

    Ms. Martin. Thank you, Chairwoman Beatty, Ranking Member 
Wagner, and members of the U.S. House Financial Services 
Subcommittee on Diversity and Inclusion. Thank you for the 
opportunity to testify before the subcommittee today and for 
holding this hearing.
    My name is Dolfinette Martin, and I am the housing director 
of Operation Restoration, a nonprofit created to help remove 
barriers for formerly and currently incarcerated women, to help 
them reach their fullest potential and discover new 
possibilities.
    I, myself, am a formerly incarcerated woman who served a 
combined 12 years in prison. Upon my release on April 12, 2012, 
after serving 7 years, 4 months, and 28 days for shoplifting, 
on my first night home, I had no soap, no deodorant, or no 
personal items that would help me keep my dignity.
    My living situation was me hiding in my elderly mother's 
senior living apartment because her lease required that no one 
live in her apartment other than her. This went on for a year 
after my release. At that time, I began to organize with 
grassroots organizations to change the current policies around 
public housing and criminal backgrounds at the Housing 
Authority of New Orleans (HANO).
    We were able to successfully get those policies changed, 
but implementation would take another 2 years. Once 
implemented, I was nominated to sit on the panel as a tenant of 
public housing. This was important, because what was needed was 
someone who faced and is still facing the stigma and challenges 
of being safely housed in affordable housing due to a 
conviction.
    This panel is only for people who have not been released 
from incarceration within the last 3 years, or their conviction 
isn't over 3 years. The reason this panel is so important is 
that it gives people the opportunity to receive public housing 
regardless of their past.
    In the 4 years of panel review, there has only been one 
denial. However, oversight is greatly needed, as this is an 
agency that is part of a larger problem. Despite some 
progressive work we have been able to get HANO to do, third-
party management corporations and private landlords are still 
using discriminatory practices, although they receive HUD 
funding.
    These corporations and private sector landlords are using 
arrests as well as convictions to deny access to people. For 
instance, the panel could vote to allow access, but if the 
tenant is applying for Section 8 housing, then the landlord 
does yet another background review and they deny.
    In my work with Operation Restoration, and the Vera 
Institute of Justice, we have attempted to help many women who 
have been denied housing solely because of a conviction, and a 
few who only had an arrest with no adjudication of the charge.
    This type of discrimination not only affects the safety of 
these people, but also the financial hardship that paying $50 
application and $25 background checks fees creates. It is 
astronomical.
    Recently, we had a natural disaster hit our State, and 
evacuation efforts created yet another barrier to safe, 
affordable housing. Initially, those seeking hotels would have 
to pay out-of-pocket, and if FEMA approved the lodging, there 
was this barrier called, ``credit card on file for 
incidentals.''
    If I have no money, job, or credit, then presenting this 
lifesaving piece of plastic is nonexistent. So now, I am faced 
with yet another barrier to housing.
    My personal experience with this is still present to this 
day. Although I am fortunate to be gainfully employed, I have a 
savings and a checking account, several credit cards, and cash 
on hand, I am homeless. Due to the hurricane damaging my roof, 
and HANO's negligence to ensure that a tarp was properly placed 
on my unit, I am currently paying to live in an Airbnb, have 
received zero dollars from FEMA, and am not sure when my unit 
will be repaired.
    This I bring up solely because I have beaten the odds. As 
someone with 10 felony convictions in my past, my present is a 
college degree since my release.
    I sit on HANO's panel review. I sit on the board of 
commissioners of the Audubon Zoo. I sit on the advisory board 
for the Formerly Incarcerated Transitional Clinic.
    I am a housing director at Operation Restoration. I manage 
a transitional home for women. I am an entrepreneur. I have a 
working relationship with city government. I was part of our 
mayor's transition team and have received numerous awards.
    But with all of the access that I have to people in 
positions of power, I could not find housing.
    [The prepared statement of Ms. Martin can be found on page 
50 of the appendix.]
    Chairwoman Beatty. Thank you very much, Ms. Martin.
    I now recognize Ms. Tran-Leung for 5 minutes to do an oral 
presentation of your testimony.

 STATEMENT OF MARIE CLAIRE TRAN-LEUNG, DIRECTOR, LEGAL IMPACT 
             NETWORK, SHRIVER CENTER ON POVERTY LAW

    Ms. Tran-Leung. Thank you, and good morning, Chairwoman 
Beatty, Ranking Member Wagner, and distinguished members of the 
subcommittee.
    On behalf of the Shriver Center on Poverty Law, I would 
like to thank the subcommittee for holding this important 
hearing on eliminating barriers and increasing opportunities 
for justice-involved individuals.
    And I just want to take a moment to thank my fellow 
panelist, Ms. Martin, for sharing her testimony with us today.
    Securing safe, decent, and affordable housing often 
presents challenges for individuals immediately after release 
from the criminal justice system, as well as years after.
    Incarceration and homelessness are deeply connected. 
Formerly-incarcerated individuals experience homelessness at 10 
times the rate of the general public, and this burden of 
homelessness is especially acute for Black women, who are 4 
times as likely as White men, and twice as likely as Black men, 
to experience sheltered homelessness following incarceration.
    In the same way that incarceration is a risk factor for 
homelessness, a history of homelessness increases the risk of 
incarceration. Individuals in jails are 7 to 11 times more 
likely to experience homelessness than the population at large. 
Housing barriers for justice-involved individuals can also 
severely restrain their ability to reintegrate into their 
communities by exacerbating other collateral consequences.
    Sustained employment and improved relationships with 
family, for example, are difficult to achieve in the absence of 
safe, decent, and affordable housing. Living with family, as 
Ms. Martin referred to, is one of the most affordable and 
stable housing options available to justice-involved 
individuals, and it is also one of the most commonly-used 
options.
    Restrictions on where people with criminal records can 
live, however, mean that many are living in the shadows rather 
than out in the open, especially in federally subsidized 
housing, and these illicit living arrangements pose a threat to 
the entire family's housing because of the risk of eviction or 
subsidy termination, straining the family dynamic.
    Rather than dampen the strong family bonds that can help 
people leave the criminal legal system behind them for good, it 
is time to find a way to reinforce those bonds by reducing 
unreasonable criminal records' barriers to housing.
    The shortage of affordable housing, especially in cities 
where many formerly incarcerated individuals return to, is a 
significant barrier for a population whose prior interaction 
with the criminal legal system often limits their employment 
prospects.
    Given this shortage, the need for federally subsidized 
housing is especially acute. For the past decade, HUD has 
encouraged public housing authorities and project owners to use 
their discretion to give second chances, and this encouragement 
has led some public housing authorities to adopt more inclusive 
policies, such as the Housing Authority of New Orleans.
    But, as Ms. Martin referred to, that is not enough. Agency 
encouragement in the absence of legislative action will have a 
limited impact on removing housing barriers because public 
housing authorities and project owners do not consistently use 
their discretion to admit people with records.
    Some engage in problematic practices like relying on 
arrests that never resulted in conviction, failing to place 
reasonable time limits on the use of criminal history, using 
overly broad categories of criminal activities such as felony 
bans, and failing to fully consider mitigating evidence that 
shows that a person is more than the four corners of their 
criminal background check.
    Congress has a chance to address some of these issues 
through the Fair Chance at Housing Act, which does several 
important things, the most notable being placing more 
parameters on the type of criminal conduct that can form the 
basis of denying admission and requiring an individualized 
review of applicants before denial.
    When it comes to housing barriers for people with criminal 
records, it is also not enough to regulate housing providers. 
Tenant screening companies play an increasingly large role in 
the application process both in the federally subsidized 
housing market and the private rental market.
    Over the last decade, the tenant-screening industry has 
flourished and yet it continues to be largely underregulated, 
especially compared to employment screening companies providing 
similar criminal record information to employers.
    At a minimum, we would urge Congress to amend the Fair 
Credit Reporting Act (FCRA) to extend existing protections for 
employment applicants with criminal records to the tenant 
screening context and put employment applicants and housing 
applicants on the same footing.
    We also urge Congress to amend the Fair Credit Reporting 
Act to limit the types of criminal records that can appear in 
consumer reports for non-law-enforcement purposes.
    [The prepared statement of Ms. Tran-Leung can be found on 
page 62 of the appendix.]
    Chairwoman Beatty. Thank you. Your time is up, but thank 
you so much, Ms. Tran-Leung.
    Ms. Sorenson, you are now recognized for 5 minutes for an 
oral presentation of your written statement.

STATEMENT OF MELISSA SORENSON, EXECUTIVE DIRECTOR, PROFESSIONAL 
                BACKGROUND SCREENING ASSOCIATION

    Ms. Sorenson. Good morning, and thank you, Chairwoman 
Beatty, Ranking Member Wagner, and members of the U.S. House 
Financial Services Subcommittee on Diversity and Inclusion. 
Thank you for the opportunity to testify today and for holding 
this important hearing.
    The Professional Background Screening Association (PBSA) 
shares the same goals as the public, industry partners, and 
Congress in terms of promoting pathways for individuals 
reentering society to secure employment and housing 
opportunities that help reduce recidivism and the costs borne 
by our society and the individuals' families when we fail to 
provide a path for successful reintegration.
    We also recognize the importance of ensuring employers who 
are uniquely positioned with knowledge of their industry, the 
positions that they are filling, and the access to consumers 
and consumer information have the information and ability to 
hire the most qualified candidates, and that housing providers 
have knowledge about their tenants to help keep our communities 
safe.
    Our mission is to advance excellence in the screening 
profession. The reports prepared by PBSA's background screening 
members are used every day by employers, volunteer 
organizations, and housing providers to help make our 
communities safe for all who use, work, and reside in them. 
PBSA's members, as with all consumer reporting agencies, are 
subject to strict regulations under the FCRA.
    Additionally, under the Obama Administration, both the EEOC 
in 2012, and HUD in 2016, issued regulatory guidance regarding 
the use of background checks. In both of these instances, our 
Federal agencies recognized the legitimacy for background 
checks while offering guidance on their appropriate use.
    I will refer you to my written statement that includes a 
discussion of the regulatory structure and protections it 
affords consumers today including infographics.
    With respect to the topic of today's hearing, PBSA has been 
actively and constructively engaged with policymakers and 
stakeholders in the Federal, State, and other forums to help 
promote successful integration of justice-involved individuals, 
and we have welcomed the opportunity to discuss this topic 
today.
    Specifically, we encourage Congress to take the following 
actions: adopt a uniform ban-the-box standard for private 
employers with preemption for State and local legislation; 
adopt carefully tailored employer negligent hiring liability 
protections; and expand the application of employer incentives 
such as the Worker Opportunity Tax Credit.
    First, ban-the-box and fair chance hiring. According to the 
National Employment Law Project (NELP) in October of 2020, 36 
States and 150 counties and local governments have adopted ban-
the-box policies.
    Additionally, later this year Congress will apply the Fair 
Chance to Compete for Jobs Act, which will prohibit most 
Federal agencies and contractors from requesting criminal 
history information before a conditional job offer.
    PBSA supports the intent of ban-the-box policies to provide 
those with criminal histories the fairest chance possible for 
reintegration. However, there are challenges posed by the sheer 
number of the varying regulations.
    Often, the laws include varied requirements such as 
specific wait times for adverse action letters or specific 
language requirements in those letters, and much more.
    This patchwork has created a burdensome environment for 
employers and places otherwise equally positioned applicants on 
unequal ground based solely on the city or State they live in.
    Therefore, we encourage Congress to adopt a uniform ban-
the-box standard that allows for background checks after the 
initial employment application.
    Next, employer liability. We would also encourage Congress 
to provide employers with liability protections with respect to 
negligent hiring. As discussed in greater detail in my written 
statement, employers can be confronted with millions of dollars 
of liability for hiring employees with criminal records. To 
help foster job opportunities for these individuals, a number 
of States have taken action to provide protection for employers 
who hire them.
    While States have structured their protections in different 
ways, PBSA recommends immunity for employers based on the 
employer's use of the Green factors as outlined in EEOC's 2012 
guidance.
    Finally, additional employer incentives. We would encourage 
Congress to consider an incentive-based approach, including 
expansion of the Work Opportunity Tax Credit Program beyond the 
current construct that applies only to employment of ex-felons 
within one year of release, expansion of the Bonds for Jobs 
program by changing the definition of what the bond covers and 
the value of the bond, and implementation of certificates of 
rehabilitation.
    It could be a program led by a governmental agency that 
includes individualized assessments and the issuance of 
certificates outlining the risk if reoffense is negligible. It 
would be a helpful tool for both justice-involved individuals 
and employers alike.
    Employment extended to a certificate holder could be 
accompanied by liability protections for the employer.
    We recognize the complexity of these issues and welcome the 
opportunity to appear before you today to address these as well 
as any other approaches that can help promote racial justice 
and increase reentry opportunities for justice-involved 
individuals.
    Thank you, and I look forward to discussing this with 
members of the subcommittee and my fellow panelists today.
    [The prepared statement of Ms. Sorenson can be found on 
page 52 of the appendix.]
    Chairwoman Beatty. Thank you so much, Ms. Sorenson, for 
your testimony. I now recognize myself for 5 minutes for 
questions.
    First, let me just say to you, Ms. Martin, thank you so 
much for your personal story and your personal sharing. It 
gives us firsthand knowledge of why we value this hearing and 
how we hope to move the needle so more people will have a story 
that is a little different than your story. But please continue 
to tell your story. We appreciate it.
    Let me just ask you, as a returning citizen, what are some 
of the important resources that justice-involved individuals 
need to have or know about to reconnect with their families and 
communities?
    And I am going to ask you to hold on your answer. I am 
going to go straight down the list.
    To Mr. Korzenik, some employees face regulatory 
restrictions such as the 10-year look back for misdemeanors. 
What policies should be implemented to eliminate employment 
barriers and what can employers do to leverage this population 
in their workforce?
    And to Ms. Tran-Leung, each year there are roughly 25,000 
returning citizens in my district of Franklin County, Ohio. 
Stable housing is a critical need to achieving employment and 
financial success. How can we address these biases in access to 
housing?
    And Ms. Cook, you highlighted discrimination in your 
testimony from payday lenders in accessing financial services. 
How can we ensure financial background checks for returning 
citizens are relevant and germane and increase financial 
inclusion?
    We will start there, and then I will come back.
    Ms. Martin?
    And we have limited time so I am going to ask you for 
concise responses.
    Ms. Martin. Yes, ma'am. Thank you, Chairwoman Beatty.
    So initially, on the first day of release, we should have 
identification cards--birth certificate, Social Security card--
because if we don't have those things, then housing, 
employment, anything that comes after that is nonexistent.
    If we are faced with reporting to parole officers, we can't 
really keep a job because we have all of these reportings that 
we have to do to--for someone else to say we are deemed worthy 
of being free, if free is even an option.
    So I would say, ID, birth certificate, Social Security 
card, the moment we are released. We should leave prison with 
those things.
    Chairwoman Beatty. Thank you so much.
    Mr. Korzenik?
    Mr. Korzenik. Thank you.
    With regard to the question about misdemeanors and how they 
might be considered in the process or what can be done to 
alleviate the burdens that those create, some of the most 
powerful policies have been various types of expungement or 
record sealing.
    For example, the State of Michigan has one of the most 
comprehensive expungement bills, called the Clean Slate 
Initiative. These are very, very powerful because they take 
these off of consideration and they de facto eliminate the kind 
of negligent hiring liability concerns that might be associated 
with having a visible record.
    With the broader question of, how can the business 
community take advantage of this population, I think it starts 
with a recognition of the size of this as an opportunity.
    This is an opportunity to get a massive talent base that is 
overlooked, but it requires an intentional and well-thought-out 
strategy, just as any business would pursue any kind of--
    Chairwoman Beatty. Thank you.
    Mr. Korzenik. Thank you.
    Chairwoman Beatty. Ms. Tran-Leung?
    Ms. Tran-Leung. In Ohio, we have worked with a lot of 
actually very good housing providers that have been interested 
in providing second chances for folks.
    I think uplifting those who work well, and then for those 
actors who don't house people with records, I think really 
looking at enforcement of the Fair Housing Act is really 
important for addressing those biases.
    Chairwoman Beatty. Thank you.
    And Ms. Cook?
    Ms. Cook. Yes, I am aware that there are some nonprofits 
that connect returning citizens to second chance banking 
services, and I think Congress can explore ways to leverage 
those partnerships and expand on them.
    And then, I would also say that it would be great for 
Congress to look at the Fair Credit Reporting Act and see if 
there are any provisions around enforcement or the provisions 
to limit or that are limiting access to banking services and 
financial institutions.
    So, those are the two approaches I would suggest that 
Congress take.
    Chairwoman Beatty. Thank you. And thank you to all of the 
witnesses as we move forward looking at diversity and inclusion 
from a criminal justice standpoint.
    I now recognize the distinguished ranking member from 
Missouri, Mrs. Wagner, for 5 minutes for questions.
    Mrs. Wagner. Thank you, Madam Chairwoman.
    First, Ms. Martin, I, too, want to acknowledge your 
strength and your courage in telling your story, and I would 
encourage you to continue to do so. We will be there to help, 
and the work that you are doing for Operation Restoration and 
Hope House is remarkable. So, I thank you.
    Mr. Korzenik, you published an op-ed in the Chicago Tribune 
last year in which you stated that eliminating the question 
about arrests or conviction records on job applications, known 
as the ban-the-box policy, has had mixed results and unintended 
negative consequences.
    You also cited an alternative series of steps you called, 
``bridging the box.'' Can you go into further detail, sir, 
about the negative consequences of this policy and these 
alternative steps?
    Mr. Korzenik. Sure. There are two challenges to ban-the-box 
in terms of its efficacy. I am by no means against ban-the-box 
but it certainly has failed to fulfill the hopes of its 
advocates.
    Some businesses, apparently, practice avoidance strategies. 
For example, we did our own work that suggested that businesses 
who did not want to consider these applicants because of their 
perceived costs of tapping this pool or having to later discard 
people because of a criminal record, seemed to direct them to 
avoiding people who had long periods of unemployment on the 
thought that it might include prison time, and other kinds of 
communities would be avoided.
    The other challenge with ban-the-box is it might not really 
support or encourage the kind of thoughtful process that might 
be let us give it a whirl, let us try someone kind of hire, and 
that doesn't seem to be terribly effective.
    Mrs. Wagner. What about, ``bridging the box?'' What would 
that be?
    Mr. Korzenik. ``Bridging the box'' is my name for a couple 
of things, starting with recognizing that there are very low-
risk hires. For someone who has been out in the workforce for 
10 years, why should an employer care about a criminal history 
that preceded that? Those are proven good applicants.
    Visiting nonprofits that can be partners in this effort, 
visiting employers that are already doing this, educating 
yourself on what these things--
    Mrs. Wagner. Thank you so much. I need to move on.
    Ms. Sorenson, in your testimony, you note that there is a 
patchwork of State laws and even a patchwork of policies at the 
local level. We see this a lot. You have called for a uniform 
ban-the-box policy. Could you discuss what that should look 
like?
    Ms. Sorenson. Certainly. Thank you.
    As you noted, there is a patchwork of varying ban-the-box 
laws and regulations at the State and local level. We would be 
supportive of a ban-the-box policy at the Federal level that 
applies to all private employers alike that would delay the 
criminal history inquiry until after that initial employment 
application to get everyone situated equally.
    Certainly, we recognize, as was just stated, that there are 
some open questions with respect to ban-the-box and some of the 
unintended consequences that may flow from these policies.
    We do want to also recognize the intent of the policies and 
move forward proactively with those.
    Mrs. Wagner. Ms. Sorenson, I have read that there is some 
concern about employer liability. Your testimony discussed 
negligent hiring cases. I believe you mentioned protections for 
employers that hire individuals who have minor or irrelevant 
criminal histories.
    But if an employer chooses not to conduct a background 
check, perhaps for the reasons we are discussing in this 
hearing, and it turns out that the employee had a serious or 
relevant crime in their past, what kind of protections would 
that employer have?
    Ms. Sorenson. Our recommendation is to consider employer 
liability protections for those that conduct criminal 
background investigations and consider the Green factors, 
evidence of rehabilitation, time since the offense, and job-
related as for that.
    We would be seeking employer liability protections in those 
cases. For employers that choose not to conduct background 
checks, that is kind of outside of the scope of our membership 
and the work that our members do.
    Mrs. Wagner. Okay. And then back on the ban-the-box, what 
specific policies have you seen at the State and local level 
that you find notable, that work well?
    Ms. Sorenson. A uniform ban-the-box that would be 
implemented, for example at the State level, that restricts 
that employment application inquiry about criminal history 
until after the employment application has been submitted 
effective.
    Mrs. Wagner. Thank you. My time has expired, and I yield 
back.
    Ms. Garcia of Texas. [presiding]. Thank you.
    The Chair now recognizes the Chair of the full Financial 
Services Committee, the gentlewoman from California, Chairwoman 
Waters, for 5 minutes.
    Chairwoman Waters. Thank you very much.
    I am very pleased about this subcommittee hearing. We are 
dealing with an issue that, of course, really points out the 
discrimination, the systemic racism in our society, and so I am 
very pleased not only that the subcommittee is holding this 
hearing, but I expect our committee to be in the forefront of 
getting rid of these discriminatory policies in not only 
housing and banking, but in other areas over which we have some 
oversight.
    Ms. Cook, in June of 2020, many organizations came 
together, led by the American Civil Liberties Union, to file a 
lawsuit challenging the Small Business Administration (SBA) 
rule that barred individuals with certain criminal histories 
from receiving Paycheck Protection Program (PPP) loans. The 
plaintiff in the case said the criminal justice system already 
disproportionately impacts people of color, and destructive 
policies that create unnecessary barriers to much-needed 
resources such as the PPP serve only to simplify the structural 
racism in our justice system. It is long past time to eliminate 
rules like this.
    The lawsuit was successful, and the court ruled that 
barring eligibility for business owners with criminal records 
from the SBA's PPP loan application was unlawful. Additionally, 
the Biden Administration worked to further broaden access, 
allowing thousands of firms to apply for this business-saving 
relief.
    So, it indicates just by the work that was done dealing 
with the CARES program, dealing with the American Relief 
Program, and dealing with PPP, that if government acts, we can 
get rid of this systemic discrimination in so many different 
ways.
    Ms. Cook, last year, we fought to further loosen these PPP 
restrictions when House Democrats passed the HEROES Act. I also 
worked with House Small Business Committee Chair Nydia 
Velazquez to set aside $60 billion for Minority Depository 
Institutions (MDIs), Community Development Financial 
Institutions (CDFIs), and other community financial 
institutions to make PPP loans. And we did this because we knew 
these institutions have a proven record of reaching underserved 
and underrepresented communities, including those that are 
justice-impacted.
    I have also worked $12 billion in capital investments and 
grants for these MDIs and CDFIs into the COVID-19 relief bill 
to, again, get money to the communities that need it most.
    But these are only first steps. Going forward, we need to 
know and understand how we can structure government lending 
programs to limit discrimination against people of color and 
prevent them from amplifying racial disparities.
    And so, let me ask whether or not you have taken a look at 
the many ways in which government discriminates, for example, 
in public housing, and are working, in our committee, to ensure 
that we undo these discriminatory policies that were created by 
this government to not allow those returning, say from prison, 
to be able to live in public housing units with their parents, 
their grandparents, et cetera, et cetera.
    I would like to know whether or not you have taken a look 
at other ways that we have absolutely initiated and support 
discrimination, whether it is in housing or it is in banking or 
in other areas. Can you help me with that, and that will help 
us dig deeper into what we can do?
    Ms. Cook?
    Ms. Cook. Absolutely. As you noted, formerly incarcerated 
people and people who are reentering society face a myriad of 
barriers, not only in financial institutions but in education, 
in housing, and in access to social programs and services, and 
we are talking about health care, Medicaid access, lifetime 
bans on access to Supplemental Nutrition Assistance Program 
(SNAP) and Temporary Assistance for Needy Families (TANF) 
benefits, the inability to explore higher education because you 
can't get access to Federal grants for educational services, et 
cetera. And it is important for Congress to look at all of 
these barriers across-the-board to ensure that we are 
increasing access and opportunity for people in our society.
    Chairwoman Waters. Thank you very much.
    And I yield back the balance of my time.
    Ms. Garcia of Texas. The gentleman from Oklahoma, Mr. 
Lucas, is now recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman, for holding this 
hearing. In particular, thanks to the witnesses for agreeing to 
testify.
    Mr. Korzenik, you discussed in your testimony how employers 
should view individuals with criminal histories as a pool of 
talent that should be evaluated on a case-by-case basis.
    Can you elaborate on some industry best practices and 
organizations that support this effort?
    Mr. Korzenik. Thank you very much.
    Yes. In the companies that are model second chance 
employers that I have observed and studied, you see one of the 
critical points is the individualized assessment period.
    Typically, in a ban-the-box State, if an offer contingent 
on a background check produces a background check, or earlier 
in the process, there is a review of that record, the challenge 
here is that the committee or individual who typically reviews 
that record usually has career disincentives to ever say yes.
    And so there is a perceived career risk, particularly to HR 
professionals, if they don't have executive support in the 
company to promote second chance hiring, it is so much easier 
from a career standpoint to say no.
    You have offsets to this, like the excellent work being 
done by the Society of Human Resource Management and their 
Getting Talent Back to Work certification program, but you also 
have structural changes you see in these employers.
    For example, one of the companies we studied in Michigan, 
Cascade Engineering, has a member of the executive team who is 
trying to promote second chance employment, and actually makes 
that final decision as to whether something in the background 
precludes employment.
    Other companies, like JBM Packaging, an Ohio-based company, 
have a member of one of the lines of business that are 
suffering and being challenged by the workforce shortage. They 
will put one of those people on that committee. Others will 
take an HR professional and assign them the role of advocate on 
behalf of those persons.
    So that is part of it, and then there is, of course, to the 
work advocated by the background check community. Designing a 
background check that is very specific and does not overly 
exclude candidates where their background is not relevant to 
the position would all be examples of what we have seen work 
very well.
    Mr. Lucas. Absolutely.
    Ms. Sorenson, could you further discuss State and local 
policies regarding background checks during the application 
process that slows down hiring and often has an adverse impact 
on individuals with criminal histories looking for work?
    Ms. Sorenson. Certainly.
    Generally, State and local policies that require background 
screening are related to those industries that have licensing 
requirements. So when there are licensing requirements at play 
for the position, that will require specific components of a 
background check be conducted, which often looks for certain 
offenses in that background check that might prohibit that 
person from being employed.
    Generally, that process in the employment context includes 
running the background check, and should something come up, an 
adverse action process where the consumer is notified of 
anything that pops up in the background check that the employer 
is considering taking action on, as well as a copy of the 
background check and an opportunity to dispute that process 
right there and can extend the time for the background check to 
be completed.
    Mr. Lucas. And continuing with you, Ms. Sorenson, could you 
elaborate on the ban-the-box policies and discuss how they 
operate differently across sectors?
    Ms. Sorenson. Certainly.
    Mr. Lucas. Are there exemptions for certain types of crimes 
or occupations?
    Ms. Sorenson. Generally, ban-the-box policies don't exempt 
certain types of crimes or occupations. What they have done in 
varying requirements is to require specific wait times for 
employers once they send out that initial adverse action 
notification, or require specific language be included or 
specific talking points that have to be involved in that 
process.
    Mr. Lucas. You discussed in your testimony the possibility 
of expanding the Bonds for Jobs program to include workplace 
violence. Could you expand on why you believe this is necessary 
and what this change would look like?
    Ms. Sorenson. Certainly. One of the key reasons that 
employers conduct background checks is for the safety of 
consumers and their workforce. The Bonds for Jobs program 
provides for a $100 cost--a bond that is extended--to up to 
$5,000 for employee dishonesty.
    That doesn't cover the real purpose and reason why 
employers are doing background checks. So, extending that bond 
to further coverage for the real reason that employers are 
doing background checks, extending that coverage limit beyond 
dishonesty and beyond the $5,000 would be helpful.
    Mr. Lucas. Thank you.
    And I yield back, Madam Chairwoman.
    Ms. Garcia of Texas. The gentleman yields back.
    The gentlewoman from Massachusetts, Ms. Pressley, who is 
also the Vice Chair of our Subcommittee on Consumer Protection 
and Financial Institutions, is now recognized for 5 minutes.
    Ms. Pressley. Thank you, and I want to thank Chairwoman 
Beatty for convening this critically important hearing.
    The mass incarceration crisis disproportionately impacts 
Black and Brown communities and, therefore, these communities 
face collateral consequences of incarceration, including doors 
to reentry and stability slammed shut as a result of criminal 
background checks.
    Criminal background checks too often bar our justice-
involved neighbors from securing housing and employment. A 
recent study, in fact, found that 79 percent of formerly 
incarcerated people and their families were denied housing due 
to a past criminal conviction.
    Black people are more than twice as likely to be arrested 
as their White counterparts, and people of color are 
drastically overrepresented in the population of those who are 
incarcerated.
    That is why President Obama, under his Administration, with 
the Department of Housing and Urban Development, made the case 
that banning tenants with a criminal record can constitute de 
facto racial discrimination and, therefore, is a violation of 
the Fair Housing Act.
    However, here we are more than 5 years later, and it is 
still legal to deny tenants in public and private housing for 
their involvement with the criminal legal system.
    Ms. Martin, I echo the sentiments of my colleagues. I 
associate myself with all those and just say the work that you 
are doing to center the humanity and to restore others, you are 
owed the same, and offline, we will do whatever we can to 
support you.
    But we thank you in the midst of your own uncertainty and 
trauma for coming here to advocate for the millions who stand 
to benefit from what we are doing here today.
    Ms. Martin, one in three individuals in this country has a 
criminal record. This is not abstract for me. Both my husband 
and my father, both Black men, are survivors of mass 
incarceration, who have gone on to do extraordinary work in 
academia, in the nonprofit world, and they have saved lives.
    Amanda Gorman said, ``We seek to be not a more perfect 
union but a more purposed union,'' and I am so grateful that 
they have been able to bring to bear their contributions.
    But it almost didn't happen. You and many of the people 
that you work with have the lived experience of challenges 
returning home and needing to secure housing.
    In my own district, the Massachusetts 7th, 30 percent of 
those who have been released from correctional facilities were 
released to shelters.
    So, it is disingenuous to say we want you to get on the 
grid, make a positive contribution after you have paid your 
debt, when we are not giving people an ID, housing, or income, 
even for transit to get to a job interview.
    So, again, none of this is abstract. I have seen it. I have 
lived it. But you know intimately what these challenges are.
    Please lend your expertise, and could you share some of the 
specific challenges that justice-involved people face 
specifically around housing?
    Ms. Martin. Thank you.
    To be specific, I share this all the time, and as I talked 
about the paper--the ID, birth certificate, Social Security 
card that we need.
    But as we know, over the past few years the incarceration 
of women has risen 800 percent. And so, as we have the 
conversations about incarceration, oftentimes women are left 
out of those conversations. But we do know that women are now 
becoming heads of households and we are the glue that holds 
these families together.
    So, if there is no safe space for me to sleep or for those 
women to sleep with those things, then the desperation sets in. 
Over the past 3 weeks, the three emotions that I have visited 
the most are fear, desperation, and anxiety. Those very three 
things led me to incarceration, because the trauma that lives 
within each of us leads us to prison, not the crime that we 
commit.
    I shared with you all, and I am not sure if you caught it, 
but I served 12 years for shoplifting. Desperation brought me 
there.
    Ms. Pressley. Yes.
    Ms. Martin. To be released, my first night home after 
almost 8 years, without a change of underwear, desperation is 
what leads most folks to prison, trying to survive where I am 
and those in my community are today. When we become desperate, 
we do what we know.
    Ms. Pressley. Thank you. Thank you for centering--
    Ms. Martin. Congress can help. And Congress can help by 
mandating these public housing agencies, when you get into bed 
with third party corporations, if you are taking money from us, 
you are going to implement our policies.
    Ms. Pressley. Ms. Martin, thank you for that. I do want to 
say that my bill would tackle some of these challenges by 
preventing tenant screening companies from including most 
criminal activity in a background--
    Ms. Garcia of Texas. The time has expired.
    Ms. Pressley. As we know, people who have been incarcerated 
once are 7 times more likely to experience homelessness than 
those--
    Ms. Garcia of Texas. Your time has expired, Ms. Pressley. 
Thank you.
    Ms. Pressley. Okay. Thank you. Thank you, Ms. Martin.
    Ms. Martin. Thank you.
    Ms. Garcia of Texas. The gentleman from Ohio, Mr. Gonzalez, 
is now recognized for 5 minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, and 
thank you to Chairwoman Beatty for holding this important 
hearing.
    Earlier today, I got off the phone with somebody who is one 
of the most inspiring people I talk to on a regular basis. His 
name is Maurice Clarett. For those who are from Ohio, you may 
know that name.
    Maurice was probably the best running back I have ever seen 
in my life in college, and he, ultimately, went through some 
challenges, and was incarcerated. He came out, and is now one 
of the largest podiatry providers in the State in terms of 
owning the practices. He has three vascular surgery centers, 
hundreds of affordable housing units throughout the State, and 
behavioral health clinics that he operates for youth who are 
going through trauma in various ways.
    And my question to him this morning was, tell me about when 
you got out. Tell me about the very moment you got out, what 
your plan was, and how difficult it was to actually access 
capital.
    And the one thing he said, and this will stick with me for 
the rest of my life, is he said, ``If I could fight for one 
thing in your committee, it would be access to capital for 
people like me. Access to capital literally changed my life.''
    And he talked about how he went through the traditional 
banking route and banks that we are familiar with, if I name 
them. He said, ``Look, to me, it felt like I was getting 
blacklisted. I came in with my business plan. I had my 20 
percent. I wanted to get a loan so I could get off my feet and 
I was completely shut out. And it took a personal relationship 
with a community bank in Delaware County before somebody 
finally said, `I will take a chance on you.'''
    And from that, he has built an unbelievably successful set 
of businesses. I am so proud of him and just honored to call 
him a friend.
    But I want to start, Mr. Korzenik, with you. In terms of 
the barriers that are in place for justice-involved individuals 
like a Maurice Clarett or others who come into Fifth Third Bank 
or another bank with their business plan, and they want to get 
on their feet, what are those barriers? How are they treated 
differently, if at all, from a lending standpoint when they 
come in the door?
    Mr. Korzenik. I have to say this is not an area of 
expertise to me. I do note, obviously, there are challenges 
with access to capital, particularly with entrepreneurship, and 
this is irrespective of criminal records.
    Banks are in the business of lending out other people's 
money, and so it is, generally, entrepreneurship lending 
through banks comes with people who have collateral. A lot of 
entrepreneurs in this country build their resources initially 
through families and credit cards, and those are all difficult 
resources for this population.
    Mr. Gonzalez of Ohio. Absolutely. And let me sort of shift 
them to something you might have a stronger opinion on. In 
terms of prison entrepreneurship programs, how effective do you 
think those are in providing the skills to eventually start and 
run a business?
    Mr. Korzenik. Because of the access to capital, because of 
levels of educational attainment, often coming from challenged 
family backgrounds, in terms of creating wildly successful 
entrepreneurs, it's probably not terribly successful.
    But I don't think that is the appropriate measure. Many of 
these entrepreneurship programs offer just terrific general 
training, business training, business skills training. They 
teach participants to think like business owners, which makes 
them great employees, and they also very often may not provide 
what we would consider a wildly successful entrepreneurial 
result but they create, essentially, effective side hustles 
that allow people to manage their finances and to prosper. I 
think they are very important programs. It is just that how you 
measure their success is important.
    Mr. Gonzalez of Ohio. Yes, and I probably should have 
prefaced with this. I asked Maurice that same question. He 
said, ``Everything I learned was self-taught.'' He said, ``I 
read the Economist. I read Forbes. I read about Andrew Carnegie 
and the Vanderbilts. I read about every successful entrepreneur 
in the history of our country over that period of time and that 
is how I learned. That is how I learned anything. And then, I 
just networked like crazy when I got out.''
    So, there is certainly a lot more that we can do.
    Ms. Martin, I guess I will end with you. I only have 30 
seconds. But how effective are prison entrepreneurship programs 
in providing the skills to eventually start and run a business, 
from your experience?
    Ms. Martin. I don't have that experience, because most 
women's prisons don't have those types of training.
    Mr. Gonzalez of Ohio. Yes. I think that is the answer right 
there.
    Ms. Martin. But I do think it would add a lot if there were 
some.
    Mr. Gonzalez of Ohio. Yes. So, nonexistent, right?
    Ms. Martin. Nonexistent.
    Mr. Gonzalez of Ohio. So, another huge gap. And, again, I 
want to thank the Chair for this hearing, and I yield back.
    Ms. Garcia of Texas. The gentleman yields back.
    The gentleman from Massachusetts, Mr. Lynch, who is also 
the Chair of our Task Force on Financial Technology, is now 
recognized for 5 minutes.
    Mr. Lynch. Thank you very much, Madam Chairwoman.
    I want to thank all of our witnesses for your willingness 
to help this subcommittee with its work, and Ms. Martin, I want 
to thank you as well for the power of your example on this 
issue, and for your courage in reengaging and helping other 
women in similar situations.
    I have had an opportunity during my time in Congress to 
visit quite a few prisons in Massachusetts and in my district, 
as well as houses of correction is what we call them in 
Massachusetts.
    But to be honest with you, what I have found from my own 
observations is that about 90 percent of the prison population 
suffers from dual addiction. So, we have an underlying problem 
there, and I have been working on this issue for a long, long 
time.
    But we have an underlying issue there that also creates a 
barrier to our neighbors who are coming out of prison, both men 
and women. I am involved right now. I founded a residential 
drug rehab program in my home community of South Boston geared 
towards children--believe it or not, adolescents--because they 
are becoming involved with drugs at such a young age.
    And now my latest project, a so-called local priority for 
my district is to establish a home for women coming out of 
prison, and it is going to be run by the Cushing House, the 
same people that are running my adolescent program, and it will 
provide educational opportunity and reconnecting to the 
community.
    But, importantly, the underpinning of that program is 
really on getting people sober, getting them straight, in order 
to provide that stability and that sense of community that 
might have been disconnected during their incarceration.
    And I am just wondering, from your experience, and you are 
a very powerful example of the good that can happen, how 
important is that?
    I don't think this is just my district that is dealing with 
the addiction problem. How important is that, do you think, in 
the overall effort to help women transition out of 
incarceration back into their communities?
    Ms. Martin. I would say it is very important, because as I 
stated earlier, a lot of trauma is what causes us to end up in 
prison. The trauma leads to the drugs, which leads us to 
prison.
    So, it is very important that you have that aspect of the 
transition. But if that trauma, that root cause, is not dealt 
with, then the cycle will continue, the recidivism will 
continue, and we will keep prisons running because people 
aren't being given the resources that they are needing, which 
is dealing with the trauma that is there.
    And men have trauma as well, but there are no resources to 
deal with any of that. Prison does not deal with trauma. Prison 
adds to the trauma.
    Mr. Lynch. Thank you.
    Ms. Tran-Leung, I know you are doing great work over at the 
Shriver Center. Again, on this issue of providing that support 
to make sure we deal with the dual addiction that--in my 
experience, it is, like, 90 percent of the prison population is 
dealing with that, and if we don't get that right, it 
diminishes our opportunities to do other good things.
    But can you share what your perspective is from the Shriver 
Center side of things?
    Ms. Tran-Leung. Yes, thank you for the question, 
Representative.
    From our perspective, we probably have had less experience 
in this space. But what I will say is that there is an 
increasing recognition that housing is necessary for our 
individuals and that housing is paramount to helping them to 
address some of these broader issues.
    And so, there has been a lot of really good work from HUD 
recently to try to remove some of the drug-related restrictions 
from the emergency housing vouchers, noting as of the fact that 
addiction is often a root cause of homelessness.
    Mr. Lynch. Thank you, Madam Chairwoman. I yield back.
    Ms. Garcia of Texas. Thank you. The gentleman yields back.
    The gentleman from South Carolina, Mr. Timmons, is now 
recognized for 5 minutes.
    Mr. Timmons. Thank you, Madam Chairwoman. And I would like 
to thank my colleagues across the aisle for having this 
hearing. This is very important, and currently in this country 
we have 10 million jobs that are available, and if people want 
to get back to work and are being prevented from doing so, we 
need to take steps to make sure that they have the opportunity 
to get back to work. That is the whole point of the criminal 
justice system--there are two theories of justice: retributive 
justice; and deterrent justice. If you have been released from 
prison, if you have served your time, you should be able to get 
back to work and pursue the American Dream just like everybody 
else.
    We have four proposals here before us. Two of them, I 
think, could have bipartisan support. Two of them, I do not see 
getting much bipartisan support.
    There is one thing that I think that is incredibly 
important that is not present before us here that would affect 
this enormously, and that is the issue of expungements. We have 
talked about it. I was a prosecutor for 5 years. I worked on 
the expungement laws of South Carolina. One of the biggest 
issues that is involved in the expungement conversation is the 
cost of the expungement.
    In South Carolina, it costs $285 to get your record 
expunged, if you are eligible. I just did some research--
Kentucky, $500; Louisiana, $550; Tennessee $450. If you don't 
have a job and you want to get a job, how are you going to pay 
$200, $300, $400, $500, $600 to get your record expunged to 
then get the job? It actually doesn't really make much sense.
    I think that we could find a lot of bipartisan support 
surrounding making expungements easier to get, payment for 
expungements, and I really think that is an area on which we 
should focus.
    Mr. Korzenik, what are your thoughts on the subject?
    Mr. Korzenik. I agree. I don't spend a lot of time focusing 
on policy. My focus is, let's get the employers to see this 
population as their future workforce, and then, I think, we 
will get better policy support for things.
    But expungement is very powerful. Clean slate type 
initiatives where there is automatic expungement are 
particularly helpful.
    You need two things for this population to access: one, 
money, as you have referred to if there is no automatic 
expungement; and two, the sophistication to know how to tap 
this resource. And these are all very, very helpful and would 
help address our labor shortage in a meaningful way.
    Mr. Timmons. To that point, I am going to ask a question of 
Ms. Sorenson. A lot of these States are generating tens of 
millions, hundreds of millions of dollars of revenue off of 
expungement fees. That is why they have them. Theoretically, it 
does require someone to actually assess an application, make 
sure the person is appropriately eligible, and then process it.
    Do we have any data or can you take a guess at what type of 
hit it would be budgetary-wise to these States if the Federal 
Government said, if you want this funding, you have to charge 
no more than $50 for an expungement or, as Mr. Korzenik just 
said, an automatic expungement?
    That is going to have a cost. That is actually the hardest 
one because not only does that remove their ability to charge 
the fee, so they lose the revenue, but then they have to do 
more work. So, that is probably the most expensive.
    Ms. Sorenson, do you have any thoughts on that?
    Ms. Sorenson. To your earlier question, I don't have the 
background or history on the cost and the income that goes to 
the States with respect to the expungement process. It is 
something that we can look at and get back to you.
    But I, personally, don't know what States are collecting in 
terms of the funding for the expungement process.
    Mr. Timmons. Sure. I will open it up.
    Ms. Martin, do you have any thoughts on this?
    Ms. Martin. I completely agree with what you are proposing. 
It would make life much easier for those of us with criminal 
backgrounds, but also I have no clue what the hit would be for 
the State. But they are raking in enough cash through the 
prisons not to really take too hard of a hit through the 
expungements.
    Mr. Timmons. Sure. There is not a lot of agreement in 
Congress, but I think we could find some agreement on this 
subject.
    Yes, Mr. Korzenik?
    Mr. Korzenik. I just wanted to mention that we should 
offset these lost costs with the economic benefits. There was a 
University of Michigan study which showed that people who went 
through expungement saw a pick-up of income of about 20 or 25 
percent over 2 years, an extraordinary pick-up in economic 
benefits.
    Mr. Timmons. And more tax revenue, because when you make 
more money, you pay more taxes.
    I also want to point out that we talked earlier about 
marijuana, which is going to be a very big challenge in this 
country. So many States have already legalized recreational or 
medical marijuana, and it is going to be very difficult to 
unwind this.
    We have to address it, and the longer we wait, it is really 
a disservice to the American people.
    With that, I yield back. Thank you, Madam Chairwoman.
    Ms. Garcia of Texas. The gentleman yields back.
    The gentlewoman from Michigan, Ms. Tlaib, is now recognized 
for 5 minutes.
    Ms. Tlaib. Thank you so much, Madam Chairwoman. I am so 
glad we are holding a hearing of this kind today, because too 
many of my colleagues don't fully understand how broken our so-
called justice system is.
    As we all know, it incarcerates people at a higher rate 
than any other nation right now and, of course, 
disproportionately targets our Black and Brown neighbors.
    There is also this heightened level of dehumanization that 
happens here. So, I just want to personally thank you, Ms. 
Martin, for helping change that with your powerful voice.
    We know that many leave prison already thousands of dollars 
in debt, whether from conviction-related costs, missed 
payments, prison charges, or child support, and often these 
debts leave individuals unable to obtain a driver's license. We 
talked about the ID required to open a bank account and so 
forth.
    Ms. Tran-Leung, what kind of credit score do returning 
citizens have upon release, and do they typically have access 
to consumer credit?
    Ms. Tran-Leung. First, thank you for that question, 
Representative.
    One of the common barriers that we have seen from justice-
involved individuals, in addition to the fact of their criminal 
record, is also the fact that they lack credit and that they 
have not been able to accumulate a good credit score while 
incarcerated.
    And so, this is something that is definitely a barrier with 
respect to housing, and I think one of the areas that we have 
been trying to push back on is the need to really conduct these 
type of screening requirements, especially after we have gone 
through a pandemic, where people will have eviction records, 
will have different things on their tenant screening, but where 
the need for housing is especially important.
    So, that is a very significant barrier for people, I agree.
    Ms. Tlaib. I appreciate it.
    And, Ms. Tran-Leung, as a result, justice-involved 
individuals are 3 times as likely to use alternatives such as 
payday loans or check-cashing services. Has your organization 
looked at that impact of how that has led folks towards 
predatory lending?
    Ms. Tran-Leung. The Shriver Center itself has not, but I 
do, at the Shriver Center, lead our legal impact network, where 
we have a network of State-level law and policy organizations 
that have done a lot of really good work around payday lending. 
And so, that is something I am happy to get back to you on, 
Representative.
    Ms. Tlaib. Yes. I have a bill that reduces debt to be 
reported on your credit report from 7 years down to 4 years, 
and I really think that could be transformative for everyone 
involved here, but especially around the country.
    We know that a consumer credit report can determine a 
person's ability to own their home, get a job, and even auto 
insurance in my State.
    In addition, prior to the COVID-19 pandemic, formerly 
incarcerated persons faced a 27-percent unemployment rate in 
the U.S., nearly 5 times higher than the national unemployment 
rate.
    Ms. Cook, I have admired your work and your leadership for 
a very long time, and I appreciate you being here.
    Could you talk a little bit about how poor credit can be 
used, intentionally or unintentionally, as a proxy for being 
formally--I call it a proxy to discriminate, especially those 
who are formerly incarcerated? Can you talk a little bit about 
that, and has your organization taken a dive into really 
understanding that impact?
    Ms. Cook. Absolutely, and thank you for that question. And 
as I noted earlier, predatory lending and access to financial 
services are really difficult for people with records. They 
face a myriad of challenges when it comes to credit reporting, 
when it comes to background checks that lock them out of access 
to homeownership, being able to get mortgages, being able to 
have jobs or hold jobs because of these barriers.
    And so, we have recommended that Congress look at these 
barriers and look at the Fair Credit Reporting Act and seeing 
[inaudible] exist, and look at revising those limitations and 
limiting any restrictions to people with records.
    Ms. Tlaib. How can we reform our credit reporting system? 
This is something you talked about, and I don't know if Marie 
or any others on the panel--one of the things that I have been 
looking at is, obviously, medical debt, because 90 percent of 
folks who file bankruptcy in our country is due to medical 
debt, and trying to prevent medically necessary debt from ever 
appearing on people's credit reports, again, which has been 
heavily used for all different areas--housing and so forth.
    The University of Michigan did a study which showed the use 
of credit scores actually in auto insurance, and how that has 
kept people in the cycle of poverty, because they are paying 
thousands and thousands of dollars even if they don't have DUIs 
on their record, but somebody who has a better credit score 
with a DUI is actually paying less. It just doesn't make any 
sense.
    And so I don't know, Marie or others, if you can talk about 
any other bills. We have been working on the one that reduced 
it from 7 years to 4 years, which we think would be truly 
transformative and a compromise. But I would love to hear if 
anybody has any questions, if the Chair would allow. Thank you.
    Ms. Garcia of Texas. The gentlewoman yields back.
    The gentlewoman from Pennsylvania, Ms. Dean, is now 
recognized for 5 minutes.
    Ms. Dean. Thank you, Madam Chairwoman, and I thank our 
chairwoman and all of you for coming to us today to testify to 
offer your important voices and your important experience.
    Ms. Martin, I especially thank you for your eloquence in 
everything that you have talked about.
    I will start first with education.
    Mr. Korzenik, in your testimony, you describe how 
employment plays an important role in rehabilitation of 
incarcerated and formerly incarcerated people. You also 
describe how behind bars education programs are an important 
part of this investment in employment.
    Last Congress, I had the privilege of working with the late 
Elijah Cummings to author a bill that would standardize the 
Federal Bureau of Prisons' education programs by creating an 
Office of Correctional Education focused on areas such as 
literacy, getting a GED, post-secondary workforce training, and 
more.
    Would creating such an office and a set of best practices 
across the Federal Prison Bureau help reduce barriers to 
meaningful employment after release, and do you think it could 
be replicated both at the State and local levels as well to 
boost employment and, obviously, bring people back into 
society?
    Mr. Korzenik. First, thank you for your work on that, your 
important policy work. Let me speak, most broadly, to the role 
of education.
    The RAND Corporation, the think tank, did a study of what 
was most consequential in getting better employment outcomes, 
and they found that education was the single-most critical 
element.
    Interestingly, it was not necessarily vocational 
employment, vocational training, but actually hard-core 
education programs. So, I think anything that encourages 
education and makes an investment in this workforce--and it is 
a workforce--would be beneficial.
    Ms. Dean. I think that is really well put, and, of course, 
vocational training is appropriate and useful. But you are 
right, the key is a real education, regardless if you are 
behind bars or not.
    Mr. Korzenik. Some of that, if I may, is because it is 
particularly true because of very low levels of educational 
attainment in this group. So, that plays a role in making core 
education.
    The other thing I will say in defense of vocational 
training is the study that RAND looked at was done at a time we 
were losing manufacturing jobs in this country, and it wasn't a 
prosperous area. I think redoing that might show some 
additional benefits to vocational training.
    Ms. Dean. Great points. Thank you.
    I am going to shift now to housing and, particularly, 
housing for those who are in recovery or those who struggle 
with substance use disorder.
    I am mindful that we are approaching the very end of 
National Recovery Month, and we know that many of those who are 
incarcerated or formerly incarcerated suffer from addiction or 
substance use disorder.
    I am especially concerned about how these people are 
treated if they happen to relapse, which is a normal, sadly, 
and common part of long-term recovery.
    Ms. Tran-Leung, in your testimony you describe instances 
where public housing authorities use broad discretion in 
screening and denying applicants based on such things as prior 
drug use.
    For those who may be in long-term recovery and are at risk 
of relapse, are they also at risk of losing their housing or 
maybe at risk of never getting housing, based on addiction?
    Ms. Tran-Leung. First, thank you for your question, 
Representative, and this is a very significant problem that we 
are concerned about is some of our laws around public housing 
and access to housing are relics of the war on drugs, and as 
time has gone on, we have learned that relapse sometimes is 
part of recovery, and there have been some areas in housing 
that reflect that.
    I think some States and some places take a housing-first 
approach, where it is necessary to house people and get them 
the support before we start talking about recovery, and so 
those are the type of policies for which we are hopeful.
    But as things stand right now under the current laws, 
people who are using drugs and have drug-related criminal 
activity could be at risk of losing their housing or could be 
at risk of being denied housing.
    And so, the Fair Chance at Housing Act that is before 
Congress helps to eliminate that and helps us to take a much 
broader view and get rid of this relic of the war on drugs.
    Ms. Dean. It is a relic.
    And I thank you, Madam Chairwoman. We know that addiction 
is a disease. It is not a criminal state, and we have to adjust 
accordingly.
    Thank you, and I yield back.
    Ms. Garcia of Texas. The gentlewoman's time has expired.
    The gentlewoman from Georgia, Ms. Williams, who is also the 
Vice Chair of our Subcommittee on Oversight and Investigations, 
is now recognized for 5 minutes.
    Ms. Williams of Georgia. Thank you, Madam Chairwoman, for 
recognizing me and for this conversation today.
    Increasing economic opportunity for justice-involved 
individuals is such an important topic to address. This 
conversation must also include addressing the centuries-old 
loophole in the Thirteenth Amendment.
    When the Thirteenth Amendment to the U.S. Constitution was 
passed, it outlawed slavery and indentured servitude except as 
a punishment for a crime. This exception also appears in State 
constitutions across the country.
    Unfortunately, this loophole has meant that many prisoners 
or justice-involved individuals are still working under 
conditions of forced labor, getting little to no wages for 
their work.
    We should all be able to agree that slavery and indentured 
servitude should not be permitted in any instance in this 
country. What's more, when those currently incarcerated are not 
fairly compensated for their work, they have an even harder 
time reentering as productive members of society.
    Fortunately, bipartisan supermajorities are starting to 
eliminate this exception in their State constitutions across 
the country. A whopping 80 percent of Utah voters approved the 
change just last year. In 2020, Nebraska voters also approved 
the change by over 68 percent. Colorado voters approved the 
change by over 66 percent in 2018.
    We need to learn from the successes at the State level and 
mirror this change at the Federal level. I have introduced the 
legislation to do just that with Senator Jeff Merkley.
    Ms. Cook, if those currently incarcerated can work under 
fair conditions, how would this help them to better access 
capital to start their small businesses when they reenter 
society?
    Ms. Cook. Thank you for that question.
    As I noted earlier, and as many of my colleagues have 
noted, when someone returns from prison, they are trying to 
start over. We have said that they have been rehabilitated, 
that they have served their time. But when they come out, they 
face barrier after barrier to being able to access the basic 
necessities that each of us need to live our lives and enjoy 
our lives.
    And so, it is extremely important that we remove those 
barriers to accessing employment, accessing housing, accessing 
Medicaid and health care and other public benefits in order for 
them to successfully reintegrate back into society.
    And without the removal of those barriers, without removal 
of barriers to debt, they are saddled with mountains of debt, 
fines and fees that they must pay--without having access to 
economic opportunity in order to pay those debts, in order to 
access housing, in order to continue education, we will 
continue to have the permanent underclass.
    We will continue to see a cycle of incarceration and 
reincarceration that Ms. Martin talked about.
    So, it is extremely important that we look at this through 
a holistic perspective and recognize that these things 
intersect and work together in keeping people out of economic 
opportunity and pathways to social inclusion.
    Ms. Williams of Georgia. Ms. Cook, I want to specifically 
talk more about the barriers to receiving and saving income to 
help those currently incarcerated to become more familiar with 
traditional banking services that they will need to utilize 
when they enter society.
    What is the impact of that, and what do you see our role as 
the Federal Government in helping?
    Ms. Cook. Absolutely. The fact is, when most people come 
out, they don't have credit. They don't have much credit or a 
credit history, and there are barriers to accessing traditional 
financial services.
    Many of them may not have ever had a bank account, may not 
have ever engaged with banking services in the past, and so it 
is important for us to support the work of nonprofit 
organizations that are helping to bridge this gap, that are 
helping to provide financial literacy and training and connect 
them to financial services, but also for Congress to look at 
its regulations and how those regulations also limit 
individuals with records from accessing those services.
    Ms. Williams of Georgia. Thank you so much, Ms. Cook. I 
urge all of my colleagues on this subcommittee to co-sponsor 
H.J.Res. 53, my legislation to eliminate the exception clause 
for slavery in the Thirteenth Amendment.
    Madam Chairwoman, I yield back the balance of my time.
    Ms. Garcia of Texas. The gentlewoman yields back.
    The gentleman from Massachusetts, Mr. Auchincloss, who is 
also the Vice Chair of the Full Committee, is now recognized 
for 5 minutes.
    Mr. Auchincloss. Thank you, Madam Chairwoman.
    First, I just want to say this has been just a terrific 
hearing. I have learned more from these materials and from this 
hearing, I think, than I have from almost any Financial 
Services hearing to date, so thank you.
    I wanted to zoom in on the safety versus justice paradigm, 
Mr. Korzenik, that you put forward. You talk about a false 
choice and a way of thinking that could, ultimately, undermine 
progress on both fronts. And you have this really nice graph 
here with public safety and restrictions and supervision and 
how it is actually--you start to get diminishing returns by 
going too far on restrictions and supervision.
    What I wanted to ask you about, and then I want to let Ms. 
Sorenson and Ms. Cook also weigh in is, as we are dialing back 
restrictions and supervision and getting returns actually on 
public safety, how are we measuring those returns on public 
safety in a way that addresses people's concerns about 
violence, especially as we are seeing gun violence actually 
spike by up to 20 percent in some cities across the country?
    Ms. Sorenson, I know that you said that what is keeping 
employers up at night is not so much theft or fraud but 
actually the threat of workplace violence, that they feel like 
they owe their employees that security, which I can certainly 
appreciate.
    So, what are the restrictions and supervision that we need 
to maybe actually dial up as we are dialing back others to 
ensure that there is not going to be interpersonal violence in 
the workplace or in our cities as we widen opportunity for the 
formerly incarcerated?
    Mr. Korzenik. One of the challenges in working in this 
space is the lack of good data, and this was recently 
highlighted--I know there is an op-ed in The Hill. I think it 
was one of the principals at Arnold Ventures who talked about 
this.
    One of the best investments that, I think, could be made at 
the Federal level is better data collection and more uniform 
data collection. It is so complex because it is across all 50 
States, sometimes even smaller jurisdictions, as well as the 
Federal Government.
    So part of the answer is, we don't really know.
    Mr. Auchincloss. And by better data and what we don't know, 
you mean the things that are predictive of future violence?
    Mr. Korzenik. Data collection of what is actually 
happening. We don't know a lot about outcomes. We don't know a 
lot about--we don't have standard definitions of recidivism 
versus rearrest, whether they are technical violations. Is it a 
minor parole violation or something serious?
    So, there is kind of a mess of a national data network, 
which makes it harder. And the purpose of that graph that you 
saw, which I used in my book and I stole shamelessly from my 
own op-ed in the Tampa Bay Times which featured that, is to 
kind of point out that there is this tradeoff where you can go 
too far, and I think that is a political discussion where you 
dial it back.
    But what I was really trying to get to is more 
restrictions, if it interferes with employment, as so many of 
these restrictions do, are bad for public safety.
    Mr. Auchincloss. Ms. Sorenson, do you have any thoughts on 
what would be the criteria we would want to use to expand 
economic opportunity, while still addressing the public safety 
issues so that we do not have employers worried about workplace 
violence, and we can ensure the public's safety?
    Ms. Sorenson. I don't know that we can ever ensure that 
employers will not be worried at all about workplace violence 
as part of that hat that they wear as an employer. Likewise, 
the same applies to landlords.
    I think one of the key components here with respect to 
background checks is understanding that it depends on the 
particular facts and circumstances for the employer, for the 
industry that they operate in, and for the positions that they 
are filling, whether they are filling positions that have 
access to vulnerable populations or consumer information and 
how you use that information from the background check, based 
on your industry, based on the positions being filled, and 
access to people and information.
    Mr. Auchincloss. Ms. Cook?
    Ms. Cook. I think it is important that we look at safety 
through a broader lens, and that we don't think about safety 
purely as enforcement but we think about safety as addressing 
causes of problems and how we address the underlying causes of, 
``violence,'' and trauma is an underlying cause.
    So, investments in social supports and investments in 
social services that will help to identify the root cause of 
the trauma, the root causes of violence, are critical in this 
instance. And I also think it is important that we don't 
blanketly limit access to employment for a person's background. 
A person is better than the worst day that they have ever had, 
and I think we have to remember that if we truly believe in 
rehabilitation.
    Mr. Auchincloss. Madam Chairwoman, I yield back.
    Ms. Garcia of Texas. The gentleman yields back.
    The Chair now recognizes herself for 5 minutes.
    First, I want to thank the chairwoman for bringing together 
all of these witnesses to talk about such a critical, very, 
very important topic.
    My district is 77-percent Latino. We are the fastest-
growing market in the United States. The Department of Labor 
found that Spanish-speaking Americans are expected to account 
for almost 65 percent of the labor force growth through 2029, 
adding about 7 million new workers.
    But despite this contribution to the labor market, there is 
a growing body of evidence that background screening products 
result in harmful discriminatory effects on Black and Latino 
Americans.
    This is a disturbing trend that has a significant impact on 
families, access to housing, financial services, and other 
essential capabilities.
    In a Fair Housing Act and Fair Credit Reporting case, the 
plaintiffs argued that a tenant-screening product, which 
automatically disqualifies applicants, has an adverse impact on 
Black and Latino applicants.
    The National Consumer Law Center found that background 
reports can contain a variety of errors, from a mismatched 
name, including sealed or expunged records, and 
misclassification of offenses.
    What is even more concerning is a growing prevalence of 
algorithm screening systems which take out any human 
consideration in the process.
    My question, therefore, is for Ms. Sorenson to begin. In 
your testimony, you say that the Fair Credit Reporting Act 
binds your members to use, ``reasonable procedures,'' to ensure 
accuracy. What are these procedures, and how are your members 
working to improve them since we, obviously, know that 
sometimes they don't work?
    Ms. Sorenson. The Fair Credit Reporting Act does require 
reasonable procedures to ensure maximum possible accuracy. 
Often, this involves linking an individual, the applicant's 
information, to the information in the record that is found. 
Typically, that is personal identifiers like the full name and 
date of birth, as well as additional information like Social 
Security number and address if that is available.
    One of the significant challenges in our space is access to 
personal identifiers in court records. We are seeing a trend 
that exists within the Federal court records system, the Public 
Access to Court Electronic Records (PACER), as well as in some 
States to redact personal identifiers, namely and particularly, 
date of birth. That is one of the most significant identifiers 
used and is necessary to link a record to an individual, and 
is, likewise, one of the current issues in our industry 
impacting accuracy and the ability to match up those records to 
people.
    Ms. Garcia of Texas. Right. Are you able to distinguish, 
for example--I believe one of the other witnesses mentioned in 
her written testimony about the screening, the arrest screening 
records, that it may say, ``arrest,'' but it doesn't say that 
there was no final conviction.
    Do your screening procedures include making a distinction 
between arrests that occurred but not having a final 
conviction?
    Ms. Sorenson. When you pull a public record from the court 
system, you would generally report the current status. So if it 
is an arrest-only piece of information, that would be included.
    It is ultimately up to the employer or property manager 
whether they want to receive or see that information. There are 
certain Federal and/or State laws and regulations that limit 
the reporting of arrest-only information, and then, on top of 
that, our PBSA members--background screening companies--can 
further limit that information based on their client request. 
Many proactively request to not see that information.
    Ms. Garcia of Texas. Okay. This committee has looked at 
consumer access to your credit reports and we have talked about 
the difficulty some consumers have in correcting errors.
    What is it that you all do to ensure that it is an easy 
process, if you will, to correct errors that may be in your 
screening procedures?
    Ms. Sorenson. As a trade association, the Professional 
Background Screening Association does not have consumer 
reports. So, PBSA does not correct the errors.
    Our members, however, are required under the FCRA to 
reinvestigate any dispute that comes in at no cost to the 
consumer. That, generally, is either a phone call, an email, or 
some other communication from the consumer that launches that 
reinvestigation dispute process.
    Ms. Garcia of Texas. Okay. I will probably submit a follow-
up question to that for the record, because I see that my time 
is expiring.
    But it seems to me that you should have a process where the 
consumer can more readily and accessively correct any errors 
that may--because we are keeping people from housing, banking, 
and so many other things that we need to figure out a way to 
make sure they make the corrections quickly.
    So, thank you for your testimony, and I would like to thank 
all of the witnesses for their testimony today.
    The Chair notes that some Members may have additional 
questions for these witnesses, 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.
    Also, without objection, I would like to enter statements 
to the record from the Bank Policy Institute, the Chris Wilson 
Foundation, the Collateral Consequences Resource Center, the 
First Step Alliance, the National Association of Federally-
Insured Credit Unions, the National Employment Law Project, and 
the National Low Income Housing Coalition.
    The hearing is now adjourned. Thank you all for being here.
    [Whereupon, at 11:55 a.m., the hearing was adjourned.]

                            A P P E N D I X


                           September 28, 2021                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]