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


                   BRINGING CONSUMER PROTECTION BACK:
                      A SEMI-ANNUAL REVIEW OF THE
                  CONSUMER FINANCIAL PROTECTION BUREAU

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

                             HYBRID HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 27, 2021

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-57
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
	
                                __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
46-246 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------   
                              

                 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

                            C O N T E N T S


                              ----------                              
                                                                   Page
Hearing held on:
    October 27, 2021.............................................     1
Appendix:
    October 27, 2021.............................................    69

                               WITNESSES
                      Wednesday, October 27, 2021

Chopra, Hon. Rohit, Director, Consumer Financial Protection 
  Bureau (CFPB)..................................................     4

                                APPENDIX

Prepared statements:
    Chopra, Hon. Rohit...........................................    70

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of the Consumer Bankers Association........    74
    Letter to Hon. Kathleen L. Kraninger from various undersigned 
      entities...................................................    80
    Written statement of the National Association of Federally-
      Insured Credit Unions......................................    85
    Letter from Tamara K. Nopper, Associate Professor, Rhode 
      Island College.............................................    90
Hill, Hon. French:
    Letter to Hon. Kathleen L. Kraninger from various undersigned 
      entities...................................................    80
Chopra, Hon. Rohit:
    Semi-Annual Report of the Consumer Financial Protection 
      Bureau, Spring 2021........................................    98
    Written responses to questions for the record submitted by 
      Representative Hill........................................   215
    Written responses to questions for the record submitted by 
      Representative Timmons.....................................   214
    Written responses to questions for the record submitted by 
      Representative Nikema Williams.............................   218
    Written responses to questions for the record submitted by 
      Representative Zeldin......................................   212

 
                   BRINGING CONSUMER PROTECTION BACK:
                      A SEMI-ANNUAL REVIEW OF THE
                  CONSUMER FINANCIAL PROTECTION BUREAU

                              ----------                              


                      Wednesday, October 27, 2021

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:07 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Maloney, Sherman, 
Meeks, Scott, Green, Cleaver, Perlmutter, Himes, Foster, 
Beatty, Vargas, Gottheimer, Axne, Casten, Pressley, Torres, 
Lynch, Adams, Tlaib, Dean, Garcia of Illinois, Garcia of Texas, 
Williams of Georgia, Auchincloss; McHenry, Lucas, Posey, 
Luetkemeyer, Huizenga, Wagner, Barr, Williams of Texas, Hill, 
Emmer, Zeldin, Loudermilk, Mooney, Davidson, Budd, Kustoff, 
Hollingsworth, Gonzalez of Ohio, Rose, Steil, Gooden, Timmons, 
Taylor, and Sessions.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    I now recognize myself for 5 minutes to give an opening 
statement.
    Good morning. Today, we welcome Mr. Rohit Chopra, the 
newly-confirmed Director of the Consumer Financial Protection 
Bureau (CFPB), before our committee. Mr. Chopra, you have 
inherited an agency that was undermined by the Trump 
Administration, which actively worked to reduce consumer 
protections and enable predatory behavior against the most 
vulnerable.
    For example, Mick Mulvaney and Kathy Kraninger weakened the 
CFPB's Office of Fair Lending and Equal Opportunity. During 
their tenure, only a total of four CFPB fair lending 
enforcement actions were taken, and regulator referrals to the 
Department of Justice for potential Equal Credit Opportunity 
Act (ECOA) violations declined by 58 percent. Thankfully, their 
efforts to eliminate the CFPB were unsuccessful.
    The CFPB was founded on the principle of protecting 
consumers from unfair, deceptive, or abusive acts or practices 
in the financial marketplace. Since its inception, the CFPB has 
uncovered illegal, predatory, and discriminatory conduct toward 
consumers, returning over $13.4 billion to over 175 million 
people who were taken advantage of by bad actors.
    Unfortunately, at a critical time during the COVID-19 
pandemic, the Trump Administration left consumers exposed. The 
CFPB reported earlier this year that homeowners of color 
continue to face significant challenges. Specifically, while 
Black and Latinx borrowers represent only 18 percent of all 
mortgage borrowers, they are nearly 3 times as likely as White 
borrowers to report being behind on their mortgage payment or 
having a mortgage in forbearance. It is critical that the CFPB 
provide strong oversight of mortgage servicers to ensure that 
they proactively work with all borrowers, providing affordable 
loan modifications to avoid unnecessary foreclosures.
    Furthermore, the COVID-19 crisis highlighted the predatory 
behavior of debt collectors, as thousands of people struggled 
to make ends meet and keep up rent. A legal aid attorney from 
Texas testified that debt collectors made record profits by 
aggressively pursuing default judgments, and in some cases, 
seizing stimulus payments and unemployment benefits deposited 
into bank accounts.
    And let's not forget the role of the CFPB in promoting 
responsible innovation. With the rise of financial technology, 
the CFPB must take action to ensure that consumers have more 
control over their own data and are protected from 
discrimination and predatory products and services. Last week, 
you issued orders for information from Big Tech firms operating 
digital payment systems to learn, among other things, how they 
are handling sensitive consumer data and to what extent they 
are following the consumer protection laws.
    So, Director Chopra, I look forward to your testimony and 
your leadership at a revitalized CFPB that can be the strong 
watchdog Congress always intended to protect consumers, 
especially those who have experienced historical 
discrimination, such as people of color, women, and low-wage 
workers, among others.
    I now recognize the ranking member of the committee, the 
gentleman from North Carolina, Mr. McHenry, for 5 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman, for holding the 
hearing today, and I am glad the committee is following up on 
our statutorily-required oversight hearings and holding this 
semi-annual review of the CFPB on time. And I want to 
congratulate you on that because there has been an alarming 
trend that the committee Democrats are scrapping these 
statutorily-required hearings, and I hope that we are back on 
track now.
    Director Chopra, welcome to the committee. Thank you for 
being here. I know you have been in this room many times 
before, but this is your first time testifying. As you know, we 
have a lot to discuss. Over the last several months, the CFPB 
has issued many new and concerning rules and guidance, as well 
as policy statements, and revoked some important actions 
completed under previous leadership. The Bureau has also 
delayed implementation of major rulemakings, causing regulatory 
uncertainty. That is problematic. I would like to hear more 
about how the Bureau came to those conclusions and why those 
actions were necessary.
    But I know you have only been Director for a month. None of 
those decisions were of your making. It was Acting Director 
Uejio who was calling the shots for the last 9 months, and he 
was unconfirmed. He acted as an unaccountable bureaucrat making 
those decisions, and I think the decisions were harmful to 
small businesses and consumers. But now we have you, a Senate-
confirmed, but still wholly unaccountable under the 
organizational structure of the law of the CFPB, a wholly-
unaccountable Democrat CFPB Director. And I think we have seen 
this one before. This is not new.
    And as you have pointed in your statements to Bureau staff, 
you were there at the inception of the Bureau, one of the first 
employees more than a decade ago. And under the leadership of 
Senator Warren and former Director Cordray, you were an active 
participant in the CFPB's regulation by enforcement. I would 
hope that having witnessed the harmful impacts of that style of 
regulation, you would come to a different conclusion about how 
you will operate as Director. The Bureau's overreach was 
substantial at the time, but, frankly, what we have heard from 
you in your statements is that you, like many of the Democrats 
we have been dealing with here on the Hill--the Democrats seem 
to have learned nothing and yet forgotten nothing.
    And you have made it clear in your statements that the CFPB 
will be basically run by Richard Cordray 2.0, and I would like 
to hear some differences, but so far I have yet to hear 
substantial differences. The main difference between now and 
then is that the Supreme Court has recognized what Republicans 
were saying, that the CFPB's leadership structure is 
unconstitutional. We think this is a good first step, but now 
it is time for Congress to rein in the Bureau and create an 
accountable agency.
    There are a number of Republican proposals to accomplish 
such a goal. Take, for instance, Congressman Barr's TABS Act to 
make the CFPB's annual funding part of the congressional 
appropriations process, or Congressman Luetkemeyer's bill to 
make the Bureau a five-member commission. We also have 
Congressman Loudermilk's TAILOR Act, to tailor regulatory 
actions to limit the burden on institutions and give greater 
clarity. We also have Congressman Williams' bill to remove, 
``abusive,'' from the UDAAP, and make sure that the Bureau 
can't make rules of the road as they sort of go along, and 
Congressman Emmer's bill to require a review of all proposed 
and existing guidance, orders, rules, and regulations, and to 
create a whistleblower reward program at the CFPB.
    I think there are things that we can come to terms with in 
this basket of Republican policy offerings here. These are 
simple and common-sense solutions that we should talk more 
about today. Instead, I know that Democrats have attached a 
long list of their partisan priorities to this hearing because 
they continue to focus on a far-left agenda, trying to pass it 
here in the House of Representatives and through the Senate. 
Republicans are more interested in getting answers about your 
agenda, Director Chopra, and how your decisions will impact 
small businesses and American families. And we want it to be 
different than last time--we do--and my hope is that you have a 
different approach than your predecessors.
    Madam Chairwoman, I ask unanimous consent to insert for the 
record the list of Republican initiatives, in more detail, of 
the reforms to the Bureau--
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. McHenry. --to ensure that it actually helps consumers.
    Chairwoman Waters. Thank you.
    Mr. McHenry. I yield back.
    Chairwoman Waters. Thank you, Ranking Member McHenry. I now 
recognize the gentleman from Colorado, Mr. Perlmutter, for 1 
minute.
    Mr. Perlmutter. Thank you, Madam Chairwoman. Mr. Chopra, 
congratulations on your appointment, and welcome back to our 
committee. I am excited to have a champion for consumers at the 
CFPB. The pandemic has produced a great deal of fear and 
uncertainty in our country, and having strong consumer 
protections during the economic recovery is critical to 
building back better. When consumers know they have someone on 
their side, it helps them have a little more faith in the 
economic system and their own future.
    The Bureau is faced with many important issues, like 
helping consumers having more control over their data, ensuring 
lenders aren't engaged in sharp practices, and making sure 
student borrowers are treated fairly. Now, as is this 
committee's tradition with CFPB Directors, I am sure Mr. Chopra 
will get nothing but softball questions today, and there will 
be broad bipartisan agreement on the mission, scope, and 
structure of the Bureau. Madam Chairwoman, I look forward to 
hearing Mr. Chopra's testimony, and I yield back.
    Chairwoman Waters. Thank you. I want to welcome today's 
distinguished witness, the Honorable Rohit Chopra, Director of 
the Consumer Financial Protection Bureau.
    You will have 5 minutes to summarize your testimony. You 
should be able to see a timer on the desk in front of you that 
will indicate how much time you have left. I would ask you to 
be mindful of the timer and quickly wrap up your testimony when 
your time has expired.
    And without objection, your written statement will be made 
a part of the record.
    Director Chopra, you are now recognized for 5 minutes to 
present your oral testimony.

  STATEMENT OF THE HONORABLE ROHIT CHOPRA, DIRECTOR, CONSUMER 
               FINANCIAL PROTECTION BUREAU (CFPB)

    Mr. Chopra. Thank you, Chairwoman Waters, Ranking Member 
McHenry, and members of the committee. I appreciate you holding 
this hearing today.
    2021 is very different than 2020. The economy is reopening 
and growing, labor demand is strong, and employers have added 
millions of new jobs. Household spending is increasing, and 
demand for housing is robust. While these macro indicators are 
promising, the recovery has been uneven. In many parts of our 
country, conditions remain fragile. Many families are 
struggling to afford their mortgages and their rent payments. 
Many small businesses are facing very severe challenges to make 
ends meet. Many communities, especially those that have been 
historically disadvantaged, have not felt much of a recovery. 
American families now owe $15 trillion in household debt, 
roughly $800 billion more than at the end of 2019, before the 
pandemic. Over the course of 12 months, mortgage origination 
hit historic highs at $4.6 trillion.
    The CARES Act has kept delinquency rates on mortgages and 
student loans at relatively low levels. However, many of the 
borrower forbearance programs have expired, so we lack a 
complete picture about distress. Many family farmers continue 
to confront significant challenges in staying afloat, and 
medical debt collections continue to grow as a concern for 
households. Congress has asked the CFPB to monitor market 
conditions to spot risks and meet other statutory objectives. 
Most importantly, right now I have asked staff at the CFPB to 
carefully monitor the mortgage market, including foreclosures. 
It is critical for our economy that families do not experience 
unnecessary hardship or errors, and that disruptions in the 
mortgage market do not impede a fragile recovery. We are keen 
on understanding how homeowners from different segments of the 
population are faring, including communities of color, 
military-connected families, older Americans, first-time 
homeowners, and family farmers.
    Technological progress holds the potential for enormous 
benefits for households and the economy, particularly with 
respect to real-time consumer payments. In recent years, 
though, Big Tech has sought to gain greater control over the 
flow of money and data in our economy. Last week, the CFPB 
issued orders to dominant firms, such as Facebook, Google, 
Apple, and Amazon, to shed light on their payment system 
practices. How will these giants harvest, track, and monetize 
data about our spending habits? How will they decide who gets 
kicked off their payment platforms? We will also be studying 
some of the practices of Chinese tech giants, like WeChat Pay 
and AliPay. This effort will inform other initiatives to ensure 
that our evolving payments landscape is in alignment with 
competition, consumer protection, and our national interests.
    More broadly, the CFPB intends to use its tools to promote 
an equitable and inclusive recovery, and given the existing 
economic conditions and these tools, I expect to have several 
areas of focus.
    First, we must find ways to create more competition in 
markets under our jurisdiction. For example, I am concerned 
that many Americans could be paying lower rates on their 
mortgages and credit cards and earning higher rates on their 
savings. We plan to listen carefully to local financial 
institutions and nascent competitors on the obstacles they face 
when seeking to challenge dominant incumbents, including in Big 
Tech.
    Second, the CFPB will sharpen its focus on repeat offenders 
that violate Agency and court orders, harming families and law-
abiding businesses.
    Third, we must work to restore relationship banking in this 
era of big data. Too many households and businesses have no 
place to turn to when they need help, especially when they face 
errors, problems, and other issues in their financial lives. 
The inability to cut through red tape and get help in one's 
financial life can be a major obstacle when seeking a job or 
when applying for credit. Preserving relationship banking is 
critical to our nation's resilience and recovery, particularly 
in these times of stress.
    Thank you, again, for this opportunity to appear before you 
today, and I look forward to your questions.
    [The prepared statement of Director Chopra can be found on 
page 70 of the appendix.]
    Chairwoman Waters. Director Chopra, it is refreshing to 
have a consumer financial protection expert leading the CFPB 
once again. I will now recognize myself for 5 minutes for 
questions.
    While I know a Republican Administration would appoint 
individuals to run the CFPB with a different approach to 
consumer protection, it was appalling to watch the former and 
twice-impeached President appoint individuals lacking in 
qualifications with the sole mission to destroy the CFPB. After 
this effort failed, I sincerely hope my Republican colleagues 
will cease politicizing the CFPB and drop their efforts to 
undermine its work.
    Director Chopra, there are many issues where the CFPB can 
play a meaningful role, including fair lending, payday lending, 
credit reporting, debt collection, student lending, and 
promoting responsible innovation that helps all consumers. Will 
you commit to not only reversing prior efforts to weaken 
consumer protections on many of these fronts, but reexamine 
ways to provide even greater protections for consumers? For 
example, instead of simply restoring CFPB's 2017 payday loan 
rule that Mick Mulvaney and Kathy Kraninger weakened, will you 
realize the full extent of your authority to strengthen the 
original rule so we can put an end to the debt trap too many 
borrowers, including borrowers of color, have experienced at 
the hands of predatory payday lenders?
    Mr. Chopra. Thank you for the question, Madam Chairwoman. 
Of course, we are doing everything we can to monitor every 
single one of those markets carefully. There are obviously a 
lot of fluxes in the economy. Things are changing, and we need 
to make sure we are acting before it is too late and anticipate 
those risks. I was very affected by the foreclosures after 
Lehman Brothers, and I think we saw that regulators acted too 
late, missed some of the key smoke signals, and the results 
were very devastating to homeowners. And with respect to all of 
the issues you have raised, I am going to be looking at all of 
those markets carefully to see how we can make the markets more 
fair, transparent, and competitive as the law directs us to do.
    Chairwoman Waters. Thank you. One policy area that I 
believe warrants more attention by the CFPB and by Congress is 
mortgage servicing. As we saw during the 2008 financial crisis, 
shoddy mortgage servicing practices led to far too many 
unnecessary foreclosures, when a reasonable loan modification 
would have made such a difference to keep homeowners in their 
homes with additional benefits for their neighbors and 
communities. I am glad the CFPB issued a rule earlier this year 
to provide some safeguards for homeowners' existing forbearance 
during the pandemic to ensure that mortgage servicers are 
communicating with them about loan modification options before 
initiating foreclosures.
    However, those enhanced protections expire at the end of 
the year. Data indicate that over 800,000 homeowners will still 
be seriously delinquent at the expiration of the Bureau's rule, 
approximately twice the number than at the start of the 
pandemic. The significant portion of those homeowners have FHA-
insured loans, which are disproportionately held by borrowers 
of color, hit hardest by the pandemic. Moreover, money from the 
Homeowner Assistance Fund will not be available to many 
homeowners until next year. Have you seen lenders proactively 
offer affordable loan modifications to help homeowners stay in 
their homes? Do you expect to see a significant increase in the 
number of foreclosures in the near future based on the data 
that you are analyzing right now?
    Mr. Chopra. The issue of foreclosures is number one on my 
mind. What we saw a decade ago was that problems in the 
mortgage market rebounded through the entire financial system. 
And the effect on individual homeowners, and that was 
disproportionately those neighborhoods, historically 
disadvantaged, they suffered the most. As I understand it, we 
are closely monitoring the servicers' activities, and working 
with the other bank regulators to make sure we understand where 
there are risks of illegal foreclosures, and to make sure we 
are using all of our tools to stop them. The CFPB will not be 
successful unless it is carefully monitoring what is happening 
in housing and, particularly, related to foreclosures.
    Chairwoman Waters. Thank you very much. The gentleman from 
North Carolina, Mr. McHenry, who is the ranking member of the 
committee, is now recognized for 5 minutes.
    Mr. McHenry. Director Chopra, I am going to start with the 
same question I asked Director Cordray in 2012, and it is about 
the word, ``abusive.'' I wrote you a letter about this. Thank 
you for the timely response. We are off to a good start. Former 
Director Kraninger put out a policy statement about, 
``abusive,'' providing clarity, but you wrote in your letter 
that, ``Articulated principles actually have the effect of 
hampering certainty over time'' How so?
    Mr. Chopra. I think what I intended to say there is that 
the way in which that policy statement was previously written, 
it did not actually provide clarity on the analytical framework 
that would be used.
    Mr. McHenry. Is it your intention to do so?
    Mr. Chopra. I have huge, huge aspirations to create a 
durable jurisprudence with respect to that, and that--
    Mr. McHenry. Durable jurisprudence. Does that mean that the 
courts will define what, ``abusive,'' is?
    Mr. Chopra. It could be a mix. It could be a mix of, of 
course, our Judicial Branch interpreting statutes. It is also 
about how the CFPB may use rules and guidance to help 
articulate those standards.
    Mr. McHenry. So, rules are very important, right? Rules are 
very important. Clarity for those that you are recognizing is 
important, and, therefore, they can follow the rules and they 
will know what the rulebook says. Don't you acknowledge that is 
important, especially on something that is a new standard?
    Mr. Chopra. Well, without going into too much boredom--
    Mr. McHenry. Oh, I love the boredom. Fantastic.
    Mr. Chopra. I used to serve at the FTC, and the FTC had an 
unfairness standard that took some time to litigate cases, to 
develop rules, to develop a clear analytical framework. And I 
agree, we all need to make sure that we are living up to what 
Congress was seeking to prohibit, ``abusive.'' There is 
actually much more detail on, ``abusive''--
    Mr. McHenry. Okay. So a decade in, what you are saying is, 
we don't yet have a standard for, ``abusive?''
    Mr. Chopra. We have a standard in the statute that has, 
essentially, a multi-pronged approach. The courts so far have 
not had too much of a difficult time, as I understand it, 
interpreting it. But that being said, there is a place for 
guidance. There is a place for litigation. There is a place for 
rules--
    Mr. McHenry. And right now, what we see from your actions 
previously and previous Democrat Directors is that regulation 
is not how they are going to do it. It is going to be through 
enforcement. Are you going to enforce regulation or 
enforcement?
    Mr. Chopra. When you say, ``regulation,'' do you mean 
through the rule writing process?
    Mr. McHenry. Right. We have a normal Administrative 
Procedure Act (APA) process. Do you intend to adhere to the APA 
in writing--
    Mr. Chopra. We will always adhere to the Administrative 
Procedure Act.
    Mr. McHenry. Thank you.
    Mr. Chopra. But the issue of abusive rulemaking, just as a 
matter of statutory construction, Congress required rulemaking 
under that section to trigger two things. The first is State AG 
enforcement over national banks, and the second is FTC 
enforcement over nonbanks. Other sections of the law required 
rulemaking prior to the sections going into effect, but, as I 
said, I am very committed to trying to create a durable 
jurisprudence--
    Mr. McHenry. Let me ask you just a couple of things for the 
record.
    Mr. Chopra. Sure.
    Mr. McHenry. Do you fully intend to cooperate with the 
Inspector General's investigations?
    Mr. Chopra. All of them.
    Mr. McHenry. Okay. And what is your view of congressional 
oversight?
    Mr. Chopra. As you may know, I have appeared in many--
    Mr. McHenry. We are Congress. We like to hear that you like 
it.
    Mr. Chopra. I have appeared--
    Mr. McHenry. Whether or not you personally like it, is kind 
of not relevant to the question.
    Mr. Chopra. I have appeared many, many times. I have 
responded and testified many times. And I will tell you, I came 
from an Agency at the FTC that in many ways, in my view, had 
absolute contempt for Congress and ignored statutes, and 
letters. And I hope to be able to provide and be responsive 
to--
    Mr. McHenry. So, you hope to be better than the FTC. Got 
it. We had the CELA litigation before the Supreme Court. In 
effect, the Court ruled that your Agency is, in effect, part of 
the Executive Branch, and it is considered part of it. My 
question is, is it your intention to adhere to Executive Orders 
issued by President Biden?
    Mr. Chopra. Executive Orders, as I understand it, are not 
binding on the CFPB. There may be some other types of 
regulations that are required by statute to apply to all 
agencies regardless of if they are independent or not. It is 
the newest part of the Federal Reserve System and the entire 
Federal Reserve System--
    Mr. McHenry. Let me ask you a final question. Executive 
Order 12866, which was issued by President Clinton, requires 
significant regulatory actions to be submitted for review by 
the Office of Information and Regulatory Affairs (OIRA) in the 
Office of Management and Budget (OMB). Do you intend to submit 
significant regulations?
    Mr. Chopra. As I understand from our statute, that is not 
part of the process. But with respect to certain principles, we 
will adhere to all of the statutory requirements on rulemaking.
    Mr. McHenry. Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentlewoman from New 
York, Mrs. Maloney, who is also the Chair of the House 
Committee on Oversight and Reform, is now recognized for 5 
minutes.
    Mrs. Maloney. I thank the chairwoman for yielding. Director 
Chopra, congratulations on your confirmation. I must say it is 
welcome news to, again, have a CFPB Director who is dedicated 
to putting consumers first.
    I want to touch on two issues today. As you know, I was the 
author of the Credit CARD Act of 2009, which ended the unfair, 
deceptive, and abusive practices of the credit card industry 
and leveled the playing field between cardholders and credit 
card companies. A 2015 CFPB study estimated that this 
legislation alone saved consumers over $16 billion in the first 
years of its enactment. Other studies have shown that it saves 
$20 billion a year. This 2015 study was the last year CFPB 
reported the cumulative benefits to consumers. The 2017, 2019, 
and 2021 reports don't do so, and I worry that if we stop 
talking about the benefits of the CARD Act, and take our eye 
off the ball, the industry may attempt to roll back some of 
these important protections again or resort to its past abusive 
practices. So, Director Chopra, ``yes,'' or ``no,'' will you 
reinstitute CFPB's past practice of reporting the cumulative 
benefits for consumers of the CARD Act in future reports, as 
the Obama Administration did?
    Mr. Chopra. Congresswoman, I do believe--I may be 
mistaken--that the CFPB is required to give a full picture of 
the card market, and I fully intend to make sure we report to 
Congress appropriately on that.
    Mrs. Maloney. Thank you. And are there any other areas of 
particular concern for you in today's credit card market that 
you believe merit further consideration by the CFPB or by 
Congress?
    Mr. Chopra. I think if you look at many of the consumer 
complaints and you look at some other market data, obviously 
people are concerned about whether assessments of certain types 
of fees have been appropriate, whether they are actually due to 
system errors. I think in the credit card industry writ large, 
I am concerned that not enough Americans are taking advantage 
of moving their balances or finding lower rates. Many Americans 
qualify for lower rates than they might be paying, and a 
competitive and fair market would mean that those consumers 
could move or find lower rates, and that could save them a lot 
of money. I believe in 2019, Congresswoman, Americans paid, I 
think, $90 or $100 billion in credit card interest and fees, 
and obviously a more competitive market would be to the 
benefit--
    Mrs. Maloney. Wow.
    Mr. Chopra. --of all issuers and consumers as well.
    Mrs. Maloney. Thank you. Changing gears, Director Chopra, 
what if I told you that I had a regular cup of coffee to sell 
you and it was going to cost $40? ``Yes'' or ``no,'' would you 
buy this cup of coffee?
    Mr. Chopra. I have not had a cup of coffee that would be 
worth that much.
    Mrs. Maloney. Of course not, and I can't imagine anyone who 
would say, ``yes,'' to that offer. Unfortunately, a $40 cup of 
coffee or sandwich from a bodega is too common of an occurrence 
today due to the abusive, unfair, and excessive overdraft fees 
charged by our nation's financial institutions taking billions 
of dollars out of the pockets of hardworking Americans every 
year. That is why I have introduced, with many of my colleagues 
on this committee, H.R. 4277, the Overdraft Protection Act, 
legislation that would crack down on predatory overdraft fees 
and establish fair, transparent programs.
    In 2012, the CFPB launched an inquiry into overdraft 
practices and the Bureau has published research reports which 
show that these fees are taking a heavy, unjustified toll out 
of many vulnerable consumers. And in the past 10 years, our 
nation's financial institutions have drained roughly $125 
billion from accountholders struggling day to day.
    Director Chopra, under your leadership, what will the CFPB 
do to address these abusive, unfair practices in this 
profoundly influential driver of racial inequity?
    Mr. Chopra. Congresswoman, as I understand the data, 
overdraft fees are actually disproportionately paid by a 
relatively small sliver of borrowers. Some of those 
accountholders are paying a very high amount of overdraft fees 
in a single calendar year. We will obviously enforce the law as 
written as well as any implementing regulations that have been 
promulgated by the Federal Reserve or the CFPB, and we will 
closely monitor this market to make sure it is free of unfair, 
deceptive practices.
    Chairwoman Waters. Thank you.
    Mrs. Maloney. Thank you, and I yield back. I hope you 
reinstate the studies that you have been doing. Thank you.
    Chairwoman Waters. The gentlewoman from Missouri, Mrs. 
Wagner, is now recognized for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman, and Director 
Chopra, thank you for appearing before us today. I look forward 
to hearing from you on the CFPB's actions over the past several 
months under the Biden Administration and what your priorities 
are as the Bureau's new Director.
    Since the CFPB's creation, we have seen the Obama 
Administration put in place, frankly, egregious regulations 
that made it harder for Americans to qualify for mortgages, 
obtain an auto loan, and access other forms of credit that 
families depend on every day. Additionally, the CFPB has 
continually shunned due process in bringing enforcement cases 
against businesses, and is a perfect example of how a lack of 
proper checks and balances leads to a downward spiral of 
expanded power and overreach, all at the consumer's expense. 
The CFPB's structure and funding mechanism must be reformed to 
ensure accountability to the American people. Dr. Chopra, do 
you agree that all rulemaking should be done in compliance with 
Administrative Procedure Act requirements, and that the public 
should have the opportunity for notice and comment for any 
major regulatory rule changes or shifts?
    Mr. Chopra. Congresswoman, yes. Whenever CFPB seeks to 
promulgate a rule, we should always, and, as I understand it, 
have always complied with the Administrative Procedure Act. But 
if there are places where you think--
    Mrs. Wagner. Not always.
    Mr. Chopra. --we have not complied--
    Mrs. Wagner. But I am glad to hear your commitment.
    Mr. Chopra. --I would like to hear about it. No, but I 
would love to hear where there are places where there hasn't 
been compliance so I can look into that.
    Mrs. Wagner. Wonderful, and I appreciate your commitment to 
following the APA. Do you agree that the Bureau should foster a 
better environment for consumers by rewarding companies that 
are self-identifying and self-reporting compliance concerns 
rather than seeking to punish companies and fining them when 
they have already taken corrective action?
    Mr. Chopra. Based on my record, I think you will be able to 
see that where companies have come forward, remediated and 
fixed issues, these things can often be solved without public 
enforcement action.
    Mrs. Wagner. Good.
    Mr. Chopra. That is a place where I want to encourage self-
reporting. But, of course, where they have flagrantly violated 
the law and not taken steps to fix things, enforcement action 
is usually appropriate.
    Mrs. Wagner. Just so that we are clear, self-identifying, 
self-reporting concerns, I hope that we are not going to seek 
to punish companies and fine them when they have already taken, 
as I said, the corrective action and done the right thing.
    Mr. Chopra. Yes. And, Congresswoman, in the law, under 
Title X, that actually relates to the factors in civil 
penalties assessment and good faith, all of those issues.
    Mrs. Wagner. Under the Obama Administration, we witnessed 
how regulation by enforcement creates uncertainty in the 
consumer financial markets, which, in turn, impacts consumers' 
ability to access innovative and affordable credit products.
    Director Chopra, will you commit the CFPB, under your 
leadership, to clearly communicate enforcement expectations to 
its supervised financial services companies?
    Mr. Chopra. That is absolutely my aspiration. I think 
markets work well when rules are easy to follow and easy to 
enforce. And I think often bright lines and bans can be one way 
of doing it, but we also have to enforce the law as written. We 
can't decide to invalidate parts of the law we don't like. 
Congress makes the laws, and we have to enforce them.
    Mrs. Wagner. That is the uncertainty that I think has been 
a question over time. Director Chopra, do you believe that the 
Bureau is accountable to Congress through your testimony today?
    Mr. Chopra. That is really for you to decide about that, 
but I hope that all of the requirements that Congress has put 
in place for not just the CFPB, but the OCC and other agencies 
similarly-situated to us, that we are adhering to high 
standards.
    Mrs. Wagner. Would you agree that the CFPB should be funded 
through the annual congressional appropriations process similar 
to other financial regulatory agencies to further increase the 
Agency's accountability to Congress and the American people?
    Mr. Chopra. Again, that is really a decision for Congress, 
but just as a factual matter, the other--
    Mrs. Wagner. What is your opinion on it? Do you have an 
opinion on it?
    Mr. Chopra. The other banking regulators have a similar 
type of independent funding, and the CFPB is subject to the 
appropriations process for requests above the base budget. 
There are two elements of how the funding works. To date, the 
CFPB has not requested money above the base budget and is 
subject to the normal banking--
    Mrs. Wagner. My time has expired. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Georgia, 
Mr. Scott, who is also the Chair of the House Agriculture 
Committee, is now recognized for 5 minutes.
    Mr. Scott. Thank you, Madam Chairwoman. Director Chopra, 
let me ask you this, at the time that the CFPB Civil Penalty 
Fund was established in the Dodd-Frank Act, we in Congress 
ensured that in statute, money from this fund could be used for 
payments for financial literacy and financial education 
programs. And before this hearing, I got a chance to review the 
CFPB's year-end financial report, and I was very pleased to 
discover that there is now more than $576 million in 
unallocated funds within the CFPB's Civil Penalty Fund. 
However, while the CFPB has written policies that describe the 
Agency's role and the process for making financial allocations 
to consumer education, zero--zero--money has been allocated for 
financial education. So, the question I have for you is, can 
you explain what factors the CFPB considers when determining 
the allocation of funds for consumer education and financial 
literacy programs?
    Mr. Chopra. Congressman, as I understand it, the Civil 
Penalty Fund has two purposes. The primary purpose is to 
redress victims where the CFPB could not recover funds. Many 
defendants may be judgment-proof. Scammers may have taken away 
the money. In those situations, where the CFPB has assessed a 
civil penalty, the fund can be used to make those individual 
families whole from the funds that were illegally taken from 
them.
    The second part, as you say, can be used for certain 
financial literacy initiatives. There is a set of rules that 
are in place currently to make determinations. Generally 
speaking, it goes through a process covered by certain 
procurement laws, but I am happy to follow up with you with 
more specifics on it.
    But I agree that the Civil Penalty Fund really is important 
to redress those victims, and, of course, the CFPB uses its own 
allocated budget to engage in financial education initiatives 
as well.
    Mr. Scott. Thank you so much for that. Let me just say that 
on this Financial Services Committee, we have many Members on 
both sides of the aisle who are vitally concerned and would 
like to see us move in a direction to allocate some of this 
money for financial education. That is the way we protect the 
consumers. We arm them with education with the literacy 
program. That is what will help us to keep our consumers away 
from these predators. And so, as you have indicated, there is a 
clear linkage between the CFPB's ability to prevent consumers 
from falling victim to these scams. And I think you also agree 
with many of us on this committee that we will be able, as 
written in the law, to allocate some of this half billion 
dollars to educating our consumers.
    With this in mind, first of all, I appreciate you extending 
that offer to get back with us. But, Director Chopra, can I get 
a clear commitment from you today that CFPB plans on using a 
portion of the more than $570 million in unallocated Civil 
Penalties Funds to support financial literacy, financial 
education, and consumer education programs?
    Mr. Chopra. I totally agree with the spirit of what you are 
saying. I want to be upfront that because it also is used for 
victim redress, I think we should all have a discussion about 
what is the right allocation between victim redress and 
consumer education. As the chairwoman said, I want to make sure 
that if people are foreclosed upon illegally, we need to be 
able to use those funds to make them whole as well. So, it is a 
balance--
    Mr. Scott. But you are agreeing to work with me on this, 
going forward?
    Mr. Chopra. Of course.
    Mr. Scott. Thank you. And thank you, Madam Chairwoman.
    Chairwoman Waters. The gentleman from Oklahoma, Mr. Lucas, 
is now recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman. Director Chopra, 
last week you ordered six Big Technology firms to turn over 
information about how they collect, use, and store consumer 
data. Could you describe your intent in requesting this type of 
information?
    Mr. Chopra. Yes, sir. I am very, very worried, I think, as 
many in the regulatory community have been, about Big Tech 
taking more control of the U.S. dollar and the global flow of 
payments. There are so many innovators who are trying to break 
in, and they feel that Big Tech can just turn them off. There 
are so many people who feel that their data is being misused 
and abused. Many of us have no transparency whatsoever as to 
how some of these firms determine how they kick people off 
platforms, and we have no transparency at all into a number of 
other issues. The orders that we have issued cover a number of 
topics, and I am hoping that we will be able to use that 
information to report to you all because I think safeguarding 
our nation's payment system is so critical to our economy. It 
is critical to small businesses. It is critical to our national 
security. And I want to make sure that payment system is 
vibrant and serving everybody.
    Mr. Lucas. Given your experience in this area, in your 
view, has the growing landscape of digital payment services 
been a net positive to consumers?
    Mr. Chopra. Oh, innovations that heavily have been driven 
from mobile device adoption have been terrific for many, many 
businesses and consumers. The ability to be able to transfer 
money is more seamless than it was. But what I want to make 
sure is that those payment systems still adhere to consumer 
protection, that they don't really undermine a fast, fair, and 
transparent system, and that they are not squelching out 
innovators or kicking people off with no understanding as to 
why.
    Mr. Lucas. This is an example of a mass amount of 
information, really insightful and critical to the developers, 
I suspect. I have to ask, do you commit to remaining within the 
confines of the Bureau's statutory authority in relation to 
payments?
    Mr. Chopra. Oh, of course, but, Congressman, the Electronic 
Fund Transfer Act, the Gramm-Leach-Bliley privacy rules that 
are under our jurisdiction, those are deeply implicated by 
these payment systems when it comes to surveillance of our 
payments and transactions privacy and misuse of data, squarely 
in our jurisdiction.
    Mr. Lucas. But let's not by un-intention create fewer 
options for the consumers out there.
    Mr. Chopra. Oh no, we want more. We want more options.
    Mr. Lucas. I respect that. A proposal for the CFPB to take 
a role in a government-run credit reporting bureau has gained 
support among some of my colleagues. I am concerned that a 
government-run credit reporting bureau would decrease privacy 
and accountability.
    Director, do you support the creation of a government-run 
credit reporting bureau? And along with that, what would you 
see as potential positives and negatives?
    Mr. Chopra. I have to be blunt with you. I have not 
actually given much thought to this because I don't know how 
mechanically it would work. I know in some countries they do 
have that, but that would be an enormous undertaking. It would 
be a big mountain to move. I am much more concerned in the near 
term, given the pandemic, about law violations of the Fair 
Credit Reporting Act (FCRA), how the credit reporting agencies 
are investigating disputes, and to make sure that new types of 
credit reporting agencies are adhering to the law because there 
are serious privacy implications of how our data is being 
trafficked without our knowledge.
    Mr. Lucas. Director, it is important for financial 
institutions to be able to collect and close out on previous 
loans, which allows them the opportunity to have the resources 
to continue to extend credit to those who need it. Would you 
describe what the economic impact would be if the ability for 
small business and lenders to recover debts was restricted?
    Mr. Chopra. If I am understanding the question correctly, 
credit reporting obviously can play a very important role in 
the financial ecosystem and be beneficial. Where there are 
severe errors and inaccuracies, there can be huge pain points 
for a business or a consumer to be able to move forward with 
their financial life. So, if you are asking whether I think we 
should delete everyone's credit report, the answer is no, but 
we want to make sure that credit reporting is adhering to all 
aspects of the law, including the Fair Credit Reporting Act.
    Mr. Lucas. Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Green, who is also the Chair of our Subcommittee on Oversight 
and Investigations, is now recognized for 5 minutes.
    Mr. Green. Thank you very much, Madam Chairwoman, and I 
thank you, Mr. Director, for appearing today. I greatly 
appreciate the fact that you seem to take an interest in 
consumers in ways that, quite frankly, are beneficial to 
consumers.
    Mr. Director, I recently introduced H.R. 5484, the 
Financial Compensation for CFPB Whistleblowers Act, which would 
create at the CFPB a whistleblower protection program modeled 
on the one created by Dodd-Frank at the Securities and Exchange 
Commission. As Facebook and its whistleblower have currently 
made headlines and remind us that insiders are uniquely 
positioned to bring large-scale corporate wrongdoing to light, 
I would like to know what you think about the notion of this 
type of action taking place through the CFPB? What do you think 
about whistleblowers bringing these kinds of actions to the 
attention of the CFPB so as to timely report fraud, abuse, and 
other corporate misconduct?
    Mr. Chopra. Congressman, I have to say I do believe in the 
power of whistleblowers, particularly when reporting this type 
of fraud. Director Kraninger, my predecessor, I believe put 
forth a proposal around whistleblowers as well. Obviously, we 
will have our policy differences, but this is an area where 
more whistleblowers will lead to better enforcement, and a 
reduction of fraud. I think the SEC's model is one, but I am 
happy to work with you and your office to figure out how we can 
create an appropriate CFPB whistleblower program.
    Mr. Green. Thank you for that comment. I would take it that 
you are somewhat familiar with the SEC's model. Can you tell me 
how that model is beneficial or some of the positives 
associated with it?
    Mr. Chopra. Yes. As I understand it, there have been a 
number of very severe law breakings that have occurred in 
financial institutions, that were often alerted to authorities 
by employees or by those with direct knowledge. These 
whistleblower laws can, in some circumstances, depending on how 
it is crafted, provide protections for those individuals and 
also financial compensation. We do know that the United States 
has actually recovered quite a bit of money when it comes to 
Medicare fraud based on these whistleblower programs, and I 
think it is something that can be very beneficial to 
enforcement.
    Mr. Green. And what about stronger protections? Do you 
think they are needed at this time for misconduct such that 
persons can report this to the CFPB to get some sort of 
redress?
    Mr. Chopra. I apologize, sir. It may be just your mask or 
the video, but stronger protections for what specifically? I 
apologize. I couldn't hear.
    Mr. Green. Do you think stronger protections are needed in 
the law for persons who report misconduct to the CFPB?
    Mr. Chopra. I would need to get back to you with more 
specifics on that, but we want to make sure that, like other 
agencies, whistleblowers are not retaliated against, and have 
the ability to provide information and are safe in doing so.
    Mr. Green. I will look forward to working with you. You 
have indicated a willingness to do so. I would like to work 
with you so that we can present all of that and find favor with 
you as well as what we are trying to accomplish here in 
Congress. I have always found it beneficial to be aligned with 
the Agency that will have to implement policies.
    Mr. Chopra. I am happy to do so.
    Mr. Green. Thank you very much. I yield back the balance of 
my time.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Sessions, is now recognized for 5 minutes.
    Mr. Sessions. Madam Chairwoman, thank you very much. 
Director, thank you for taking the time to be with the 
committee this morning. We do appreciate your time and respect 
the role that you have.
    Mr. Director, you are now engaged in rulemaking procedures 
about what is called Section 1071, which is known as small 
business lending data collection. It was important to us when 
Dodd-Frank was passed, and it has two overwhelming, really, 
reasons of what this is about, intended to do: facilitating 
enforcement--in other words, giving an opportunity for the data 
collection to match up with enforcement so you can see it--and 
secondly, enabling opportunities for people. Would you mind 
taking a minute and giving us your viewpoint of this small 
business lending data collection rule that you are preparing 
and giving us some parameters about how those people who 
collect the data--lenders--might gain some access of knowledge 
that you are thinking?
    Mr. Chopra. Yes. Thanks for this question. The CFPB, before 
I arrived, proposed a rule to implement those requirements. I 
will tell you, I think the public was at a disadvantage during 
the pandemic, including with respect to the Paycheck Protection 
Program (PPP), by not having reliable small business data 
available. There are many good reasons to have that small 
business data, including to understand the complete picture of 
how our small businesses are accessing financing, but also, how 
we can determine trends, spot risks, and avoid discrimination.
    I do want to encourage everyone to submit comments to this 
because I think, like the Home Mortgage Disclosure Act (HMDA) 
database, there will actually be certain data that may be 
publicly available that can be useful to local officials, to 
the small business community, to financial institutions, and 
others. I am eager to work with everybody to make sure we get 
this right and implement it according to the deadline 
established by the Court.
    Mr. Sessions. Okay. Director, my personal feedback is that 
I hope we take this, and the rulemaking would be a part of 
this, as data and information that would enable us to do the 
two things that are their reasons instead of it being used as a 
weapon. I think that data like this needs an opportunity to be 
vetted and for us to understand the type of information that 
also could have changed dramatically from the time a loan was 
taken out. And as you know, during the last few years, a lot of 
money was rushed to small businesses without the rules in place 
and the knowledge of those rules, and how that data and 
information may have been gathered. And thenz, material pieces 
of the business and the loan may have changed dramatically as a 
result of COVID. So, it is my hope that we would use this as a 
tool, as an opportunity to gain more information, and work with 
and learn how CFPB would want to use this data, working with 
the industry, but not the weapon.
    Mr. Chopra. I agree with you, sir. I agree with you.
    Mr. Sessions. Right. That is my whole point, and I will 
look forward to following up with you, and you may count on me 
as someone who would be interested in this issue. And thank you 
for your time.
    Madam Chairwoman, I yield back my time with the choice here 
that I would like to add that I think the Director was very 
clear and gave us good answers, and I appreciate it very much. 
Thank you.
    Chairwoman Waters. Thank you very much. The gentleman from 
Colorado, Mr. Perlmutter, who is also the Chair of our 
Subcommittee on Consumer Protection and Financial Institutions, 
is now recognized for 5 minutes.
    Mr. Perlmutter. Thank you, Madam Chairwoman.
    And again, Mr. Chopra, it is good to have you here.
    Just one thought from my point of view, from my 
perspective. Mr. Huizenga and I, a number of years ago, had an 
issue where a title company in Michigan had the roof brought 
down on them. It was a $500,000 fine brought really out of 
nowhere, or it seemed that way to me.
    And so, I would just like to reiterate in terms of bringing 
the enforcement bludgeon, that there be an effort--and this is 
an anecdote. It doesn't happen all the time. But I think from 
my point of view, I want to make sure that we have good 
regulations in place, that you are following them, and that you 
are giving businesses who might be under your jurisdiction an 
opportunity to correct whatever mistakes that they have made.
    Can you give me sort of your philosophy on this?
    Mr. Chopra. Yes. I have thought about this issue a lot. I 
think one of the things that drives me a little crazy is when 
Federal agencies don't focus their efforts on nationwide or 
systemic or severe harm. And instead--I saw this at the FTC. On 
one hand, the FTC is letting Facebook and Google off the hook. 
On the other hand, they are chasing after small businesses, and 
strong-arming many of them into settlements.
    I believe that we should focus most of our resources on the 
largest firms that are engaged in nationwide harm that are 
really totally beyond the pale, where they clearly knew what 
the rules were, where they clearly knew what they were doing, 
or they buried their head in the sand. Focusing on larger 
participants in the market, I think is one of the best ways we 
can accomplish our mission.
    I don't know about the specific case you mentioned, and in 
fact, I don't know the facts. It may have been very severe. I 
just don't know. But that is generally my philosophy.
    And I think what we have seen over the past many years 
under both Democrats and Republicans of failures at the FTC, I 
don't want to repeat that at the CFPB.
    Mr. Perlmutter. No, thank you. I appreciate your sharing 
that.
    Let me change a little bit to the big platforms. You just 
mentioned some of them. In terms of Section 1033 and Dodd-Frank 
and the ability for the CFPB to kind of keep an eye on 
transparency, keep an eye on fairness, you talked about getting 
kicked off a platform, a payment platform or the like. Explain 
to us what you are talking about? And if you want to name 
names, I am okay with that, too.
    Mr. Chopra. A payment system that works well is one that is 
open, resilient, and fast. And I think there are questions. We 
have seen it in the App Store context. We have seen it in other 
types of platforms. How are they making decisions about whom 
they include and whom they kick off, and how are they deciding 
how much to charge them?
    I am worried that some of these Big Tech platforms may 
start competing businesses and, therefore, will want to 
foreclose on potential competitors. That is bad for consumers. 
That is bad for businesses. And we need to understand those 
policies.
    In many cases, of course, if someone has red flags related 
to money laundering, if people are not eligible for other 
specified reasons, that may be totally appropriate. But when 
payment networks may be using their own business incentives to 
kick off consumers or businesses, we should know why.
    Mr. Perlmutter. Okay. In the rulemaking process, in terms 
of this data, understanding the data and how these platforms 
are working, can you share where you are in the rulemaking 
process?
    Mr. Chopra. You are referring to Section 1033--
    Mr. Perlmutter. Yes.
    Mr. Chopra. --which is about consumer control of data. As I 
understand it, last year there was an issuance of an Advance 
Notice of Proposed Rulemaking (ANPR). There have been comments 
collected on that. I am very eager to engage on what we know so 
far, because I think Section 1033 holds promise to really make 
sure there is a more competitive environment and that consumers 
have more choices and that there is not just a handful of 
incumbents who control everything. Competition is good here.
    At the same time, we are going to need to make sure we are 
protecting privacy, security, and other things that are 
critical. So, there are a lot of issues, and we are very eager 
to hear from everybody on this, as we think through this tool 
that Congress has put into place.
    Mr. Perlmutter. Thank you, sir.
    My time has expired. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Florida, 
Mr. Posey, is now recognized for 5 minutes.
    Mr. Posey. Thank you very much, Chairwoman Waters, for 
holding this hearing.
    Mr. Chopra, over several Congresses, I have introduced 
legislation to direct the CFPB to permit regulated entities to 
ask the CFPB to resolve uncertainties in the interpretation of 
regulations and statutes by the advisory opinions available. In 
more recent years, I asked the previous Director, Ms. 
Kraninger, to implement an advisory opinion program 
administratively, and I am very grateful that she did do that.
    And I just wonder if you could give us an update on the 
status of the program for advisory opinions and how it is being 
used, the applications and results you have obtained so far, 
and how you might plan to expand or improve the program as we 
go down the road?
    Mr. Chopra. Yes, sir. I am only on day 12 or 13 of the job, 
so I don't have all of the exact information, for which I 
apologize. But just so you know my views, I do believe there is 
a role for, as you mentioned, the interpretative rules, 
advisory opinions, and others to be able to develop the law. In 
many cases, that is helpful to everybody.
    At the same time, I want to be upfront that I don't think 
the CFPB should be picking winners and losers, crowning an 
individual company to be able to own a market. I think we are 
better off when we can go through the rulemaking process, go 
through interpretive rules, guidance, and advisory opinions in 
ways that everybody can understand and not just one individual 
firm that is seeking it.
    Mr. Posey. For example, when you say they have to paint the 
office furniture red, there are a lot of variations of the 
color red. And somebody might want to ask, for the benefit of 
many, what particular color code are you talking about?
    Mr. Chopra. I totally agree with you. I think the more that 
this can be elucidated, and I think, generally speaking, I 
prefer pretty clear, easy to understand, easy to follow, easy 
to enforce rules. But of course, the CFPB has inherited an 
enormous number of rules from the Federal Reserve Board, and 
many of them are very complicated. And yes, there are places 
where I hear exactly what you are saying. It can be to the 
benefit for everybody.
    Mr. Posey. Okay, great. Thank you.
    In March 2021, the CFPB noticed a rule change to postpone 
the compliance date for the new qualified mortgage (QM) rule to 
October 1, 2022. Does your postponement reflect a change in 
policy direction from the December 2020 rule that would replace 
QM loan definition's 43 percent limit on debt-to-income with a 
price-based approach, or is there some other explanation for 
the postponement?
    Mr. Chopra. Sir, obviously, that was before me. But as I 
understand it, the new definitions from the general QM rule 
have taken effect. The aspect that was delayed was the 
mandatory compliance date. So, lenders can use one of multiple 
definitions.
    And as I understand from the Federal Register Notice, it 
was because there were dislocations and potential disruptions 
in the mortgage market during the time of the pandemic, and the 
goal was actually to create more certainty for lenders, or at 
least more flexibility for lenders, on the mechanisms that they 
could comply with that rule in order to continue to extend 
mortgage credit.
    With respect to the QM writ large, I am always eager to 
hear of places where it needs to be changed, but I want to be 
clear, though, that the rule has taken effect.
    Mr. Posey. I thank you for your responses. And I thank you 
for your appearing here.
    And I see my time is about to expire, so I will yield back. 
Thank you.
    Mr. Chopra. Thank you, sir.
    Chairwoman Waters. Thank you. The gentleman from New York, 
Mr. Meeks, who is also the Chair of the House Committee on 
Foreign Affairs, is now recognized for 5 minutes.
    Mr. Meeks. Thank you, Madam Chairwoman.
    And thank you, Mr. Director. It is so good to see you, and 
I am really happy to see you because I have been here for a 
while, and I know when we created the CFPB, it was for 
consumers. We never had anything before for consumers, and 
somewhere in the last few years, we lost our way, and we were 
not focused on consumers. And it is good to see you and to hear 
that we are back to focusing on consumers again.
    The Dodd-Frank Act gave the CFPB the authority under 
Section 1033 to promulgate a rule that would allow consumers 
full electronic access to their financial data. There is a 
growing need and desire for the concept of open finance. With 
that, open finance marketplaces are offering greater 
competition to financial services and products.
    My question to you is, will you prioritize CFPB's Section 
1033 rulemaking, and can you provide any insight into how you 
are going to balance the continued data access for hundreds of 
millions of Americans who use fintechs every day, and the need 
for consumer protections in the financial data access base?
    Mr. Chopra. I appreciate the question, Congressman.
    Let me just say, as a general matter, Congress has made it 
clear to the CFPB that we need to make sure the markets are 
fair, transparent, and competitive. And a competitive market 
means that consumers aren't locked in to a product that they 
want to get out of or that they want to get a lower price on or 
want to get a better service on.
    Section 1033, I think aspirationally, could unlock more 
competition, could unlock more opportunities. But at the same 
time, we also need to make sure that banks and nonbanks are 
operating under the same set of rules, that there is not 
regulatory arbitrage. So, we are going to be looking at all 
these issues.
    I will tell you I have studied a bit the United Kingdom's 
open banking system, as well as what other jurisdictions have 
done to create more consumer control of data and how we can 
harness technologies to do it, and I am very interested in 
seeing what we can do there.
    I don't know any timelines or anything more. Again, I'm 
only on, I think, day 12 or 13 of the job, but I'm very, very 
interested in what we can unlock for businesses and consumers 
alike.
    Mr. Meeks. Great. And I know it is only day 12 or 13, but 
as I said, there are high expectations that we have, that you 
will be focused on consumers.
    The pandemic has also highlighted the impact that access to 
credit has, particularly on women- and minority-owned 
businesses, and there is a tremendous need to increase that 
access. And it seems to be clear that under the Biden 
Administration, the CFPB is putting financial inclusion and 
racial equality at the forefront. And of course, for that, I 
want to commend you and your colleagues.
    Last month, the CFPB issued a proposed rule under the Equal 
Credit Opportunity Act (ECOA)that would require covered 
financial institutions to report small business lending data 
and annual reports on small businesses and the credit 
applications. Can you please explain how the CFPB expects to 
use its enforcement authority under the ECOA and how the data 
that it will collect will further advance these initiatives for 
women- and minority-owned businesses?
    Mr. Chopra. Congressman, I am reminded that, I believe in 
2013 or 2014, you invited me to Jamaica to have a town hall 
with you, and this issue actually came up there.
    Mr. Meeks. Absolutely.
    Mr. Chopra. People not being able to find help or not 
knowing where to turn and not necessarily having access because 
there was not a sense of relationship banking locally, and I 
think we need to restore that and make sure that our markets 
are free of discrimination. I think the rulemaking you refer to 
will give the CFPB insight into whether there is any 
discriminatory patterns, but also macro data on what 
communities are being served well when it comes to small 
business loans.
    In many ways, it is similar to the Home Mortgage Disclosure 
Act data collection on mortgages, but there are some important 
differences. But I think if we want a vibrant, growing economy 
across the country, regardless of neighborhood, regardless of 
race or ethnicity, we want to make sure small business and 
entrepreneurship is in people's sights and that they can access 
the capital to do so.
    Mr. Meeks. Thank you. My time has expired. I am excited to 
work with you, though, and excited that you are there.
    Chairwoman Waters. Thank you very much. The gentleman from 
Michigan, Mr. Huizenga, is now recognized for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman. I appreciate the 
opportunity.
    And I know he has left, but my colleague from Colorado, Mr. 
Perlmutter, brought up something that was very important, and I 
know you may not know the details of the case. But to round it 
out a little bit, it was a small title company that was put in 
the crosshairs of the CFPB, to be made an example of to the 
larger companies. And at best--well, let me put it this way. At 
worst, their actions were in a gray area, at worst. And they 
literally were put in the crosshairs and levied a fine that 
would have bankrupted them.
    And when I could not even receive a return phone call, I 
went to my friend and colleague across the aisle, who then, on 
my behalf, called and started getting some answers and had me 
be a part of that. And I am forever grateful for him, and 
hopefully, I have tried to repay that kindness.
    But I want to just restate, make sure I heard what I think 
I heard, which is that it is not your philosophy to pound on a 
little guy to make sure that the message gets sent to these 
larger operators. Is that accurate?
    Mr. Chopra. That is accurate. I want to be clear, though, 
that it doesn't mean small businesses and medium-sized 
businesses should not follow the law.
    Mr. Huizenga. Correct.
    Mr. Chopra. But it is that the Federal Government should be 
focused on us particularly going after the biggest harms in the 
market, rather than kind of picking on people. I saw this at 
the FTC. I was constantly distressed about the bullying of 
small businesses rather than willingness to take the big 
companies to court--
    Mr. Huizenga. Yes.
    Mr. Chopra. --who are well-resourced to do that.
    Mr. Huizenga. It is really regulation through enforcement, 
and I am glad to hear that isn't the case. And as I said, in 
this particular situation, it was a shift in policy from the 
CFPB that was not a legislative shift. And it was, like I said, 
at worst, a gray area, but they decided to make an example of 
that.
    So, moving on, I am kind of curious and concerned about 
whether you would agree with this notion that having wild 
swings in policy coming out of the CFPB or any regulator could 
actually cause harm, not just to the company but, by extension, 
to the consumer that company is trying to serve. And I just 
want to know if you understand those challenges implementing 
pretty severe and wide rule changings and swings in policy, 
what that might do?
    Mr. Chopra. Yes. I think where we are is we always want to 
make sure that, obviously, the policies represent those that 
Congress has put into place and administer those laws. But I 
completely appreciate, particularly for our small businesses, 
being able to understand what they need to do to comply and 
that they are spending less time hiring lawyers and all of 
these things and focusing on their business.
    Mr. Huizenga. So, it can really divert resources, 
basically, that should be going to be service the customer?
    Mr. Chopra. Yes. And as you know, many lawyers want to put 
money in their own pockets by creating hysteria and creating 
uncertainties, and so it is important for the regulator to also 
be clear on what the rules are wherever we can when we are 
implementing the laws you pass.
    Mr. Huizenga. Great. And this one might be a little outside 
your lane, but it dovetails with something that I asked 
Chairman Gensler. You happened to bring up large tech 
companies, and there are lots of concerns, I think on both 
sides of the aisle about this.
    I would like to know, when do you think that a service 
provider might actually morph into becoming a utility and then 
has possibly a different set of regulations on that? So, just 
give me a little of your philosophy on what you think--and it 
probably is most applicable with tech firms at this point. But 
when do these tech firms get to be so big and powerful and 
direct? Because you had talked about them setting up 
competition to put others out of business. When do those 
companies become utilities in your mind?
    Mr. Chopra. Yes. Historically, we have a number of 
different frameworks for this: the Communications Act; railroad 
regulations. I think the way our country has dealt with it is 
one of two ways. I think antitrust, sort of breaking up firms 
and making sure that they are not monopolies or abusing it, or 
utility-style regulation where there is a natural monopoly, 
like the electric company or whatever it might be.
    So, you are right. It is a little bit distant from the laws 
that I am administering, but I think that is something that 
there are many places and this is something Chair Lina Khan at 
the FTC has described before about ways in which policymakers 
can approach these issues. The Communications Act obviously has 
a number of vehicles in which this is done, but again, some of 
this is a little distant from--
    Mr. Huizenga. But you will be enforcing some of those 
concerns, presumably as those companies--
    Mr. Chopra. Yes, that is right. And I will say that there 
are a number of firms that have a huge amount of power in the 
financial ecosystem. There are very few credit bureaus. Almost 
everyone uses the FICO score. So, we have to figure out how to 
make sure that they are fair, transparent, and competitive, of 
course.
    Mr. Huizenga. My time has expired. Thanks.
    Chairwoman Waters. Thank you very much. The gentleman's 
time has expired.
    The gentleman from Missouri, Mr. Cleaver, who is also the 
Chair of our Subcommittee on Housing, Community Development, 
and Insurance, is now recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman.
    Mr. Director, congratulations, and we certainly look 
forward to working with you. I am going to try to squeeze three 
questions in, if possible.
    On Tuesday, CNBC reported that Mastercard is preparing to 
announce that any of the thousands of banks and millions of 
merchants on its payment network will be able to integrate 
crypto into their products. Every time I see one of these 
statements, it causes me to tremble a little bit, because I am 
not sure we have successfully dealt with the whole issue of 
double spending of Bitcoins and spending the balance more than 
once, which you couldn't do if you had a dollar.
    But the capitalization--I was with Mr. Meeks in New York at 
one of these tech companies, and they talked about the 
capitalization. It is now at about $2.6 trillion, with a, 
``t.'' Does that create any nervousness on your part, or do you 
think we have everything under control, based on Dodd-Frank?
    Mr. Chopra. With respect to Bitcoin and the stablecoin, 
this is something Secretary Yellen and Chair Powell and all of 
the regulators have started to discuss, some of the risks that 
are involved, systemic risks. Obviously, there may be risks to 
investors or consumers. So, there is a great deal of 
interagency discussion about how to approach this problem 
because what we do--I think in many ways, Facebook's Libra 
proposal in 2019 was a wake-up call to all of us about really 
what could be the damage that is done to our dollar and to 
really our economy and our households.
    So, I think it is really for all of us to be working with 
and really to be working with all of you, too, because this is 
something we need to make sure that vast seamless payments have 
so many benefits, but we need to make sure we are guarding 
against risks as well.
    Mr. Cleaver. In that regard, are there things that you 
would recommend to us that we should legislatively pursue in 
order to reduce the threats that we can experience, not just 
here at home with Mastercard, but internationally? The hoodlum 
governments would love to be able to create problems for us in 
this area.
    Mr. Chopra. Yes. Congressman Cleaver, I know you and I have 
had a lot of discussions about small business loans, student 
loans, and I think this is a new one where there are uncertain 
risks, and we need to get down to the bottom of it, all of the 
banking regulators and securities regulators.
    I am very happy to continue to work with you on that. I 
don't have any recommendations off the top of my head, but I 
think we all need to make sure that we are protecting our 
payment systems and flow of currency.
    Mr. Cleaver. Thank you very much.
    By the way, I try not to be a Cro-Magnon or troglodytic in 
my attitudes about new technology. That does create some 
fright. But this issue is so serious to me that we may need to 
have ongoing dialogue, as you just suggested, to make sure that 
we are on top of the issues that could be born out of this 
amazing new technology.
    You may not even be able to deal with this. If Mastercard 
can go in this direction, what happens if we have a flood of 
institutions, lending institutions going into this arena like 
this?
    Mr. Chopra. Yes. I think that is really something to watch 
out for. With respect to the stablecoin, stablecoins are right 
now primarily used for speculative purposes. But one could 
imagine that if it starts riding the rails of some of the large 
networks or Big Tech companies, it could scale very, very 
quickly.
    I apologize that I don't have all the answers for you on 
that, but I am attuned to really some of the places where we 
need to analyze and collect data. That is part of the reason 
that I issued those orders to the Big Tech companies, so that 
may be a place where certain digital currencies scale very, 
very quickly and globally in ways that we may not fully 
understand the implications.
    Mr. Cleaver. Again, congratulations, and I look forward to 
working with you.
    Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentleman from Kentucky, 
Mr. Barr, is now recognized for 5 minutes.
    Mr. Barr. Director Chopra, it's good to see you. 
Congratulations on your appointment. It's great to see you 
again, and I look forward to working with you during your 
tenure to promote consumer protection, not from a heavy-handed 
central planning approach, but instead, as you have described, 
a competitive marketplace where consumers retain access to 
choices.
    And I was encouraged to hear you say that you want to 
restore relationship banking. That was really, really a 
positive comment in your prepared testimony and the way I think 
of it. And in fact, I think you used the words, ``cut through 
red tape.''
    I am going to hold you to that, because I believe 
relationship banking and relationship lending can't happen when 
lenders are deterred by a regulation through enforcement 
approach. So, first question. Do you believe that regulated 
entities should know the rules of the road in advance of any 
supervision or enforcement action?
    Mr. Chopra. Yes. The laws that you have passed, we should 
make sure that we do our best so that everyone knows what they 
are. I believe that we work best when laws are clear, easy to 
follow, and easy to enforce.
    Mr. Barr. Right. And I think that will facilitate that 
relationship-style of lending. Let's talk about UDAAP and your 
predecessor, Acting Director Uejio's rescission of the 
Kraninger policy statement from 2020. I appreciated what you 
said about durability and a durable abuse of jurisprudence, but 
you also, in an answer to my colleague's question, talked about 
how the Bureau could provide some durability through 
interpreting or applying the abusiveness standard.
    And here is where I think your immediate predecessor went 
wrong on rescinding the guidance, because I don't believe 
rescinding the Bureau's guidance promoted durability. I think 
it was the opposite. It created a chaotic discontinuity and 
unpredictability. And I think, arguably, it was arbitrary and 
capricious to just upend abruptly a guidance offered by 
Director Kraninger.
    My question to you is, given the fact that Acting Director 
Uejio, in his rescission, did not offer an alternative 
interpretation of, ``abusive,'' what, in your mind, is the 
correct definition of, ``abusive?''
    Mr. Chopra. There are many questions there. I will try my 
best to answer them, and tell me if I don't. With respect to 
abusive, Congress has laid out what the definition is in the 
multi-pronged approach. So, that exists. That is the law. And 
that is enforceable not just by the CFPB, the prudential 
banking regulators, but also State attorneys general.
    Mr. Barr. Right. But Director Kraninger defined it. The 
problem is that market participants didn't have clarity on what 
the statutory language actually meant, and that is why there 
was this dual pleading position in there. And so, let's get a 
little bit more specific.
    Mr. Chopra. Congressman, can I just say, that statement was 
not binding on the State attorneys general. It is not binding 
on the State regulators. It was not binding on the other--
    Mr. Barr. Let us get to that durability piece.
    Mr. Chopra. Yes. I think the way you build jurisprudence--
there are many, many ways you do that. But particularly, you 
raised the issue of dual pleading.
    Mr. Barr. Right.
    Mr. Chopra. When an agency finds a violation of law and 
doesn't plead it, that is actually abrogating what Congress 
directed, and it is also bad for the development of the law.
    Mr. Barr. Okay. What is the difference in your mind between 
abusive and unfair?
    Mr. Chopra. Unfairness and abusive are two different 
frameworks. Unfairness requires an analysis of substantial 
injury, it requires an analysis of avoidability, and it also 
requires an analysis of countervailing benefits to consumers in 
competition.
    Mr. Barr. In the interest of time, because we only have 5 
minutes, I would have also asked you what is the difference 
between abusive and deceptive. But the point here is that in 
the Kraninger policy statement, she specifically said that the 
Bureau would avoid challenging conduct of abusive where the 
alleged violation relied on all or nearly the same facts as an 
unfairness or deception violation.
    This is exactly what you are saying. You are making 
distinctions between the two. Ms. Kraninger was clarifying 
that. Why is Acting Director Uejio's rescission in any way 
clarifying the situation? I think the rescission is undermining 
durability here.
    Mr. Chopra. I totally disagree, respectfully, with you. 
When we don't plead those, courts cannot analyze that. They 
cannot issue opinions to determine whether the conduct at hand 
violates--
    Mr. Barr. I am running out of time. Let us work together on 
durability.
    Mr. Chopra. I am very eager to create a durable--
    Mr. Barr. I'm running out of time. Let's work together on 
that.
    On civil investigative demands, are you open to guardrails 
on the factual predicates to initiate a CID and other 
parameters? A lot of regulated parties feel that this is a 
fishing expedition. I want to know how your Agency and your 
leadership intends to put guardrails on CID so it is not a 
fishing expedition.
    Mr. Chopra. I am happy to review the existing policies on 
the issuance of civil investigative demand. While I was a 
Commissioner, I closely reviewed them, and often asked that 
changes be made to them. So, I will look at that. I take that 
feedback seriously.
    Mr. Barr. I look forward to working with you. Thanks.
    I yield back.
    Chairwoman Waters. The gentleman from Illinois, Mr. Foster, 
who is also the Chair of our Task Force on Artificial 
Intelligence, is now recognized for 5 minutes.
    Mr. Foster. Thank you, Madam Chairwoman.
    And congratulations, Director Chopra.
    As you take the reins of the CFPB, you are going to have to 
generate a workforce plan, and particularly in the area of a 
high-tech workforce plan to deal with AI and related issues. 
And this is going to be particularly important in the context 
of the ongoing merger and blurring of the lines between 
financial services and Big Tech.
    As was just pointed out, Chairwoman Waters has impaneled a 
task force on AI, which I am chairing, together with Ranking 
Member Gonzalez. And now on this whole issue, we are going to 
have to skate to where the puck is going here, because this 
transformation will happen over the coming decade. If current 
trends persist, soon the great majority of financial services 
transactions are going to be marketed and transacted online.
    And actually, if Mark Zuckerberg's dreams come true, in a 
decade, we are all going to be wandering around in the 
metaverse, where we will encounter some AI avatar who is, in 
fact, a nonfiduciary robo-adviser. And he will be using all of 
Facebook's psychological profiles that they have worked up on 
us to figure out exactly what to say to us to gain our 
confidence so that they can sell us overpriced life insurance 
or crummy investment products, not too different than the 
abuses we see in the human area.
    And to defend the consumer against this sort of potential 
abuse, you are going to need a CFPB workforce that is not 
overmatched against the tech companies, which means competitive 
salaries, among other things. What are your thoughts on how you 
are going to do this, and what is there that Congress can do to 
help you make standing up this workforce easier?
    Mr. Chopra. I appreciate that, Congressman. And one of the 
things I did immediately was I appointed a chief technologist 
of the Bureau. I appointed Erie Meyer, who has served at 
several Federal agencies and has worked closely with me in the 
past on identifying technological talent that can enter public 
service, so that it is not just lawyers trying to figure all 
this out, but actual individuals with real experience. And not 
just in engineering, but in a whole host of skills related to 
technology.
    I think one of the things that we should just understand as 
reality is that unless we can understand the technology that is 
being used, we won't be able to effectively police it. And we 
are never going to have the resources of the Big Tech 
companies. We are never going to have the resources of the big 
banks. We are never going to have the big resources of the 
credit bureaus.
    But we need to make sure we have the skill sets in-house so 
that when new products and new markets are shifting, we 
actually have a data-driven way of looking at that problem and 
that we are looking at the right set of interventions.
    When I see the problems in mortgage servicing that the 
chairwoman had mentioned, a lot of those problems were also 
related to lousy software and decisions that mortgage servicing 
companies a decade ago did not take to upgrade that software. 
The Equifax data breach was an absolute disgrace. The 
regulators I need to make sure that they are understanding how 
data is guarded, data is protected, and all of those are places 
that the workforce, of course, across Federal agencies is going 
to need to evolve.
    It is an area I have discussed with the States, and with 
our counterparts in Europe as well. And it is an imperative for 
our country to be competitive.
    Mr. Foster. Yes. Congress has to understand that there is a 
need for--oh, I guess a lot of people have already complained 
about Dr. Fauci's salary being higher than Members of Congress. 
And that is actually okay with us because of the extreme 
importance of having a certain number of really highly-skilled 
jobs that are paid competitive salaries to the private sector.
    And this is a very tough conversation to have when you are 
managing a mixed workforce of traditional, scheduled Federal 
employees and others. So, what are the challenges there? Do you 
find that there is a significant number of people who made 
their careers and their fortunes in Silicon Valley companies 
who are really willing to come and spend several years, or is 
that really not enough, and we are going to have to do 
something on the salary side?
    Mr. Chopra. Yes, it is a great question.
    The experience, I think, in some places, yes, there may be 
people who are very financially-comfortable, who are willing to 
serve. Of course, at the same time, we have to guard against 
conflicts of interest. They may have very substantial stock 
holdings.
    I think what you see in the financial regulatory agencies 
is that many, especially the lawyers, go through the revolving 
door and make huge amounts of money on the other end. And we 
are not going to be able to pay them the same. But I think what 
we want to be able to do is offer a good-value proposition on 
how they can serve the public, serve Congress, and serve the 
future of our markets.
    And the goal is to be able to recruit those people with 
that in mind. But of course, you are right. On the margins, it 
is exactly--
    Mr. Foster. Yes. Well, when you figure all this stuff out, 
let me know, okay?
    Mr. Chopra. Yes, okay.
    Mr. Foster. And my time is up. I yield back.
    Mr. Chopra. Thank you, sir.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Williams, is now recognized for 5 minutes.
    Mr. Williams of Texas. Thank you, Madam Chairwoman.
    Earlier, my colleague, Mr. Perlmutter, called you a 
champion for small business. We have something in common. I am 
a champion for small business. And before we get started, I 
have to say that I am a small business owner in Texas. And I 
have to tell you that in the past, your Agency, every way it 
turned, cost jobs on Main Street America. And you can't have 
competition and you can't help Main Street America by adding 
regulations on top of regulations.
    Businesses need to know the rules of the road--we talked 
about that this morning--before they are hit with arbitrary 
enforcement actions. And under Director Cordray's supervision, 
the CFPB had an awful track record of issuing massive fines and 
penalties--we have heard about that today--for things that have 
never previously been deemed harmful to consumers. And I am 
very concerned that this practice of regulation through 
enforcement will once again come back under this new 
leadership, your leadership, and it will force market 
participants out of the marketplace, costing more jobs.
    We are already seeing this trend in the student loan 
servicer space. In the CFPB's own report from the Student Loans 
Ombudsman, it states that four of the nine Federal student loan 
servicers have either stopped or announced that they are going 
to stop servicing Federal student loans.
    This will require the largest transfer of student loans, 
over 16 million borrowers, with a loan volume of over $650 
billion. It is the largest in the history of higher education 
and presents heightened risk of borrower harm. So, it will be 
impossible for a business to create a regulatory compliance 
system if they are unaware of what they are even going to avoid 
and what they are expected to do.
    Director Chopra, do you understand that the uncertainty 
coming out of your Agency is causing businesses to drastically 
change their practices in a way that limits competition--and 
you have talked about how you want competition--and would 
ultimately harm consumers?
    Mr. Chopra. Yes. Since about 1982 or 1983, we have seen 
small businesses as a proportion of total firms in the economy 
go on a constant decline. And there is a host of reasons for 
that, and I always want to figure out what is it that we can do 
to make sure that people can challenge the big guys, that they 
can enter.
    You have raised the issue of regulation. It is part of the 
reason why I believe that we always want to aspire for laws and 
regulations to be easy to enforce, and easy to understand. But 
at the same time, I do want to be upfront with you that I 
think, based on my conversations with many in venture capital 
and others, a big reason people don't want to enter is that 
they think they are going to get squashed by the big guys.
    That they have so little ability to be able to compete, and 
particularly when it comes to small financial institutions, 
ones that do offer relationship banking, they have a tough time 
doing it. And I think we need to really look at that to see 
what are those barriers that they face. And I take your 
feedback seriously about what you see as them, but I think 
there is a story there that we have to actually conquer 
together.
    Mr. Williams of Texas. Small businesses are what generates 
our economy, and we all know that. There are many rulemakings 
the CFPB is undertaking that have banks and Main Street America 
very concerned. One of the proposals is the Section 1071 data 
collection regime that will force banks to report demographic 
data on all small business loans.
    This proposed rule is 918 pages long, and is a nightmare 
for anyone who is going to be forced to comply. One of the most 
laughable provisions in this terrible rule is that lenders will 
be forced to guess a loan applicant's race and ethnicity based 
on the borrower's appearance and last name, if they leave that 
information blank. This will force loan officers to racially 
profile every applicant.
    I am old enough--very few in here remember the 1960s, but I 
was in business in the 1960s, and we couldn't ask those 
questions. They took those questions away because it was 
racist. Now, here we are back doing the very same thing.
    Small businesses would be forced to have significant 
amounts of information on their business made public on CFPB's 
website. Many small businesses do not want metrics like gross 
annual revenue or the purpose of the loan to be accessible to 
the public. So, not only will this rule force sensitive 
information be made public, but it would add significant new 
compliance costs on financial institutions, which will lead to 
credit becoming more expensive and less available. All in the 
midst of serious inflationary pressure that we see today, and 
supply chain issues.
    Instead of hiring more loan officers, businesses are going 
to have to hire more compliance officers. Quickly, how will you 
ensure that access to credit will not be hampered under this 
rule and will not allow for borrowers to opt out of complying 
with the demographic small-business information requirements in 
order to get a loan?
    Chairwoman Waters. You may answer.
    Mr. Chopra. We will faithfully seek to implement the 
congressional directive on Section 1071. With respect to the 
specific issues, and I will be quick, we really need people to 
file comments on this so that we can actually implement the 
statutory directive and consider all of the issues you have 
raised, including with respect to privacy.
    Mr. Williams of Texas. Thank you, Madam Chairwoman.
    Chairwoman Waters. You are welcome. The gentleman from 
California, Mr. Sherman, who is also the Chair of our 
Subcommittee on Investor Protection, Entrepreneurship, and 
Capital Markets, is now recognized for 5 minutes.
    Mr. Sherman. Director, first, I want to thank you and your 
staff for providing technical assistance and coordinating with 
us on drafting the bill to deal with the great London Interbank 
Offered Rate (LIBOR) problem. We now have language that I think 
every consumer group that is focused on this is at least okay 
with, and every business group. Now, we have to work out some 
language with the Fed since they are the ones that are actually 
going to have to do the work, but your office has been very 
helpful.
    Property Assessed Clean Energy (PACE) loans are well-
intentioned in that they help people get new air conditioning 
systems and other that are energy-efficient. In almost every 
instance your predecessor came before our committee, I asked 
whether the CFPB was close to finishing the regulations 
required by statute. Since spring of 2019, the Bureau has taken 
no action beyond issuing an Advance Notice of Proposed 
Rulemaking.
    Are you getting there? How close?
    Mr. Chopra. As I understand it, the process is ongoing. I 
just want to be upfront with you. I know it is not optional, so 
we are going to do it. I need--
    Mr. Sherman. Is the decade in which it is to be completed 
optional? That was a rhetorical question. For the record, 
please give me a definitive response--
    Mr. Chopra. Yes.
    Mr. Sherman. --as to when the next step is going to be 
completed. I don't want to nail you down--
    Mr. Chopra. No, no, no, no, no.
    Mr. Sherman. --unless you want to be nailed down.
    Mr. Chopra. No, no, no. I actually--
    Mr. Sherman. Can you give me a month, a day?
    Mr. Chopra. I am happy to take a question for the record on 
that. Again, I am, I think, only on day 12 or 13. I am still 
making sure I understand what is in the record--
    Mr. Sherman. I am going to count on you to actually answer 
definitively for the record and move on to another question.
    Mr. Chopra. Yes, sir.
    Mr. Sherman. Our good colleague from Florida, Mr. Posey, 
already asked you what the Bureau plans to do on the QM rule. I 
would like to follow up and ask, has the Bureau seen any market 
evidence or concerns since April of this year, when the QM 
patch was extended, I believe, that you think require another 
round of revisions to QM? Do you have concerns or--
    Mr. Chopra. Yes. We did have a very robust 12 months, from 
July of last year to June of this year, in terms of mortgage 
origination. I believe it was a record.
    On the other hand, it is hard to make that determination, 
given the flux of the economy and the recovery of the pandemic. 
What I have asked the staff to do is to really let me know what 
are we seeing in some of the more specific borrower segments 
and geographies so that we can identify what is going on.
    And sir, as you know, Treasury and the FHFA have changed 
the preferred share agreement. So, obviously, there are some 
changes in the housing capital markets as well that is dictated 
by factors outside of the QM rule. But of course, QM is a key 
part of the mortgage market and the mortgage regulatory 
guidelines. I want to make sure that we are always looking at 
it to see whatever we can do to make sure we are promoting the 
objectives that Congress laid forward in Dodd-Frank on that 
front.
    Mr. Sherman. I want to move on to another question, and 
that is, consumers are tricked into wiring usually the down 
payment on their house, which they have saved their whole life 
for, to the wrong account. They are told that is the account of 
the escrow agent or the title company because somebody went 
phishing and hacking and sent them an email that looks like 
that.
    The reason they get away with this is because we don't have 
a system where you identify the person or company you are 
sending the money to, just the number. So, if you can convince 
them that Acme Escrow Company is number 12345, and that is 
really the account of a Nigerian prince, then your money is 
going to support royalty in Nigeria.
    I pushed Chairman Powell on this. This week, I pushed 
Governor Brainard over on the Fed. It is their system, but it 
is your job to protect the consumers. Can you work with us to 
get a system like they have in Britain, so that when you wire 
money, you wire money to name of a person or company you are 
wiring money to and the account number?
    Mr. Chopra. Yes. As I understand the standards in which 
wiring--it uses the SWIFT code, plus some--but as you say, it 
doesn't require an identifier--
    Mr. Sherman. Right.
    Mr. Chopra. --for a specific name. I am very happy to 
discuss this further with other parts of the Federal Reserve 
System. I take seriously that we are there to protect 
consumers, but the systemic answer may be, in fact--
    Mr. Sherman. You are the one with the mission.
    Mr. Chopra. Yes.
    Mr. Sherman. Thank you.
    Chairwoman Waters. The gentleman from Arkansas, Mr. Hill, 
is now recognized for 5 minutes.
    Mr. Hill. Thank you, Madam Chairwoman, and thank you for 
holding the hearing.
    And congratulations, Director. We are glad to have you 
before us today in your oversight responsibility.
    And just a quick note. I would say, having been in 
community banking for really on and off for 40 years, I have to 
take a little issue that it is not big bank competition. I 
really don't think that is the case. I think it really is the 
overhead cost as a percentage of assets that is a real 
detriment to bank formation and the smaller banks being 
successful and competitive on a return on equity (ROE) and 
return on assets (ROA) basis.
    And to Mr. Williams' point, a lot of that is in the detail 
level of compliance and how it has even grown more dense for 
banks. And so really, banks under $1 billion, I think really do 
struggle with that. Keep that in mind as you look at your work.
    And in that regard, I assume you believe that the 
Administrative Procedure Act (APA) is the best way for a 
regulatory agency to communicate with the broad public on a 
proposal. Is that your view?
    Mr. Chopra. To communicate?
    Mr. Hill. Yes, communicate and ask for comment and actually 
outline--
    Mr. Chopra. Oh, yes.
    Mr. Hill. --your legal proposals?
    Mr. Chopra. Yes. I don't know that I would characterize it 
as, ``best.'' It is the law. We have to use the Administrative 
Procedure Act to promulgate regulations, and it provides for 
notices, and a comment period.
    Mr. Hill. Yes, I know what it provides. Thank you. I just 
wanted to make sure you are supportive of it.
    And likewise, do you think that regulatory agencies should 
do a cost-benefit analysis to all the parties involved before a 
proposal becomes a final rule?
    Mr. Chopra. In the Dodd-Frank Act, the Agency is required 
to consider certain issues related to benefits, costs, and 
other things. So, we will follow what the statute requires.
    Mr. Hill. Thank you for that.
    On the subject of the QM rule, I listened to Mr. Posey, and 
now my friend from California, Mr. Sherman, and I don't know 
that either got the kind of answer they are looking for out of 
you. So, I am going to go for three strikes here with you.
    In the postponement, which was, as you say, delivered due 
to the pandemic, we have had a robust housing market. We have 
had a record number of closings. I don't see in your complaint 
data any spike in complaints.
    My question for you is simple: Do you support the proposed 
change in the QM rule that was proposed by the CFPB after hours 
and weeks and years of work with stakeholders?
    Mr. Chopra. I don't know, but I will take a question for 
the record on that. I want to make sure I understand the whole 
basis of it. But I just want to be clear, that rule has gone 
into effect.
    Mr. Hill. Yes.
    Mr. Chopra. That is now a way that people can comply.
    Mr. Hill. And they have an option--I just want to know if 
you think it is a good compromise? It was hard to get to where 
we were. They have an option now, but that creates uncertainty 
in the market, or it certainly could. And it creates 
programming uncertainty for IT professionals, and for banks.
    So, I think we ought to not postpone it any more and move 
forward, and I will ask you that for the record.
    Mr. Chopra. Please.
    Mr. Hill. And Madam Chairwoman, I would like to submit a 
letter to the record from the coalition, dated September of 
2019, expressing their strong views.
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Hill. I appreciate that.
    Mr. Chopra. And sir--I am also keen to understand, 
specifically in the mortgage origination marketz, how we can 
stimulate more refinancings across-the-board. So, I have been 
asking questions about that because one of the ways that the 
interest rate environment can transmit to households is broadly 
to be able to look at, where are the impediments to 
refinancing?
    Mr. Hill. Thank you. Well, you should look at that. But the 
market has driven refinancings to an all-time high, and every 
month my household, like the current mortgage holder got from 
10 or 15 different companies, bank and nonbank alike, offering 
refinance assistance.
    Mr. Chopra. And I hope almost all homeowners get that. I 
understand that it has been high--
    Mr. Hill. Yes, I will let you do your research on that 
point.
    Mr. Chopra. Okay.
    Mr. Hill. But refinancing, and I would like you--I will 
submit a question for the record, should Fannie Mae and Freddie 
Mac be disproportionately buying refinance loans, or should 
they focus on first home mortgages? What is your view on that?
    What is their mission? Helping low- and moderate-income 
people? Is that principally done by helping that first-time 
homeowner? Ginnie Mae does that. But for low- and moderate-
income people, should that be an emphasis of Freddie Mac and 
Fannie Mae, or should they refinance Jeff Bezos' second home?
    Mr. Chopra. As you know--
    Mr. Hill. Three seconds.
    Mr. Chopra. --the Federal Housing Finance Agency (FHFA) is 
not the Agency I lead. I am not the conservator of Fannie and 
Freddie.
    Mr. Hill. Okay.
    Mr. Chopra. But again, I am happy to take questions for the 
record on that.
    Mr. Hill. We will do that. I yield back, Madam Chairwoman.
    Chairwoman Waters. The gentlewoman from Ohio, Mrs. Beatty, 
who is also the Chair of our Subcommittee on Diversity and 
Inclusion, is now recognized for 5 minutes.
    Mrs. Beatty. First of all, let me say thank you, Chairwoman 
Waters, for this hearing.
    And Mr. Director, thank you for being here so early in your 
term, in your tenure. I want to thank you for all of your work 
and especially for your investment in small businesses, as I, 
too, am a former small business owner. As I also support our 
servicemembers and our veterans, I wanted to thank you and the 
previous Acting Director for your work, because many of us will 
remember that under the last Administration, veterans and 
servicemembers were not protected as they should have been with 
the CFPB.
    I don't know if you or everybody has heard of or remember 
the, ``Mulvaney discount.'' For you or others who have not 
heard of this term, the Mulvaney discount was a term that was 
used under the Trump Administration's leadership of the CFPB, 
where the CFPB would bring an enforcement action against 
someone who had broken our consumer protection laws, but they 
would drop their fine to a mere $1 because the defendant simply 
said, well, I can't pay the bill, or I can't pay the fine.
    For example, under the CFPB in the Trump Administration, 
they would actually--if they found a person who had ripped off 
a veteran, their pension payment, they would settle that for a 
mere $1. And we know how our veterans and servicemembers have 
been out on the front lines and all of the things that affected 
them. So, it is very important to me, and should be to all of 
our Members that we don't go back to that previous 
Administration and what the Trump Administration with Director 
Mulvaney did.
    So, is this a practice that you are aware of or you plan to 
change or continue during your Administration?
    Mr. Chopra. Congresswoman, we will apply the civil penalty 
factors as Congress and the courts have directed us and have 
interpreted. Of course, with respect to servicemembers and 
veterans, I have already had a chance to speak with some other 
agencies about how to revitalize some of the work that we will 
do there. We need to make sure the Military Lending Act and 
other key protections are enforced.
    I will share with you that there may, in fact, be some 
instances where the civil penalty is $1. I don't know the 
individual circumstances, but assessing a civil penalty against 
a judgment-proof defendant, if they are truly judgment proof, 
can open up redress under the Civil Penalty Fund. But under no 
circumstances will we deviate from the legislative and court-
administered factors to do that.
    Mrs. Beatty. Thank you.
    Let me go to another question. Under the previous 
Administration, I confronted the CFPB for refusing to bring 
enforcement actions for violation of fair lending laws. They 
only brought up three cases under the leadership of not only 
Director Mulvaney, but also under Director Kraninger. I guess 
my question is, you have already brought in the 10 months that 
you have been in there more than what they did throughout their 
entire Administration.
    Now, give me your opinion. Do you think it is that all of a 
sudden, people started having these fair lending violations, or 
they turned a blind eye to it? Because I had a hard time 
believing--and after talking to some of the long-term staff 
over there--that and not seeing, getting an answer to that, I 
believe that there were some fair-lending issues going on. Can 
you address that?
    Mr. Chopra. All I can do is speak for myself. I am very 
determined to make sure that we are administering the laws that 
forbid illegal discrimination. On Friday, I joined the Attorney 
General in a law enforcement action against Trustmark Bank for 
some pretty egregious discriminatory behavior.
    Again, we want to make sure that we are not disadvantaging 
those financial institutions who follow the law, play by the 
rules, and treat people equally. It is not fair to them, and we 
need a market that is free of discrimination.
    Mrs. Beatty. Thank you so much, and we will continue to 
have a dialogue as we talk about fair lending. Certainly, we 
are having a lot of movement, thanks to our Chair, in the 
housing area, and we will come back and also talk about 
diversity and how you are moving forward with that.
    Thank you, and I yield back.
    Chairwoman Waters. Thank you very much. The committee will 
break for a short 5-minute recess.
    [brief recess]
    Ms. Garcia of Texas. [presiding]. Mr. Emmer, you are now 
recognized for 5 minutes.
    Mr. Emmer. Thank you, Madam Chairwoman. I have a lot to get 
to, so I am going to jump right into it.
    Director Chopra, Ranking Member McHenry referred to reports 
that former Acting Director Uejio unlawfully removed career 
CFPB staff to make room for your handpicked replacements. Here 
is the specific allegation in case anyone missed it. This is 
from a story that appeared in GovExec.
    On June 14, 2021, it states, ``The Biden administration is 
taking unusual steps to ensure it can install its own hires 
into top career positions at the Consumer Financial Protection 
Bureau and push out officials who served under President Trump, 
according to several current and former employees. CFPB, in 
recent months, has offered separation incentives, including 
early retirement, and launched investigations into career 
senior executives to sideline them, targeting about a half 
dozen of the highest-ranked, non-political staffers at the 
Bureau.''
    These are serious allegations. If the Inspector General 
finds these allegations to be true, it is clear that President 
Biden's political team violated a law stating that 
discrimination based on political affiliation is prohibited. 
The Supreme Court held that the President can remove the 
Director of the CFPB for any reason or for no reason at all.
    But let me be clear. The Supreme Court did not exempt the 
CFPB from laws that prohibit removing career civil servants 
based on their political affiliation.
    Mr. Chopra, were you aware of the Biden Administration's 
plan to push out career officials who were hired during the 
Trump Administration?
    Mr. Chopra. I do not believe there was a plan to do that, 
but--
    Mr. Emmer. I just asked if you were aware.
    Mr. Chopra. --the allegations--
    Mr. Emmer. Were you aware, yes or no?
    Mr. Chopra. I could not be aware if there wasn't a plan.
    Mr. Emmer. So, it is no. Did anyone at the White House ever 
discuss CFPB personnel with you, sir?
    Mr. Chopra. I was a nominee, so I was nominated, and that 
was through Presidential--
    Mr. Emmer. Again, I am trying to be very clear, and I have 
a limited amount of time. Did anyone at the White House, whom I 
am assuming you had communications with before you were 
nominated, once you were nominated, and since you have been 
confirmed, before you were actually confirmed, did anyone at 
the White House ever discuss CFPB personnel with you?
    Mr. Chopra. There has never been any discussion with the 
White House about career civil servants or any indications of 
that matter. Since I took office, I have begun--
    Mr. Emmer. Thank you very much.
    Mr. Chopra. --to get briefings--
    Mr. Emmer. If I could move on to my next question.
    Mr. Chopra. --about--
    Mr. Emmer. Sir, I will reclaim my time. Did you discuss the 
CFPB workforce with Leandra English at any time since the 
election last November?
    Mr. Chopra. No. The workforce?
    Mr. Emmer. Director, I will say it again. Did you ever 
discuss people who work at the CFPB with Leandra English at any 
time since the election last November?
    Mr. Chopra. I don't recall ever speaking to her about 
personnel issues.
    Mr. Emmer. Thank you. Director Chopra, if there are people 
on your senior political team who hired or fired career staff 
because of their political affiliation, I expect you will take 
some sort of corrective action, and my question to you, sir, 
is, will you rehire the people who were wrongfully terminated?
    Mr. Chopra. If there are findings of any prohibited 
personnel practice, we will take appropriate disciplinary 
action, and--
    Mr. Emmer. Would you rehire anyone who was wrongfully 
terminated because of their political affiliation?
    Mr. Chopra. If there is a finding of that, which I have no 
indication to suggest there will be--
    Mr. Emmer. It is a yes or a no, sir.
    Mr. Chopra. --I will take all the steps that I am required 
to under the law, including, if required, rehiring.
    Mr. Emmer. I hope that--yes, thank you. I also think it 
will be important to know whether any of the actions in 
question occurred with your knowledge or at your direction. If 
so, I think you may need to consider whether to recuse yourself 
from any decisions related to this matter. If it turns out, 
sir, that you are implicated in the scheme to remove career 
staff based on their perceived political affiliations, can I 
have your commitment that you will recuse yourself from any 
decision-making related to corrective action?
    Mr. Chopra. I will not be implicated in it because I did 
not engage in that behavior.
    Mr. Emmer. But if you were, you would recuse yourself. 
Correct?
    Mr. Chopra. On any directive about law findings, of course, 
I will adhere to that. But you can trust me. I did not engage 
in the allegations you are suggesting.
    Mr. Emmer. Thank you. Will you fully cooperate with the 
IG's investigation in this matter?
    Mr. Chopra. I will always cooperate with the Inspector 
General of the Federal Reserve System.
    Mr. Emmer. Thank you. And will you instruct the Agency's 
political staff to cooperate with the investigation?
    Mr. Chopra. Everyone must cooperate with the IG.
    Mr. Emmer. And you will tell them that they must, right?
    Mr. Chopra. Yes, and I have also told them that they must 
adhere to all ethics rules as well.
    Mr. Emmer. Thank you.
    Mr. Chopra. We need to make sure that all of those are 
being followed and that there are not--
    Mr. Emmer. I see my time has expired. We will wait and see 
what the IG finds in this case. I yield back. Thank you.
    Ms. Garcia of Texas. The gentleman's time has expired. We 
will now hear from the gentlewoman from Iowa, Mrs. Axne, who is 
also the Vice Chair of our Subcommittee on Housing, Community 
Development, and Insurance, for 5 minutes.
    Mrs. Axne. Thank you, Madam Chairwoman, and 
congratulations, Director Chopra, on your new position, and 
thank you so much for being here. And I also want to thank the 
CFPB for listening to me and others on this committee and 
finally resuming the Military Lending Act examinations that you 
are supposed to have been doing for a long time, to protect our 
servicemembers. So, thank you so much for stepping up for our 
servicemembers in the way that you should, and I hope that will 
continue. And I really hope to hear about any other issues that 
you find that we can be helping you with here in Congress.
    Now, I do intend to ask you questions about the work that 
you are doing, because I think that is important for these 
hearings, so let me get right to it.
    I know you have only been there for a couple of weeks now, 
but I want to check on the status and planning of a couple of 
other areas that I have been asking the CFPB about. First, I 
asked your predecessor about the student loan servicers and 
whether the CFPB was actually doing the exams to protect the 40 
million Americans who have these student loans. I have asked 
that a couple of times, and never got a straight answer. I know 
this used to be your department. Can you give me an update on 
where those things are right now with the CFPB's oversight of 
student loan servicers?
    Mr. Chopra. I want to be mindful of the protections in the 
law about confidential supervisory information, but I will 
share that student loan servicers, the large ones, are subject 
to the supervisory authority of the CFPB, and I intend to make 
sure we are supervising them appropriately. We will, of course, 
work with other regulators, including the Department of 
Education, to do so, but unless the law is being followed, we 
cannot be certain that our borrowers are going to be able to be 
on the road to repayment or be protected from unlawful 
practices.
    Mrs. Axne. Okay. Thank you for that. And what are the 
actual benefits--I am hoping that you can tell us--for those 
borrowers, of having the Agency looking out for them and 
actually having this oversight happen for the first time in 
years?
    Mr. Chopra. I think it is important to make sure that we 
are protecting both the borrowers and the honest companies who 
are engaged in these businesses. It is not fair to the law-
abiding businesses when some get a free pass. When it comes to 
student loans, for example, good servicing on student loans, 
mortgages helps avoid default, helps avoid foreclosures, and 
ultimately adheres to the congressional directives to the CFPB.
    Mrs. Axne. Great. Well, that will certainly help folks out. 
Thank you so much for that.
    I have also noted that over the last couple of months, 
homeowners have had some new protections from foreclosures, 
including now they have the right to new, streamlined loan 
modification options because of COVID hardships. Can you walk 
us through what those protections are and a little bit of how 
you see those working so far?
    Mr. Chopra. Yes. As I understand the amended rule, it 
provides a way for servicers to help transition borrowers from 
the forbearance programs back into repayment. This obviously 
can be very challenging, especially for borrowers who have been 
struggling during the pandemic. So, I think the win-win here is 
for servicers to be able to evaluate borrowers for these 
alternatives to foreclosure. That is good for the investors, 
that is good for the borrowers, and it is really good for the 
economy. Of course, it is a temporary rule to assist with the 
orderly transition, but we want to make sure we do not repeat 
what happened last time, which was unnecessary, avoidable, and 
illegal foreclosures, and there were too many of them and the 
effects were devastating.
    I would say, Congresswoman, I am also particularly 
interested in farm bankruptcies, foreclosures in rural areas. I 
know that is of interest to you. And I think we need to 
understand all of the issues facing family farms. It is an area 
that I have worked on for many years. We cannot have a 
resilient and strong country without a base of thriving family 
farms who can afford their obligations.
    Mrs. Axne. I will tell you what, Director, you are talking 
my language there, so thank you so much for bringing that up. 
And I am currently working to get affordable housing extension, 
more funding through the USDA, but we need a lot of help in our 
rural areas, and I am so glad to hear you say that. And, of 
course, we want to make sure that we prevent foreclosures as 
much as possible, so these loan modifications are a great way 
to do this.
    I just want to let you know this is one of my top 
priorities, to make sure that people can actually benefit from 
these programs. So, I made sure we got $100 million to support 
housing counselors to help walk people through this process. 
And I am wondering, last question, are you working with these 
housing counselors on those modifications to make sure that 
they are doing the best they can to serve Americans?
    Mr. Chopra. Yes, housing counselors are often on the front 
lines of helping borrowers to not only get a home, but to keep 
their home. I don't have the details handy this early, but you 
have my commitment that we will not be forgetting about the 
housing counselors, and I know, firsthand, how much of a 
vehicle they are to really helping people when it comes to the 
dream of homeownership.
    Mrs. Axne. Thank you.
    Ms. Garcia of Texas. The gentlewoman's time has expired. 
The gentleman from Georgia, Mr. Loudermilk, is now recognized 
for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman. And Director 
Chopra, thank you for being here.
    There are several topics I would like to discuss, the first 
being the rulemaking to implement Dodd-Frank Section 1033. As 
part of that, I hope the CFPB will take into account the 
significant progress the private sector is making on consumer 
data issues, specifically moving away from screen scraping of 
log-in credentials and transitioning to application programming 
interfaces (APIs). I think it would be counterproductive to 
impede or duplicate the work that the private sector is doing.
    The question is, do you intend to build on the work that is 
being done in the private sector as part of Section 1033 
rulemaking, and will you make sure not interfere with that 
work?
    Mr. Chopra. I think that makes sense. I think the way we 
can realize a lot of the benefits of any Section 1033 
rulemaking--and it is too early to say what the timeline would 
be on that--we have to look at actually what are the systems 
and protocols and technologies that are already in use and how 
are they working or not working?
    I think I am, to be transparent with you, going to look at 
it with the eye, of course, of competition, security, and 
privacy. In many cases, APIs will be a huge vehicle to do so. 
But I take what you are saying seriously. If there is already a 
movement or there is development that we can learn from to help 
expand, I am totally on board with that, and I hear what you 
are saying.
    Mr. Loudermilk. I appreciate that, because, quite frankly, 
it is the private sector that are innovators, not the Federal 
Government, and more often, the Federal Government tends to be 
suppressors of innovation. Anything that we can do to encourage 
innovation and keep things going in the right direction, I 
applaud.
    Mr. Chopra. Can I add one point?
    Mr. Loudermilk. Sure.
    Mr. Chopra. I want to make sure that I will look at 
private-sector initiatives to make sure that there cannot be 
kind of one dominant controller of it. The more that we have an 
open system that people can enter, they don't need a lot of 
permission slips and corporate red tape to cut through, I am 
going to be looking at that.
    Mr. Loudermilk. Okay. The CFPB has also proposed a rule to 
implement Dodd-Frank Section 1071, which will require lenders 
to collect and report data on the demographics of small 
business borrowers. I hope you will minimize the burden of 
these requirements. The 1071 rule proposes making the data 
available to the public annually, to determine what data is 
released, the rule proposes a balancing test to measure the 
risk and benefits of publicly disclosing the data.
    What risks do you believe should be considered in this 
test?
    Mr. Chopra. Again, I am new to the job, but I will just 
share my personal views on this, which is that we need to be 
thinking very hard always about re-identification risk. In many 
cases, technologies have advanced such that there are more data 
points that can be put together to re-identify. So, what I am 
going to be looking for is making sure we are implementing the 
objectives to make sure we are collecting this data, that it is 
being used to guard against discrimination and other 
violations, but also that any datasets we make available are 
still consistent with the objectives of safeguarding privacy as 
well.
    Mr. Loudermilk. So far, CFPB has not accepted public 
comment on this issue. Will you be open to accepting public 
input on the balance tests before it goes into effect?
    Mr. Chopra. I need to check on this. I thought that in the 
proposed rule, it did discuss implementing a balancing test, 
and I think we are collecting comments on all aspects of the 
rule. If I am mistaken, we are happy to follow up with you, but 
of course, all agencies need guidance when it comes to 
protecting data.
    Mr. Loudermilk. Right. Our understanding is that it hasn't 
been done. If it hasn't, will you do that?
    Mr. Chopra. Yes. I am definitely eager to hear views on how 
to make sure we are balancing that right.
    Mr. Loudermilk. Okay. So, you will ask for public input, if 
it hasn't been done, before--
    Mr. Chopra. If it hasn't been, for sure, I would want to 
make sure we ask for input, particularly from technology and 
data experts, and others.
    Mr. Loudermilk. Okay. Last question, if I have time, in 
April, the CFPB issued an interim final rule regarding debt 
collection practices during COVID-19. The rule classified 
landlords as debt collectors and accused landlords of refusing 
to accept tenant self-attestation of hardship based on 
unverified anecdotal evidence from activist groups. 
Fortunately, that rule no longer applies because the Supreme 
Court struck down the CDC's illegal eviction moratorium, but it 
is still troubling.
    I understand you were not in this position during that time 
period, but in any issue going forward, could we get your 
commitment that your policies will be based on concrete facts 
and data, not unverified anecdotes, especially from activist 
organizations?
    Mr. Chopra. Just to be clear, you are saying that rule 
covered landlords?
    Mr. Loudermilk. Yes.
    Mr. Chopra. Okay.
    Mr. Loudermilk. The rule classified landlords as debt 
collectors.
    Mr. Chopra. That wasn't my understanding. I am happy to 
look into that. I understood that pursuant to the Fair Debt 
Collection Practices Act (FDCPA), that it was third parties 
collecting on behalf of landlords who are covered. But to your 
question, I, of course, want to make sure we are being 
analytically robust whenever we can.
    Ms. Garcia of Texas. The gentleman's time has expired. The 
gentleman from Illinois, Mr. Casten, who is also the Vice Chair 
of our Subcommittee on Investor Protection, Entrepreneurship, 
and Capital Markets, is now recognized for 5 minutes.
    Mr. Casten. Thank you, Madam Chairwoman, and thank you so 
much to Director Chopra for your time and your patience with 
all of us today. I have some questions about discriminatory 
lending, and I want to go through just ridiculous hypotheticals 
to start, so bear with me, but I want to leave enough time for 
the substance on the back end.
    As you know, the Equal Credit Opportunity Act of 1974 
prohibits lending institutions from discriminating on the basis 
of all of the usual protected classes--race, religion, national 
origin, what have you. So, I want to just start with a 
completely softball hypothetical.
    If a lending institution was to intentionally, or 
unintentionally but effectively market their products to groups 
of people that had the practical effect of reducing minorities, 
certain religious groups access to loans, would that constitute 
a violation of the ECOA?
    Mr. Chopra. As I am sure you know, all of us in the banking 
regulatory area like to avoid these types of hypotheticals, but 
I will try my best to answer. The Equal Credit Opportunity Act 
implicates not just underwriting decisions but across the 
entire credit transaction. So, it can affect collections, it 
can affect marketing and advertising. You may be aware that HUD 
Secretary Carson issued a complaint against Facebook for 
violations of the Fair Housing Act that related to some of 
these issues about advertising. There is some corollary between 
the Fair Housing Act and the Equal Credit Opportunity Act. We 
are happy to follow up with some of the specific regulations.
    Mr. Casten. I appreciate the nuance, and that is the 
challenge of these 5-minute hearings is sometimes there is not 
enough time for nuance. But stipulate that there are some 
things that, within that nuance, are indeed problematic. Does 
the CFPB, under your leadership, have the authority and/or the 
obligation to investigate and prosecute crimes under the ECOA, 
of the type we just talked about?
    Mr. Chopra. Yes.
    Mr. Casten. Okay. And if a company was violating those, is 
knowledge that their marketing techniques were discriminatory a 
prerequisite for prosecution, or if their lending practices are 
discriminatory but were not intentional, does that absolve them 
of liability?
    Mr. Chopra. Yes, there is jurisprudence on this. It is also 
in the regulation. There is disparate treatment and disparate 
impact, and so in the disparate impact context, you need not 
necessarily prove intentionality to get to liability.
    Mr. Casten. Okay. Well, that is consistent with my 
understanding. Here is the substantive reason for the question. 
It has been brought to my attention that a number of folks in 
the lending industry, when they make a decision whether or not 
to advertise on Facebook, Facebook cannot share, and has 
refused to share, any information about whether the algorithms 
they use to boost their ad tracking are, in fact, intentionally 
targeting certain racial groups, certain classes of people, and 
could have a practical effect, especially in light of all this 
news over the last weeks that Facebook's algorithms have a 
habit of targeting and amplifying and boosting signals from 
White supremacist groups like the Proud Boys.
    Given your prior answers, is a lender that is advertising 
on a platform that uses algorithms that may prove to be 
discriminatory, or maybe have already been proven to be 
discriminatory, is that lender potentially guilty of an ECOA 
violation?
    Mr. Chopra. It really depends on the facts and 
circumstances, but, in fact, Facebook, in your hypothetical, 
may be liable for that.
    Mr. Casten. And would you have the jurisdiction to pursue a 
claim against the platform as opposed to the lender, or both?
    Mr. Chopra. It depends on the exact activities, but like in 
Secretary Carson's complaint, where Facebook was making those 
decisions, in your hypothetical, when a tech company like that 
is making the decision, they may, in fact, be liable.
    Mr. Casten. Okay. Last, just a question for you as we sit 
here, if the platform cannot guarantee that their marketing 
channels are not in some fashion discriminatory in a way that 
would violate the ECOA, would you advise a lender to continue 
advertising on that platform?
    Mr. Chopra. I would rather take this question for the 
record, because it is a complex one to answer in 9 seconds. But 
I am very worried about black box algorithms, that we have no 
accountability as to how decisions are made. This is the 
opposite of relationship banking, and we need to make sure that 
firms cannot dodge fair lending laws and anti-discrimination 
laws under the guise of their secret algorithm.
    Mr. Casten. Thank you very much. I am out of time. I look 
forward to following up with your staff afterwards.
    I yield back.
    Ms. Garcia of Texas. The gentleman's time has expired. The 
gentleman from Tennessee, Mr. Kustoff, is now recognized for 5 
minutes.
    Mr. Kustoff. Thank you, Madam Chairwoman, and Director 
Chopra, congratulations on your confirmation. Thank you for 
being here today.
    We have heard a lot, obviously, in the past several months 
about cryptocurrencies and digital assets. They have gotten a 
lot of attention. What do you see as the CFPB's role with 
respect to cryptocurrencies and digital assets?
    Mr. Chopra. Depending on the laws that are implicated, 
obviously there is fact-based determination as to any sort of 
law that cryptocurrencies or digital currencies have to comply 
with. This is obviously something that the CFPB is working on 
with the other regulators, but I will tell you where digital 
payments is involved. The Electronic Fund Transfer Act is a key 
law with key consumer protections. Obviously, the Gramm-Leach-
Bliley Act, the privacy provisions of that, are a key law that 
we enforce. This is part of the reason the Bureau issued orders 
to the tech companies about how they are trafficking payments, 
what data they are collecting, how they are using it, how they 
are engaged in surveillance or denial of service. All of those 
matter, and I think there are some intersections there with 
digital currencies as well.
    Mr. Kustoff. I don't like using absolute terms, but to 
paraphrase what you just said, do you see the CFPB's only lane 
being in terms of the payments?
    Mr. Chopra. I would need to review all of our laws. There 
may be certain circumstances where there may be lending 
involved. I need to really think through that and get back to 
you on it. I do want to make sure that we are guarding our 
payment system and taking care of the consumer protections that 
you all have passed.
    Mr. Kustoff. Fair enough. In your prior position at the 
FTC, almost 2 years ago, in November of 2019, you commented on 
the FedNow Service. You may remember. I am quoting from the 
opening paragraph of your comment. You said you would like to 
outline support for the Federal Reserve's proposal to develop 
the FedNow service, a new round-the-clock, real-time payment 
system, that the proposal is a natural extension of the Federal 
Reserve's existing role in check clearing, wire transfers, and 
the automated clearing house system. That a private megabank 
monopoly, over our faster payment system, would suppress 
innovation and distort incentives in our markets, and the 
Federal Reserve should not cede control of the plumbing of our 
future payment systems to Wall Street.
    And that was in your prior role. In your current role, what 
do you see as the CFPB's role as it relates to the FedNow 
Service, if any?
    Mr. Chopra. That is a good question. I think the extent to 
which they are creating the FedNow Service, I think we can 
serve as experts on consumer protection within the Federal 
Reserve System. I know this is an area of great importance to 
our local financial institutions and community banks. The CFPB 
has a Community Bank Advisory Committee that I want to engage 
on payments issues. But obviously, our core is the consumer 
protection laws and there are certain places, perhaps related 
to fraud or error resolution, where we may have relative 
expertise.
    Mr. Kustoff. Is there potential for the FedNow Service to, 
if you will, crowd out the private sector?
    Mr. Chopra. I would have a tough time seeing that. I think 
our payments ecosystem is always going to be diverse. There are 
going to be many different ways in which money is transferred. 
I do think, from a national security perspective and global 
competitiveness, we need to have faster payments in our 
country. I think the fact that we are being beaten out when it 
comes to speedy payments, by China and others, is a concern for 
me. So, I think it is really the public sector and the private 
sector all have to really work to make sure that we can compete 
in that way.
    Mr. Kustoff. Thank you, Director. In your prior life--and 
maybe in your current life also--you were a prolific tweeter, 
almost like a Member of Congress. On March 6th of last year, 
you tweeted, ``It's time to end the era of lawbreaking 
megabanks. Their empire-building brought our economy to the 
brink, their scale made them too big to fail, and their 
executives have turned boring banking into a risky business 
model built to break the law.''
    Two questions: first, who are you talking about; and 
second, is it within your purview to, ``end the lawbreaking 
megabanks?''
    Mr. Chopra. I have to tell you, one of the things that 
bothers me so much is when small players break the law, they 
get shut down, and when the large players repeatedly break the 
law, it feels like nothing happens. In my testimony, I 
submitted one of the areas that is going to be a focus for me, 
which is the issue of repeat offenders. We cannot have a system 
where a small financial player is caught and then totally gets 
wiped out, while a big one gets to just pay fines over and over 
and over again, and the lawbreaking continues.
    If we find that the regulators--not just the CFPB, but the 
OCC, the Federal Reserve, and others--do not have the 
managerial acumen and operational plans to follow Agency and 
Federal court orders, we have a serious problem there.
    This was my experience at the FTC, where some of the 
largest players repeatedly violated the law and nothing 
happened.
    Mr. Kustoff. Who were the lawbreaking megabanks?
    Ms. Garcia of Texas. The gentleman's time has expired. 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 so much, and I want to express my 
gratitude to our Chair for her continued commitment to this 
issue, and congratulations to you, Director Chopra. It is good 
to see you. I am excited and grateful that you will be a 
partner at the helm of the CFPB.
    I wanted to speak to you about an issue that I have been 
sounding the alarm on for over a year now, one I know you are 
very familiar with, the issue of educational redlining. 
Borrowers who attended an Historically Black College or 
University (HBCU) or other Minority Serving Institution (MSI) 
have faced thousands of dollars in additional charges because 
of these discriminatory algorithms. And we have companies like 
Upstart and Stride Funding who are practicing educational 
redlining, and continue to be engaged in this practice in the 
student loan market. And these companies are using information 
about where borrowers went to school, their major, or their 
parents' educational attainment to price loans or make credit 
decisions.
    Director Chopra, what is the Bureau doing to address the 
risks to Black and Brown borrowers that arise from the use of 
algorithmic decision-making in lending and the reliance on so-
called alternative underwriting criteria such as borrowers' 
educational background?
    Mr. Chopra. Congresswoman, there has been a myth that 
algorithms can be completely neutral. In reality, many of those 
algorithms reinforce the biases that already exist. I joined 
the Attorney General on Friday to talk about how we need to 
make sure that there is a level of accountability on 
algorithmic decision-making, that we can make determinations 
about whether the law is being followed. And a traditional 
financial institution that uses more traditional methods should 
not be held to a standard while others get to hide behind their 
algorithm.
    That is something that we will need to look carefully at, 
not just the CFPB, but others, and I would hate to see that we 
are reinforcing biases based on the enrollment of a particular 
school, particularly, as you mentioned, if they went to an 
Historically Black College or University (HBCU).
    Ms. Pressley. Thank you, Director. During the Trump 
Administration, the Bureau renewed a no-action letter, which 
allowed Upstart to act with impunity under the guise of 
spurring, ``financial innovation.'' With respect to educational 
redlining and algorithm bias, do you agree, just one more time 
for the record, that discrimination is wrong, and that no 
regulator should make carveouts that allow people to 
discriminate?
    Mr. Chopra. I, under no circumstances, believe any 
regulator should give a permission slip to engage in illegal 
discrimination.
    Ms. Pressley. Okay. Wonderful. That's good to hear. 
Transitioning to a topic that you are very familiar with, I 
wanted to talk with you about student debt cancellation. Again, 
to be clear, the most efficient way for President Biden to 
provide relief for millions of borrowers and families is to 
provide across-the-board student debt cancellation. We are 
approaching the mark where those payments could restart, and 
the fact that we would consider doing such a thing during an 
ongoing pandemic-induced recession is really unconscionable. As 
you well know, more than 4 in 10 Federal direct loan borrowers 
would have to be transferred to a new student loan servicer if 
these payments resumed.
    Director Chopra, given these simultaneous risks, what is 
the CFPB doing, within its oversight authority, to ensure that 
borrowers are not harmed should these payments resume?
    Mr. Chopra. It is very important that just like the 
chairwoman talked about with mortgage servicing, the resumption 
to repayment could be really messy, and we need to do 
everything we can to make sure it isn't, and the same goes for 
student loans. If 40 million people all need to resume 
payments, we will need to make sure that servicers and others 
are doing so in an orderly and lawful way, and I intend to use 
our tools to contribute to efforts to make sure that they are 
doing so.
    Ms. Pressley. Thank you for that commitment to user your 
oversight authority to ensure that borrowers are not harmed 
should these payments resume. I know, unlike President Biden, 
you do not personally have the authority to cancel student 
debt, but I do think the CFPB's job would be much easier if the 
President honored his promise and finally cancelled student 
debt. We were speaking about HBCUs a moment ago, and those 
presidents are using their ARPA funds to cancel student debt 
because this is a racial justice issue and an economic justice 
issue, and one I think is critical to a just recovery as well.
    But, in closing, I look forward to working together to 
address the unprecedented student loan debt crisis and other 
issues that my constituents care about, like ending 
discriminatory lending in the housing market, debt collection 
harassment, and harmful credit reporting practices.
    Congratulations once again, and thank you.
    Mr. Chopra. Thank you, ma'am.
    Ms. Garcia of Texas. The gentlewoman's time has expired. 
The gentleman from Tennessee, Mr. Rose, is now recognized for 5 
minutes.
    Mr. Rose. Thank you. I want to thank Chairwoman Waters and 
Ranking Member McHenry for holding this hearing, and Director 
Chopra, thank you for appearing before us, and it is good to 
meet you face to face. We appreciate you being here for this 
annual review of the Consumer Financial Protection Bureau.
    I am going to dive right in. Director Chopra, the Bureau 
has previously acknowledged the key role that small-dollar 
loans can play in helping consumers meet credit needs, usually 
resulting from unexpected expenses that Americans often incur. 
According to the spring 2021 Semiannual Report of the Bureau, 
what percent of consumer complaints received by the Bureau were 
related to short-term, small-dollar loans? Do you know, off the 
top of your head?
    Mr. Chopra. I don't. I think the vast bulk of complaints, 
maybe even 40 to 50 percent, related to credit reporting and 
debt collection issues. That is by far the largest component.
    Mr. Rose. It might not surprise you then to learn that the 
number that the report shows is that it was 0.2 percent, or 2 
in every 1,000 complaints. Given the amount of resources that 
the CFPB has focused on small-dollar lenders, I was surprised 
to learn from the Bureau's own data that only 0.2 percent of 
complaints received by the Bureau were attributed to short-term 
or small-dollar lenders.
    Director Chopra, yes or no, do you believe that small-
dollar lending can play a positive role in helping consumers 
meet their credit needs?
    Mr. Chopra. Yes. There are many short-term liquidity 
products, whether it is a credit card, whether it is any sort 
of small-dollar loan. Of course, that plays an important role, 
and it would be good to see many more financial institutions 
offering them.
    Mr. Rose. Thank you, and I agree very much about that.
    Switching topics, I wanted to discuss the Bureau's 
recently-proposed rule and request for public comment for small 
business lending data collection under the Equal Credit 
Opportunity Act. This proposed rule seeks to require covered 
financial institutions to collect and report to the Bureau data 
on applications for credit for small business. As several of my 
colleagues have noted, there is a lot of uncertainty regarding 
this rulemaking.
    According to the proposed rule, the Bureau is aiming to 
create the first comprehensive database of small business 
credit applications in the United States. If this rule is 
finalized, how will the Bureau protect and safeguard the 
information collected and stored in this government-run 
database?
    Mr. Chopra. That is a great question. I believe in the 
Notice of Proposed Rulemaking, there is a section on how there 
will be balancing to protect privacy, to protect re-
identification risk. Ultimately, the Bureau is seeking to 
implement the statutory directive, and there is a court order 
to do so in a timely fashion.
    As I mentioned to one of your colleagues, I think there are 
many ways we can look at how we can make sure we are 
implementing those objectives while also protecting some of the 
issues you have raised. In many ways, it is a similar exercise 
to the Home Mortgage Disclosure Act database that currently 
exists, that collects information on mortgage origination, but 
obviously there are some very important differences.
    Mr. Rose. To follow up there on the topic of information 
security, earlier this year, the Office of the Inspector 
General for the CFPB issued a memorandum entitled, ``2021 Major 
Management Challenges for the Bureau.'' I am sure you are 
familiar with that memorandum. The memo listed the management 
challenges in order of significance, and the number-one 
challenge listed for the Bureau was ensuring that an effective 
information security program is in place. The memo noted that 
although the Bureau is working toward implementing effective 
identity and access management controls, challenges to 
effectively safeguarding sensitive Agency data remain.
    The IRS is currently trying to get their hands on account 
data of millions of Americans, and the CFPB also wants to 
collect massive amounts of data. It seems like the Biden 
Administration is attempting a major grab of information. Why 
should we trust the government to successfully protect all of 
this information, and can I get a commitment from you that this 
government-run database will not be live until there is 
absolute confidence in the security of the system?
    Mr. Chopra. Almost every Federal Agency right now, because 
of many of the cyberattacks from state and nonstate actors, we 
all know the United States is a big target, and every Agency 
needs to be at the top of its game when it comes to protecting 
our cybersecurity. There are many, many ways in which every 
Agency needs to push forward.
    I was very closely involved in a lot of the data security 
issues in my last job at the FTC, and I intend to make sure 
that we not only follow that directive, but that we are 
constantly looking for ways to improve.
    Ms. Garcia of Texas. The gentleman's time has expired.
    Mr. Rose. Thank you, Director Chopra, and I yield back.
    Ms. Garcia of Texas. The gentleman from New York, Mr. 
Torres, is now recognized for 5 minutes.
    Mr. Torres. How are you, Director? Congratulations on your 
appointment.
    Mr. Chopra. Thank you so much, sir.
    Mr. Torres. In his Executive Order advocating for antitrust 
reforms, President Biden called upon the Consumer Financial 
Protection Bureau to complete rulemaking on Section 1033 of 
Dodd-Frank, which, as you know, establishes the right of 
consumers to access and transfer their own financial 
information. What is your timetable for finalizing Section 1033 
rulemaking in accordance with the President's Executive Order?
    Mr. Chopra. I am very, very interested in making sure that 
consumers are not trapped or stuck in a product they do not 
want, that they can switch, that they have more opportunities. 
I think competition is something every Agency, including the 
CFPB, should promote. I want to be able to give you a firm 
timeline. Two weeks in, I can't do that. But there is a process 
underway. There has been an Advanced Notice of Proposed 
Rulemaking. We are assessing more. We are consulting experts. I 
have been personally trying to learn about the U.K.'s open 
banking system. But I really see this as a great opportunity 
for all of us.
    Mr. Torres. I am pleased to see that you believe, as I do, 
that consumer control of data is critical to competition and 
consumer choice, ensuring open markets. If I, as a consumer, 
ask a bank to share my financial information with a competing 
financial institution, should the bank be required to comply 
with that request?
    Mr. Chopra. As a general matter, I think people need to 
control their personal data. I am very uncomfortable with the 
surveillance-style system that I think we are seeing, not just 
in China but also here, where companies are collecting all 
sorts of highly detailed information on us, sometimes without 
our consent, sometimes without our knowledge.
    Mr. Torres. Could I actually ask about that?
    Mr. Chopra. Please.
    Mr. Torres. Because it brings to mind data aggregators. Is 
your Agency going to play a greater role in supervising and 
regulating data aggregators? What are your thoughts on that?
    Mr. Chopra. In some circumstances, depending on the 
activities of them, there are many laws that they have to 
follow. There may be privacy rules. There may be--
    Mr. Torres. But general supervision and regulation.
    Mr. Chopra. No, aggregators are a key part of something we 
have to look at, including to understand the Section 1033 
rulemaking.
    Mr. Torres. I am going to ask you the same question that I 
asked the SEC Commissioner about, ``neither admit nor deny 
settlements,'' and I will offer a perspective that I have heard 
from constituents. If you are a poor kid from the Bronx who 
commits a minor crime and then enters into a plea bargain, as 
part of the process of entering into a plea bargain, that young 
kid would be expected to admit wrongdoing, to plead guilty. 
That young kid would likely have a criminal record that would 
haunt him for much of his life.
    But if a rich corporation defrauds millions of people out 
of millions of dollars, and then enters into a settlement with 
the CFPB, that corporation will likely enter into a settlement 
without ever admitting wrongdoing. That corporation can move on 
as if it had done nothing wrong. Financial regulators like the 
SEC and the CFPB essentially protect corporate bad actors from 
the consequences of their bad behavior, the reputational 
consequences of their bad behavior. Does that seem fair to you, 
because it seems unfair to me, and it certainly is unfair to 
the people I represent.
    Mr. Chopra. No. And, in fact, in criminal law it is almost 
unheard of to be able to allow this kind of outright denial. 
One of the things that I have written about in the past and 
intend to explore, what is the role of findings and admissions 
to promote compliance, promote fairness in our markets? And I 
agree with you, I am uncomfortable with this sort of blanket 
approach of constant denials of liability.
    Mr. Torres. Are you committed to either banning the 
practice or radically reducing the practice?
    Mr. Chopra. I want to talk about it with you further. There 
are some tradeoffs, but I do think we need a policy that 
actually makes it figure out when we will actually do it, 
because right now, I think it is overused.
    Mr. Torres. And I think you referenced that you were 
studying examples of open finance elsewhere in the world. Is 
there a country that you look to as a model for the United 
States?
    Mr. Chopra. I have to tell you, I want to learn from all of 
those countries, but we have to do something that works for our 
people. We have a much more diverse country. We have a large 
country. I am not wanting to replicate what the Chinese or the 
British are doing. We need to do something that is uniquely 
ours and that suits our people and our financial system.
    Mr. Torres. My time is about to expire, so again, 
congratulations on your appointment.
    Mr. Chopra. Thank you, sir.
    Ms. Garcia of Texas. The gentleman yields back. The 
gentleman from North Carolina, Mr. Budd, is now recognized for 
5 minutes.
    Mr. Budd. I thank the Chair, and Director Chopra, thanks 
for being here in person today and congratulations on your new 
role.
    Director Chopra, under former Director Cordray, the Bureau 
was notorious for carrying out regulation by enforcement. 
Essentially, the Bureau expected financial services providers 
to figure out the rules based on press releases announcing 
enforcement actions, instead of providing ahead of time clear 
guidance or actual rulemakings on the front end.
    In your confirmation hearing, I think it is relevant that 
this was your quote, ``I also will commit that the CFPB and 
every Federal Agency should be focused on fixing harms, making 
it clear to market participants what is expected of them.''
    So, will you commit to avoiding the practice of regulation 
by enforcement?
    Mr. Chopra. I always want to make sure, and I have shared 
with some of your colleagues, the best situation is when the 
law is clear, it is easy to administer, easy to follow, and 
easy to enforce. I do aspire, with respect to our laws, to be 
able to make sure it is durable and understandable, but we will 
also need to enforce the law as written and how the Congress 
has written that statute. We do not have the ability to veto 
laws. We do have to administer the laws you pass, and I want to 
make sure that it is understandable and that we can figure out 
ways to do that.
    Mr. Budd. Sure, but the question is about regulation by 
enforcement. When there is an unknown out there, where there is 
a lack of clarity, where the standard that you just mentioned 
is not there, and then all of a sudden, there is regulation 
through the mechanism of enforcement--do you see any problems 
with that approach, regulation by enforcement?
    Mr. Chopra. I think what I shared with one of your 
colleagues is that we need to go up and focus our resources 
against large players engaged in widescale harms. I don't 
believe in strong-arming small businesses into settlements to 
create some sort of law. I think we need to litigate more and 
we need to make sure that the courts are developing the law 
with us, so that creates more understanding and greater 
jurisprudence.
    Mr. Budd. But do you agree that there should be clarity 
ahead of time before they are attacked by regulation by 
enforcement? Do you think they should have a standard ahead of 
time, rather than some enforcement mechanism, just regulation 
through enforcement? All of a sudden, there is an enforcement 
without having clarity ahead of time.
    Mr. Chopra. In the context of a litigation, a court would 
not say that a firm is liable if it did not believe it was 
violating the law. We also have to enforce the laws you have 
written, and in many cases, we can develop it further. But we 
can't just stop enforcing a law that you all have told us to 
enforce.
    Mr. Budd. Thank you. I want to shift gears. I know a lot of 
my colleagues have asked about this today and it has become 
quite popular. But you mentioned earlier today that there are 
interagency discussions between Fed Chairman Powell and 
Treasury Secretary Yellen on the regulation of cryptocurrency 
and stablecoins. But Chairman Powell told me, sitting at that 
very desk earlier this month, that he had no intention of 
banning or overregulating cryptocurrency.
    So, Director, do you have a different view than Chairman 
Powell on the regulation of cryptocurrency?
    Mr. Chopra. Sorry if I misspoke. I thought what I said to 
your colleagues was that the issue of virtual currency, 
stablecoins, cryptocurrency, is a subject of discussion across 
the Administration. There is a working group, the President's 
working group, that is covering some of these issues. So, I 
apologize if I misspoke earlier.
    Mr. Budd. I just want to clarify. Thank you for that, 
Director. As a matter of policy, is it your intention to use 
your regulatory authority to ban or limit the use of 
cryptocurrency or blockchain technology?
    Mr. Chopra. No.
    Mr. Budd. No. I just want to make sure that we are clear, 
if it is your intention to regulate or ban the use of 
cryptocurrency or blockchain technology.
    Mr. Chopra. Just so we are using the same--that does not 
mean that the CFPB should not be looking at payments, and this 
is part of why I issued the orders last week to collect 
information from the Big Tech companies--some of those laws 
that we administer may implicate virtual currencies. But as you 
have asked, no, I don't have the intention, but I do want to 
make sure we are administering the laws that protect our 
payment system.
    Mr. Budd. And that is fine, but you do not have an 
intention to ban or limit the use of cryptocurrency or 
blockchain technology, as a whole?
    Mr. Chopra. No.
    Mr. Budd. Okay. Thank you. 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, Madam Chairwoman. Welcome, Director 
Chopra. It's good to see you, and congratulations on your 
appointment.
    I know that some of my colleagues have raised this issue 
previously, but I did want to talk about something that I 
uniquely believe that both my friends on the other side of the 
aisle as well as my fellow Democrats believe is important, 
which is that consumers own their own data and they should have 
control over their data. And I know that you are engaged in a 
rulemaking on Dodd-Frank Section 1033. Do you have a timeframe 
in terms of--
    Mr. Chopra. Being 2 weeks in, I don't, but I will share 
with you, as I shared with others, that I think this is a real 
opportunity to create more competition, to create more 
opportunities. And I am going to be reviewing the work to date 
to see what we can accomplish, but I apologize that I don't 
have a timeline at this point.
    Mr. Lynch. Yes. I know you did--in Section 3.5 of your 
annual report you did have a vague reference to the ongoing 
comment period, but as you know, this industry is moving at 
light speed and we are standing still. So, I would just implore 
you to--
    Mr. Chopra. Move quickly.
    Mr. Lynch. Yes, please.
    Mr. Chopra. I hear that. I am hearing that from everybody. 
We want to go through and understand how to do it right. I 
really encourage you and others to have discussions with us on 
the objectives you see. I really see promoting competition, 
promoting choice, allowing new entrants to be able to challenge 
dominant players, to be able to give people more options as 
critical to this.
    Mr. Lynch. Yes. I am keenly interested in consumer 
protection, like you, and I am wondering, as we look at Section 
1033 and the rulemaking, does the General Data Protection 
Regulation (GDPR) offer any instruction on how we handle 
consumers' privacy? GDPR offers the ownership and access to 
information, the portability of information from one 
institution to another, the right to be forgotten, the right to 
rectification. Are those elements that you would embrace, in 
terms of our own response?
    Mr. Chopra. I need to give that some more thought. I think 
the GDPR, and frankly, other State laws in the U.S. that are 
about privacy and greater control of data, are something that, 
as you said, has been evolving. I think some of those 
principles about control and moving market power toward a 
family, so that they have more bargaining leverage, they have 
more ability to protect their data too, I think that is good.
    Mr. Lynch. Look, I do appreciate what the States have done 
and are doing. In my own State, our Secretary of State, Bill 
Galvin, has done a wonderful job of protecting consumers. But I 
do think there should be a unified baseline, and if States want 
to do more in their particular jurisdictions, they have that 
right. But I think it would be much better for a cohesive and 
competitive industry if we did have a common set of standards 
that fintech companies could adhere to, and I think it would 
move us all forward in a very positive way.
    I am just wondering, as well, whether the Gramm-Leach-
Bliley Act (GLBA) offers enough protections, from a statutory 
standpoint, or whether something additional is needed?
    Mr. Chopra. No. The GLBA privacy provisions are outdated. 
Of course, we will enforce that law and administer it. I 
personally do not believe that the GLBA privacy provisions are 
working effectively.
    Mr. Lynch. Okay. That is great. Again, I welcome your 
invitation to be engaged on this issue. I wish you the very 
best. It is great to have you, with your background, in this 
position. I thank you for your willingness to serve. We have a 
lot of work to do.
    Madam Chairwoman, I yield back.
    Ms. Garcia of Texas. The gentleman yields back. The 
gentleman from West Virginia, Mr. Mooney, is now recognized for 
5 minutes.
    Mr. Mooney. Thank you. Thank you, Madam Chairwoman, and 
thank you, Director Chopra, for coming here today. And 
congratulations on your confirmation.
    In the past, the Consumer Financial Protection Bureau has 
taken a, ``punish first and ask questions later'' approach. 
Under former Director Cordray's leadership, enforcement actions 
had to be reined in after the fact by the courts. This kind of 
approach makes it more challenging for businesses large and 
small to understand the rules they need to follow. When the 
rules are confusing or enforced unevenly businesses, poor 
resources, compliance, and attorneys, it is better for 
everyone, consumers included, if they can use those resources 
to create more jobs and expand their business.
    Although you are newly sworn in as Director, we know that 
you are not new to the CFPB. You served as Assistant Director 
under Mr. Cordray and helped steer the Bureau during that era. 
My concern is that as Director, you will take the same approach 
to enforcement as Mr. Cordray. Earlier today, you did commit to 
Ranking Member McHenry to follow a notice and comment APA 
rulemaking process. I was pleased to hear that, and I hope you 
will stick to that commitment.
    So, Director, in January, the CFPB finalized a joint Agency 
rule clarifying that supervisory guidance is nonbinding. Do you 
agree that supervisory guidance does not carry the force of 
law, and do you commit to follow your Agency's January rule?
    Mr. Chopra. Yes. Just to be clear, as I understand it, that 
was an interagency rulemaking clarifying that supervisory 
guidance is not enforceable in a court, does not carry the 
force of law. Frankly, I think that has been Agency practice 
forever, but it is now in regulation.
    Mr. Mooney. Okay. It's good to have that clear. Also, 
Director Chopra, in your testimony you mentioned that restoring 
relationship banking is a priority for you. Can you explain 
what you mean when you say that you want to emphasize 
relationship banking, and how would the CFPB play a role in 
that goal?
    Mr. Chopra. I am very concerned that there are many 
situations where consumers have no place to turn in order to 
get help. The credit reporting industry is a great example of 
this, where consumers are not really the customer; they are the 
product. It is their data that is being bought and sold, so, 
those bureaus may not necessarily have the market incentive to 
serve consumers well, whereas many financial institutions, 
especially local ones that serve their communities, they have 
repeat business. They know their local communities.
    I think we are disadvantaged as a country, the more 
relationship banking goes away, and I want to figure out what 
we can do to revitalize that so that there is a greater sense 
about the customer having more leverage and the institutions 
being more responsive to them. And I think there are some 
places where institutions simply are not adequately responsive 
to customers and their needs, and I think we all can play a 
role in figuring out what we should do to restore that. We need 
that for the resilience of our country.
    Mr. Mooney. Thank you. And you mentioned earlier choice in 
competition, which I think also does benefit consumers. I agree 
with you on that. In your testimony, you outlined a host of 
priorities for the CFPB under your leadership. Notice and 
comment rulemaking forces regulators to take their time and 
listen to the public before finalizing regulations, and a 
comment period is important for getting these rules right.
    As you begin to take action on these priorities, I would 
remind you that Congress makes the laws, not the agencies--and 
you said that early in your testimony, that we make the laws 
and you are enforcing them--and, therefore, it is not within 
your power to create new policy and avoid the notice-and-
comment rulemaking process. I would also echo some of my 
colleagues' comments today on the issue of regulation by 
enforcement. Before pursuing penalties, it is important to ask 
whether the rules are clear. If they are not, an enforcement 
action is not likely appropriate.
    Thank you, Madam Chairwoman, and I yield back the balance 
of my time.
    Ms. Garcia of Texas. The gentleman yields back. The 
gentlewoman from North Carolina, Ms. Adams, is now recognized 
for 5 minutes.
    Ms. Adams. Thank you.
    And to Director Chopra, thank you for being with us today. 
I know you were just sworn in a few weeks ago. I want to echo 
the sentiments of my colleagues and say it is nice to have 
someone like you behind the wheel of the Consumer Financial 
Protection Bureau.
    So, Director, for 40 years, I was a professor at Bennett 
College in Greensboro, North Carolina, a college for women. And 
that is why it is so concerning to me that higher education has 
become so expensive for so many, to the point of putting it out 
of reach for many. And I do want to just commend my colleague 
from Massachusetts who spoke about student debt and so forth 
earlier.
    But it is why the failures of the Public Service Loan 
Forgiveness (PSLF) program are at the top of my mind. Do you 
plan to ensure that the Bureau is committed to helping our 
dedicated public service workers access the student loan relief 
that they were promised under the Public Service Loan 
Forgiveness Program?
    Mr. Chopra. Yes, ma'am. A CFPB report from many years ago 
underscored very severe challenges that borrowers were facing 
in enrolling in this statutorily-authorized program. I 
understand, ma'am, that there has been some changes that the 
Department of Education is announcing to ensure greater 
enrollments. But inasmuch that firms are lying to borrowers 
about that program to discourage them or dissuade them, that 
obviously can be in violation of the law.
    You have my commitment that we will work with the 
Department of Education and others to make sure that program is 
meeting the directives of Congress.
    Ms. Adams. Great. Thank you so much for that. It is an 
important issue, and we want to make sure that they are 
protected.
    But let me switch gears for a moment and ask about for-
profit institutions of higher education. There are plenty of 
good actors in the for-profit space. I want to say that. And I 
know that you are standing up or starting up a new enforcement 
unit within FSA. How do you plan to collaborate with the 
Education Department to hold predatory for-profit schools 
accountable for student outcomes?
    Mr. Chopra. That is a great question.
    To be clear, the CFPB's jurisdiction is not necessarily 
related to schools; it is related to the offering of financial 
services. In the past, the CFPB has done enforcement work in 
this area, particularly where those schools are offering 
lending products.
    Recently, the Federal Trade Commission also announced some 
work to be able to trigger penalties and sanctions against 
those schools that lie about certain types of earnings 
representations. Obviously, we want to make sure that public 
resources are being used efficiently and that we are 
coordinating across-the-board.
    There are some existing memoranda of understanding, and I 
will certainly look to determine whether anything needs to be 
updated to ensure that there is adequate cooperation with that 
office that you have referenced.
    Ms. Adams. Right. The rise of interest in cryptocurrency 
has led to an increase in complaints submitted to the CFPB. A 
lot of folks in Congress are considering legislative proposals 
to regulate and oversee this crypto market and to protect 
consumers. What role does the CFPB play in overseeing crypto 
markets, and are there plans to work with the SEC and Chair 
Gensler?
    Mr. Chopra. As I referenced to some of your colleagues, 
obviously, the change in the payments landscape is one that 
everyone is paying close attention to. Last week, the CFPB 
issued a set of orders to Facebook, Apple, Google, Amazon, and 
others to gain information on their business practices related 
to their payment platforms.
    Of course, most of those payment platforms are primarily 
using the U.S. dollar. But of course, there has been discussion 
in the marketplace about Big Tech also offering virtual 
currencies. We will obviously be working with all of the 
regulators to make sure that our payment system is fair, fast, 
and competitive.
    Ms. Adams. Okay. What types of complaints would push you to 
begin examining possible deceitful practices when consumers are 
buying, selling, and trading crypto products?
    Mr. Chopra. We do know that there is a good amount of fraud 
in this marketplace. In some cases, that implicates various 
State law enforcement, and various Federal law enforcement. 
There has been an uptick in those complaints. So, I will make 
sure that we review them--
    Ms. Adams. I am sorry to cut you off, sir. I am out of 
time, and I need to yield back. We will send it to you in 
writing.
    Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Wisconsin, Mr. Steil, is now recognized for 5 minutes.
    Mr. Steil. Thank you very much, Madam Chairwoman.
    Director, thank you for being here today. I am glad we get 
a chance to question you early on in your tenure at the CFPB.
    I want to start with a pretty straightforward question 
related to the limits of the Bureau's authority. Does the CFPB 
possess regulatory oversight over insurance products or 
insurance companies?
    Mr. Chopra. There is actually, in the statute, a specific 
exemption--
    Mr. Steil. In Title X.
    Mr. Chopra. --of the authority for the business of 
insurance. Business of insurance is defined there. So, no.
    Mr. Steil. Perfect. Thank you very much.
    Let me continue on. The CFPB has UDAAP authority with the 
two ``A's,'' that is Unfair, Deceptive, or Abusive Acts and 
Practices, as you know. But for those listening at home, I 
think it is important to say it.
    For many years, the CFPB seemed content with the uncertain 
definition of the term, ``abusive.'' Leaving the term vaguely 
defined allowed the Bureau to regulate by enforcement. This has 
created real uncertainty for businesses, and it stretched the 
CFPB's authority into new areas.
    And I was encouraged when the CFPB issued a policy 
statement on January 24, 2020, providing a framework for how it 
would apply the abusiveness standard. In that statement, the 
Bureau outlined clear principles explaining how and when it 
would rely on abusiveness to take a regulatory or supervisory 
action.
    I understand your predecessor, in his acting capacity, 
withdrew the policy statement, and so I want to build on 
Ranking Member McHenry's, and my colleague, Mr. Barr's, 
comments earlier on this issue. When he asked if you would 
restore the previous abusive statement or provide a new one, 
you suggested it wasn't necessary. Why is that?
    Mr. Chopra. I don't think that I suggested it wasn't 
necessary. I think I said the abusive policy statement that was 
rescinded by my predecessor, I don't think it provided much of 
an analytical framework at all.
    What it said was that it would not plead, even when they 
believed there was a law violation, abusive if it was also pled 
as unfair during certain circumstances. I don't think that is 
appropriate at all. That suggests that the Agency can somehow 
veto legislation that Congress has passed.
    Congress has put forth a number of prongs that would 
involve prohibited abusive practice. I do, though, have a view 
that it is important for the CFPB to develop a durable abusive 
jurisprudence. There are many ways in which we can do this. But 
certainly, the policy statement that was issued would not 
accomplish that.
    Mr. Steil. You are saying there are many ways that you 
could do this. Are you looking to go and litigate this through 
the courts, or are you planning to put forward a new policy 
statement on this to give clarity?
    Mr. Chopra. I think all options are on the table. There are 
many ways in which agencies can help develop and clarify the 
law. A bedrock of the American system is our common law system 
in our courts. Courts can review. They can issue opinions. We 
look at precedent. But also, administrative agencies have the 
ability to issue policy statements, interpretive rules, 
guidance, and formal rules as well.
    So, I think we can look at all of those. It is going to be 
based on the facts and circumstances. There are certain 
triggers where Congress has required the CFPB to issue rules 
under UDAAP. One is to have State AG enforcement against 
national banks, and the second is for FTC enforcement against 
nonbanks.
    But as it stands, there are many ways to do that. But I do 
not agree that the policy statement that was previously issued 
offered much clarity at all.
    Mr. Steil. We will respectfully disagree on that point, and 
that is okay, I suppose, for today's hearing. But I will 
caution that I think there is real concern for the certainty 
that is needed in the market to not move back to try to define 
this through a judicial process and regulation by enforcement. 
I think there are some real concerns there.
    Let me shift gears once again. We have discussed the value 
of predicted data to make important credit and underwriting 
decisions. I am a big believer that more data is better, 
allowing us to really provide credit to underserved 
communities. It can also help us control risk, and get more 
more stable financial systems.
    Do you believe that more data is helpful, that it will help 
those who are struggling to obtain credit?
    Mr. Chopra. I think it depends. It often can lead to better 
credit decisions. What I worry about is when there is no 
transparency at all in how the decision was made. And then, we 
have a two-tiered system where the local bank serving their 
community is held to account, and the algorithm maker or a 
lender depending on that, who can't even explain sometimes how 
a decision was made, doesn't have to adhere to it. I don't 
think that is fair, but I think we want to make sure that we 
have an approach on how algorithms, machine learning, and AI 
are doing their work.
    Mr. Steil. Thank you for your testimony today. Recognizing 
the time, I yield back.
    Mr. Chopra. Thank you, sir.
    Chairwoman Waters. The gentlewoman from Pennsylvania, Ms. 
Dean, is now recognized for 5 minutes.
    Ms. Dean. Thank you, Madam Chairwoman, for recognizing me.
    And Director Chopra, we are delighted to have you here 
today. To echo my colleagues, thank you for coming before us, 
and congratulations on your confirmation and appointment to 
CFPB Director. I am especially thankful that the former Student 
Loan Ombudsman is now the Bureau Director.
    I want to associate myself with Representatives Axne and 
Pressley and some of their remarks and questions. And to that 
end, some of the largest Federal student loan servicers 
currently servicing Federal student loan borrowers are ending 
or transferring their contracts with the Department of 
Education. They include Navient, PHEAA, and Granite State. This 
is in addition to the end of the CARES Act forbearance on 
Federal student loan payments back in January.
    Given these companies' checkered records of servicing 
borrowers, I am worried that both of these transitions could 
leave borrowers confused or without proper communication tools, 
causing potential record-keeping mistakes or the potential for 
increased default.
    Director Chopra, I recognize that you have only been on the 
job 2 weeks, but with great depth of experience, how are you 
and the CFPB working on plans to ensure that borrowers are 
protected as their loan servicers are changed?
    Mr. Chopra. Thank you so much for this question.
    Sloppy servicing, when it comes to student loans, has 
caused real pain for people. The errors that have been in their 
accounts--it has sometimes even spawned scams because people 
can't actually get things fixed. These bad actors come and prey 
upon them.
    I think when it comes to large servicing transfers, we are 
going to have to work carefully with all of the regulators, but 
especially the Education Department for the Federal student 
loan book, because there needs to be an appropriate set of 
preparation for testing of moving records with fidelity. If we 
have systemic errors in that transfer--and I don't know, maybe 
there are already systemic errors with some of their books. But 
if it gets worse and creates more disruptions or is unfairly 
penalizing people, it will create a lot of hardship. And many 
of those are younger people who are just starting out in life.
    You have my commitment that we will use our tools and work 
with the other agencies to make sure we limit that exposure.
    Ms. Dean. Thank you for your focus on that.
    And you are absolutely right. I worry about the transfer of 
records that are already corrupted or inaccurate. Do you have 
the resources you need to make sure these transitions are made, 
or to monitor and review how servicers are communicating with 
borrowers as they leave one servicer and move to another?
    Mr. Chopra. Resources are always very constrained, and we 
will have to be agile when it comes to what we are facing, 
especially in the mortgage and student loan market, two of our 
biggest markets of debt that is owed by families.
    Ms. Dean. Thank you very much for that promise.
    During the Trump Administration, I was concerned, as I sat 
here on the Financial Services Committee, about their proposal 
to require the position of the Student Loan Ombudsman to be 
reframed as the Private Education Student Loan Ombudsman. Under 
your leadership, will the Student Loan Ombudsman coordinate 
with the Department of Education and once again provide support 
and guidance for all borrowers, not just private student loan 
borrowers?
    Mr. Chopra. Yes. I am going to assess where we are with the 
activities related to our work and for students and borrowers 
and including the Ombudsman's Office to make sure that it is 
looking at the market in totality, because we need to 
understand the full market, not just one part of it.
    Ms. Dean. Exactly right. And again, I will echo my concern 
that you have the resources you need for these extraordinarily 
important economic tasks and oversight.
    Mr. Chopra. I share your concern about that, and I will be 
sure to work with you and report back further.
    Ms. Dean. Wonderful. Thank you. That is great.
    Final question: one specific instance in the private 
student loan space that I have been working on is the discharge 
of private student loans in the case of total and permanent 
disability of a borrower, a protection that exists for Federal 
student loan borrowers. This actually came to us by way of a 
constituent.
    Would you support efforts to ensure that this type of 
discharge is required on private student loans, ensuring that 
those in a seriously dire health situation do not have to be 
burdened by cascading debt?
    Mr. Chopra. Many years ago, the CFPB put together a report 
on the auto defaults that were occurring often when a 
borrower's parent or grandparent died, and they were 
immediately thrown into default. It was a gruesome practice 
that I think was totally unacceptable.
    But with respect to an individual's disability or death, I 
think I need to look at our authorities on that. I am happy to 
get back to you, but I know some lenders are offering that. 
Others are not, and it is a huge shock to people when their 
parent gets a bill for the whole balance.
    Ms. Dean. Exactly. I thank you.
    Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Gooden, is now recognized for 5 minutes.
    Mr. Gooden. Thank you, Madam Chairwoman.
    There are countless examples of Big Tech companies shutting 
down competition and controlling the flow of information and 
free speech across the globe. Many have argued that Federal 
regulators and Congress missed the boat by allowing these tech 
companies to turn into the monopolies we have today. As one 
policymaker said, Big Tech companies can migrate from, ``too 
small to care,'' to, ``too big to ignore,'' to, ``too big to 
fail,'' very quickly.
    Around the world, Big Tech companies accounted for $700 
billion of credit in 2020, which is a 40-percent increase on 
the prior year. Additionally, these Big Tech companies have 
come to account for 94 percent of mobile payments in China in 
just a few years.
    I want to caution the financial services industry that 
while working with Big Tech may look appealing now, you are 
making a deal with the devil. Director, if Big Tech companies 
continue to operate unregulated in the financial services 
industry like they have in other sectors, do you have concerns 
they could eventually have a monopoly in yet another industry?
    Mr. Chopra. Yes. I am worried that the Big Tech companies 
are coming for financial services, and while obviously we want 
technological progress and innovation, I am uncomfortable with 
us not knowing almost anything about what they are up to, 
including their data surveillance and, as you mentioned, how 
they decide who gets kicked off, how are they going to use 
their own incentives to make decisions. This is why the CFPB 
has issued orders to Facebook, Apple, Google, Amazon, and 
others. We need to understand this because this is an issue of 
consumer protection, systemic risk, and the protection of our 
country, writ large.
    It is something that I hope this whole committee--I hope we 
can all work together on this because it is something we need 
to get right.
    Mr. Gooden. I agree totally, and thank you.
    As a former FTC Commissioner, you bring a unique 
perspective to the CFPB. Do you believe Federal regulators like 
the FTC and the CFPB have the necessary tools to monitor Big 
Tech?
    Mr. Chopra. That is a good question. I will certainly want 
to look at every tool we have as it relates to how they are 
entering into financial services. But as you know, most of 
those tech companies are not subject to supervision the way the 
banks are. So, I need to think about that more.
    I will say that it is a very, very difficult circumstance I 
think we find ourselves in, where a new market entrant has to 
constantly have the fear that one of those companies will just 
turn them off one day. I don't think that is very good.
    And when I see what is happening in China, it makes me 
worried. I don't think we should go in that direction.
    Mr. Gooden. Thank you.
    Also, as a former FTC Commissioner, of course you are 
familiar with allegations that several of these Big Tech 
companies have abused their market dominance at the expense of 
their consumers and their commercial partners, which you 
touched on briefly.
    Why, in your belief, is it appropriate to continue 
exploring anti-competitive conduct by Big Tech in your new role 
as Director, and what ability does the CFPB have to restrain 
anti-competitive conduct that it might find in Big Tech's 
payment markets?
    Mr. Chopra. We actually have a different authority. It is a 
different set of laws, but many of the concerns are similar.
    The Congress has directed the CFPB to make sure that 
markets are fair, transparent, and competitive. There are many 
places in the statute that suggest that competition should be 
one we really think about innovation. So, of course, I want to 
be mindful about how I comment, because I participated in the 
decision to file some of those lawsuits, and that litigation is 
ongoing with the FTC.
    But there are many places where regulators should be 
promoting competition and innovation in ways that are good for 
small businesses, good for families, and not just another way 
for dominant firms to control more and more about our lives.
    Mr. Gooden. Thank you. And with respect to your efforts 
against these Big Tech monopolies, I thank you for your work.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentlewoman from 
Michigan, Ms. Tlaib, is now recognized for 5 minutes.
    Ms. Tlaib. Thank you so much, Madam Chairwoman.
    And thank you, Director Chopra.
    In December, I think, of 2020, you all had a final debt 
collection rule that goes into effect on November 30th, and I 
am really pleased because the CFPB was established to protect 
consumers, to protect our residents. I know there has been a 
lot of questions about the business sector in these certain 
industries, but that is not why we created the CFPB. And so, I 
hope we center on the residents and the consumers as we move 
forward, and prioritize them.
    Director, do you think all debt should be treated the same?
    Mr. Chopra. I think the answer is no.
    Ms. Tlaib. Good. Because nearly 20 percent of adults have 
one or more medical debt--
    Mr. Chopra. Yes.
    Ms. Tlaib. Yes, listed on their credit report. And 90 
percent of bankruptcies in our country, Director, are due to 
medical debt. And did you know that at the height of the 
pandemic last year, the three largest healthcare insurance 
companies raked in $10.8 billion in a single quarter, while 
nearly 20 million of our neighbors become unemployed?
    So, Director, I am worried. I am worried that the pandemic 
not only left my residents with emotional trauma, but economic 
distress that could forever alter their ability to thrive 
because we treat all debt the same. I am sure you know that the 
December 2020 rule allows for the debt collector system to send 
a physical or electronic message to the consumer and wait for a 
reasonable period of time to receive a notice of 
undeliverability.
    And you are nodding your head because you know this is very 
concerning, especially because--
    [Audio interruption.]
    Ms. Tlaib. So, you know that these debt collectors are 
likely to increase their use of electronic communication to 
consumers. And so, Director, given that digital divide that we 
have in our country and has been exposed, I think, during the 
pandemic, what steps is CFPB taking to implement this rule in a 
way that protects communities like mine?
    Mr. Chopra. Yes. I just have to share, Congresswoman, that 
what has happened to family balance sheets in many 
neighborhoods has been pretty devastating. And I think while 
there has been a recovery for many, many neighborhoods and 
households, they are still in deep debt from the struggles they 
face.
    And I am worried about them being permanently scarred by 
that, and I think if we want an equitable recovery, we are 
going to need to take a very close look at debt collection and 
credit reporting.
    Ms. Tlaib. Yes, and Director, you know this. Some of these 
emails end up in spam. Some of our folks are not--broadband 
Internet is not reliable. I am just really increasingly worried 
because they are going to check it off and say, ``sent an 
email.''
    Mr. Chopra. Understood.
    Ms. Tlaib. And so, please, if you can follow up with my 
office on some of the steps you are going to take.
    In addition, you know that the rule would prohibit debt 
collectors from bringing or threatening to bring legal action 
to collect a time-barred debt. Very important here. However, 
debt collectors often try to deceive consumers in restarting 
the statute of limitations. The Center for Responsible Lending 
has argued that the CFPB should go further and outright 
prohibit the revival of time-barred debt.
    Director Chopra, will the CFPB implement similar 
protections to prohibit the revival of time-barred debt in 
full? Because several States, as you probably know, enacted 
laws stating that the partial payment or other acknowledgment 
of debt would not revive the statute of limitations.
    Mr. Chopra. Yes, I am worried that some of this debt is 
getting bought, sold--
    Ms. Tlaib. That is right.
    Mr. Chopra. --resold, and investment vehicles are trying to 
monetize it by squeezing them and collecting debt that is not 
owed anymore. So, I want to take a look at the rule. The rule 
is going into effect, but as I understand it, the rule does not 
create any sort of safe harbor for collecting time-barred debt.
    Ms. Tlaib. Yes, but we should work together to prohibit the 
revival of time-barred debt--
    Mr. Chopra. Yes. I would be happy to do that.
    Ms. Tlaib. --in full. Again, more States are acknowledging 
that.
    Mr. Chopra. Yes.
    Ms. Tlaib. So, I think we can do something much more 
broadly.
    Mr. Chopra. Especially with respect to the renewal of 
statute of limitations.
    Ms. Tlaib. That is right.
    Finally, the National Consumer Law Center has suggested 
that CFPB's existing complaint database may not be adequate for 
tracking new complaints regarding electronic communications, 
such as receiving communication even after opting out or being 
unable to read or open file attachments.
    Director Chopra, does the CFPB plan on adopting new debt 
collection complaint categories with regards to electronic 
communications following the December 2020 rule?
    Mr. Chopra. I don't think there are current plans, but I 
would like to explore that.
    Ms. Tlaib. Please do.
    Mr. Chopra. Because that seems like a good--given those 
changes, we need to make sure that sometimes, people have a 
piece of paper. We need to make sure they can provide that 
evidence.
    Ms. Tlaib. That is right. Yes, and thank you.
    And know this, I am working hard with the chairwoman to ban 
medically necessary debt on people's credit reports. I think 
that is going to help a tremendous deal, especially with the 
complaints that you get. But again, people's lives are forever 
altered by what debt gets on these credit reports that impact 
employment and housing.
    So, thank you, and I yield back.
    Mr. Chopra. If I may, Madam Chairwoman? Just on the issue 
of medical debt on credit reports, there has been evidence in 
the past that it is not predictive of other performance. And I 
am constantly worried that a patient just feels coerced to pay 
while their insurance company and a hospital are in an endless 
doom loop, and the credit reporting system cannot be a way to 
extort payments out of patients.
    Chairwoman Waters. Thank you very much. The gentleman from 
Texas, Mr. Taylor, is now recognized for 5 minutes.
    Mr. Taylor. Thank you, Madam Chairwoman. I appreciate it.
    Director Chopra, thank you for being here. Congratulations 
on your confirmation.
    If I could just talk to you about your enforcement 
perspective, you shared a little bit of that during this 
hearing, particularly in your statement that repeat offenders 
should be treated more severely, and I certainly concur with 
you on that point.
    And the reason I ask you about that is, in my time in the 
Texas legislature, dealing with the Office of Consumer Credit 
Commissioner (OCCC), which is slightly analogous to what you 
do, their perspective was, if we find something going wrong, we 
are going to work with the business to try to fix it. If they 
keep doing it wrong, then we are going to hammer them.
    My experience with your predecessors is that they had the 
opposite perspective: We are going to hammer them every time. 
We are not going to actually try to correct, fix, help anybody. 
The problem with that, at least as I see it, is that then 
people don't want to talk to you. They don't want to tell you 
what is going on because they are afraid that if they show the 
book, so to speak, and then you find something, you are going 
to hammer them.
    Is it your job to put pelts on the wall, or is it your job 
to make the consumer space safer, to make the financial 
services space safer for consumers?
    Mr. Chopra. Yes. Our job is to make it fair, transparent, 
and competitive, and I will share with you directly that, of 
course, and there are ways to resolve problems through the 
confidential supervisory process. Not all issues need to go to 
public law enforcement matters.
    But I just want to put a finer point on something, which is 
when someone has been subject to a law enforcement order that 
they often have consented to or they have agreed to make 
certain changes, and they egregiously or don't follow it, this 
is a very severe problem to me.
    Mr. Taylor. Sure.
    Mr. Chopra. And when there is an order in place, that order 
is not a suggestion. It is a binding--it has the force of law, 
and we cannot have large players feel that these are just 
optional tip lists.
    Mr. Taylor. I certainly concur with you on that point. Do 
you think it is fair that someone is pulled over and told, hey, 
the speed limit here is 20 miles an hour, and there are no 
signs on the road? Is that fair? There are no signs of any 
kind.
    Mr. Chopra. And I totally hear your point on this, that 
people should not be harshly penalized for something that was 
not clear.
    Mr. Taylor. Sure.
    Mr. Chopra. And of course, we know that the law does 
specify a number of factors that the Bureau must adhere to when 
seeking those penalties. Those are reviewable by the courts, so 
we have to make sure that we are applying those factors fairly. 
And I share the view that when there is an honest desire to 
play by the rules, it is not appropriate to kind of harshly 
penalize that, and that is what the factors in the law push us 
to do.
    Mr. Taylor. And I guess what I am asking is for you to 
allow the rules that you make to season, to have a chance for 
people to know about them. I have seen agencies, not yours, but 
I have seen agencies produce rules in the middle of the 
enforcement, saying, ``We got you. Here is this new rule. You 
have never seen it before. You are seeing it now, and you are 
wrong.''
    And I think you and I would agree that is unfair to that 
particular--
    Mr. Chopra. It would also--just the fact pattern you 
mentioned may actually be unconstitutional in that there is in 
the legal process, when going to court, a court will assess the 
entire notice issues and number of factors. So, this is why I 
raised with some of your colleagues the importance of the CFPB 
focusing on large market actors causing widespread harm.
    Of course, there will be smaller players that may need to 
be addressed, and I am sure the enforcement docket, and there 
is a lot of backlog. But generally, we should be focusing those 
resources against those whom we know, know the rules. They know 
the law. They are well-resourced. They can fight in court. But 
going after small players, this is just I saw this too much at 
the FTC under Republicans and Democrats, and I just--it didn't 
sit well with me at all.
    Mr. Taylor. Sure. And in my final 30 seconds, I will just 
share my own thought on why smaller players are having a more 
difficult time operating in the market. And I think, actually, 
Mr. Hill mentioned that in his colloquy with you is that the 
increased regulations as a result of Dodd-Frank have created a 
very difficult environment for smaller financial institutions, 
speaking of banks. When Dodd-Frank passed, there were about 
8,500 banks in the United States. There are now about 5,000.
    And that compression, that smaller group of banks, they are 
all bigger. The average size of banks has gone up because the 
only way to survive financially is to consolidate, be bigger, 
so that you have a bigger core of assets to handle the 
regulatory burden that has been thrust upon them by this body.
    Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you.
    Mr. Chopra. Thank you, sir.
    Chairwoman Waters. The gentleman from Illinois, Mr. Garcia, 
is now recognized for 5 minutes.
    Mr. Garcia of Illinois. Thank you, Madam Chairwoman, and 
Ranking Member McHenry, for holding this important hearing.
    And of course, I want to thank Director Chopra for your 
service at the CFPB and for joining us today. I can say the 
CFPB is in good hands.
    A financial regulatory agency focused on consumers is 
crucial. It is easy for other financial regulators to forget 
that in every loan, every refinancing, every repossession, 
every deposit, every fee, we are talking about a family home or 
the car they use to get to work or cash for groceries. The CFPB 
doesn't forget that, and that is critical.
    Consumer data is an important issue in almost every 
industry, but it is particularly important for the financial 
industry because who knows more about you than your bank? This 
is one reason why the historic separation of banking and 
commerce has become more important in the 21st Century, not 
less. The trust and data access in a banking relationship is 
dangerous in the hands of a commercial company not only for 
customers, but for commercial markets and competition.
    In February of this year, the FDIC issued an order 
subjecting ILCs to the privacy standards in the Gramm-Leach-
Bliley Act, but that protection doesn't extend to their parent 
companies. Mr. Chopra, as you know, in other committees 
Congress has extensively covered just how aggressive and 
invasive companies like Facebook and Amazon are with customer 
data.
    The question is, if these companies owned the bank through 
an ILC, would it be hard for regulators like the CFPB or the 
FDIC to tell if they truly kept consumer data in the bank 
behind a firewall, and do you think that this lack of oversight 
could pose a real risk to consumers and competitors?
    Mr. Chopra. Sir, firewalls are extremely difficult to 
monitor in force, and once they are breached, it is almost 
impossible to undo. With respect to your question about, 
particularly tech companies getting into financial services and 
the unimaginable amounts of data that they collect on all of 
us, it would be very hard to administer that.
    Mr. Garcia of Illinois. Thank you for that succinct 
response.
    I represent a working-class immigrant district in Chicago. 
Remittances mean a lot to my constituents and to their families 
in other countries. We know the problem with our remittance 
system, but cryptocurrencies are coming into the market fast.
    El Salvador adopted Bitcoin as a national currency. 
Facebook is launching a new digital currency under the guise of 
sending remittances between the U.S. and Guatemala. Is the CFPB 
examining cryptocurrency as a consumer financial product, and 
what laws, rules, and regulations must be in place to protect 
consumers seeking services like remittances?
    Mr. Chopra. The Electronic Fund Transfer Act and its 
implementing regulations, including the remittance rule that 
was required by Congress, govern remittance transfers. 
Congressman, it is obviously something that is changing very, 
very rapidly about how families are sending money to their 
families, especially those families overseas.
    I think we want a remittance market that is fast, fair, and 
cheap. I don't have an exact answer for you at this point. It 
has only been 2 weeks, but I hear you loud and clear that we 
need to make sure we fully understand the changes in the market 
so that we can administer our enforcement and that we can make 
sure that those families are protected.
    Mr. Garcia of Illinois. Fair enough. It has only been 2 
weeks. I hope to follow up on this subject with you. It affects 
many people and many communities throughout the country, a 
diverse immigrant community that is engaged in remittances very 
deeply.
    Thank you so much, and I wish you really good luck in your 
position, sir.
    I yield back.
    Mr. Chopra. Thank you, sir.
    Chairwoman Waters. Thank you. The gentleman from South 
Carolina, Mr. Timmons, is recognized for 5 minutes.
    Mr. Timmons. Thank you, Madam Chairwoman.
    And congratulations, Director Chopra, on your recent 
confirmation. I hope we can find some areas to work together on 
to serve the American people in the coming years.
    I am going to start with a question about post offices. Do 
you know how many complaints the CFPB has received about the 
United States Post Office this year? Probably not a fan.
    Mr. Chopra. I don't. Yes.
    Mr. Timmons. Mail delivery--we have a lot of people 
allegedly sending bills, but nobody is getting them. I have had 
some issues myself. It is an issue, I do believe. Maybe, you 
can look into it and get back to me.
    But all of these efficiencies and, arguably, incompetence 
of the Post Office have resulted in many of my constituents and 
my colleagues' constituents across the country having late 
payments to creditors. I recently discovered that despite the 
Post Office's inability to accomplish their mission of 
delivering the mail in a timely manner, many people now want 
them to offer financial services products that would compete 
with the private sector.
    Would you agree or would you not agree that the Post Office 
maybe ought to focus simply on delivering the mail to make sure 
that our constituents have their payments delivered on time, 
instead of expanding to an area that distracts from their core 
mission?
    Mr. Chopra. I don't have a view on your specific question. 
I do know that the Post Office has been looking to change and 
make sure it is more financially sustainable by offering 
ancillary services, by leveraging their existing Post Office 
footprint.
    I do understand that there are some places where they sell 
prepaid cards or where they may be helping with money orders or 
other sorts of transfers. But I take your point. It is not an 
area that I have studied very carefully.
    Mr. Timmons. Sure. I have a gym and a yoga studio, and I 
really hope the Federal Government doesn't start paying to 
allow people to work out for free and do yoga.
    But moving on to a different topic, many enforcement 
actions issued recently by the Bureau named company owners by 
name. The reason for these allegations appears to simply be the 
fact of ownership of a business. This would appear to penalize 
small business owners over public companies whose shareholders 
and CEOs are not being named in CFPB enforcement actions and 
lawsuits.
    Earlier today, you talked about how enforcement actions 
against smaller players often kill their business while having 
a much more marginal impact on larger players. It would appear 
that you might agree this discrepancy should end. Will you 
commit to naming individuals only in circumstances where facts 
show those people actually committed unlawful acts?
    Mr. Chopra. Yes. This is actually a very important issue. I 
think one of my experiences as a regulator, including at the 
Federal Trade Commission, which was the FTC essentially said if 
you are a small company, we are naming the individuals. If it 
is a big firm, whatever.
    We took big steps to change that. I vigorously opposed the 
FTC settlement that gave Mark Zuckerberg in the Facebook matter 
an immunity clause. You have my commitment that when it comes 
to large financial institutions, if there is evidence to 
suggest that individuals were involved in directing law 
breaking, we will look to determine whether to name them.
    Mr. Timmons. And conversely, perhaps stop naming 
individuals with small businesses unless they, in fact, were 
possibly--
    Mr. Chopra. Of course. We should not name an individual 
unless we have reason to believe in the evidence to suggest 
that. And to the extent there is a discrepancy between how we 
are treating small businesses and big businesses, I agree that 
we have not paid enough attention to individual liability on 
large firms, and I take your point on the small firm aspect.
    Mr. Timmons. Sure. I really do appreciate that answer.
    One more question: Can you commit to publicly releasing all 
of the facts and data that are used to support your decisions 
during the rulemaking and enforcement process? That is the 
transparency component.
    Mr. Chopra. I think with respect to that question, there 
may be places where we are not able to release all of the 
information. There are rules governing that, as particularly 
the enforcement process and supervisory process.
    Here is one thing I am trying to do. For certain types of 
matters, in addition to just a press release, I also have been 
trying in certain circumstances to issue an accompanying 
statement that outlines some of the logic and analytical 
framework that was used.
    We recently did an enforcement action where I explained a 
little bit more about the claims and counts that were in it. I 
agree with you on wanting to be more transparent and 
communicate more, but we have to respect laws and other things.
    Mr. Timmons. Yes. Just wherever possible, helping people 
understand the decision-making would be helpful.
    Mr. Chopra. Yes.
    Mr. Timmons. Thank you for being here today.
    And Madam Chairwoman, I yield back.
    Mr. Chopra. Thank you, sir.
    Chairwoman Waters. Thank you. The gentlewoman from Texas, 
Ms. Garcia, who is also the Vice Chair of our Subcommittee on 
Diversity and Inclusion, is now recognized for 5 minutes.
    Ms. Garcia of Texas. Thank you, Madam Chairwoman.
    And I, too, want to add my congratulations to the Director, 
and I am hoping to work with you in the next couple of years as 
we work through some of these processes.
    In my district, which is very similar to Mr. Garcia's in 
Chicago, financial services are not broadly used. In fact, many 
still rely more on credit unions, check cashing services, 
remittances, money orders, and still a lot of cash activity. We 
are a community of hard-working, diverse families who rely on 
critical financial services only to try usually to access 
credit. And as you know, access to credit is also about 
accumulating wealth.
    So, for us, it means that without all of that closing and 
being able to access that credit, we will never do much about 
reducing the racial wealth gap. I think you have talked about 
that some, and the Equal Credit Opportunity Act allows 
institutions to develop special purpose credit programs 
(SPCPs), which include tailored approaches to meet the credit 
needs of and directly benefit economically and socially 
disadvantaged groups.
    Again, my district is about 77-percent Latino. It is over 
50-percent disadvantaged.
    According to recent reports by the National Fair Housing 
Alliance and the National Consumer Law Center, SPCPs can be 
critical tools for addressing the legacy of discrimination in 
the mortgage market, promoting equity and inclusion, and 
closing the racial wealth gap.
    Last December, the CFPB issued an advisory opinion 
promoting the use of SPCP programs among creditors. What steps 
has the CFPB taken to facilitate the use of these programs in 
the financial marketplace?
    Mr. Chopra. It is a great question, and I share this 
interest completely about how we can both simultaneously 
increase trusts in the financial system, but also make sure 
that the financial system isn't widening inequities and gaps 
but is actually part of closing it and part of making sure that 
everyone can access the opportunities that they seek, 
particularly when it comes to housing.
    I am going to ask the staff to give me more of a review of 
the use of special purpose credit programs. It is something I 
know that I will be keen to talk to the other regulators and 
the Treasury Department about. But I do think it is one of many 
ways that we can ensure there is not discriminatory lending, 
but also take steps to reverse some of the disgusting redlining 
practices of the past.
    Ms. Garcia of Texas. Right. And just to be clear, you are 
the head of the Consumer Financial Protection Bureau, right? 
Emphasis on, ``Consumer.''
    Mr. Chopra. That is exactly right.
    Ms. Garcia of Texas. So, what are you doing to ensure that 
your Agency is inclusive and diverse in its practices, in its 
programs, and specifically, I am always concerned about 
financial literacy in materials from your Agency and in 
programming that would be reflective of the different languages 
spoken around the country?
    Mr. Chopra. Yes, language--
    Ms. Garcia of Texas. I just see a lot of language barriers 
in financial transactions.
    Mr. Chopra. There are, and I think we should be embracing 
the fact that a strength of our country is having so many 
people from all over the world and being able to engage in 
commerce and banking in a way that they can understand, and 
that is comfortable for them. I do want to look at our 
authorities to be able to support those institutions who share 
that point of view.
    Being inclusive is not just about having one brochure in 
Spanish. It has to go much, much further than that. I don't 
have a great specific answer for you right now, but I 
completely share in what you are saying, and I am going to 
think more and look into what authorities we have to advance 
that goal.
    Ms. Garcia of Texas. Right. And within your own materials, 
your own implementation of some of your programs, you will work 
to ensure that they are reflective of the languages that are 
spoken in the different parts of the country?
    Mr. Chopra. That is right. And I want to make sure in 
particular, I have set a goal that our consumer complaints 
should be broadly reflective in terms of the geographies that 
we serve across our country and including the languages we 
serve. Already, we have made--in the past, there have been more 
languages where consumers can call, and file complaints. I want 
to see how that is going.
    Ms. Garcia of Texas. Thank you, and I see my time is up, so 
I yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Massachusetts, Mr. Auchincloss, who is also the Vice Chair of 
the Full Committee, is now recognized for 5 minutes.
    I understand that Mr. Auchincloss has left the room. At 
this time, I would like to thank our very distinguished witness 
for his testimony today.
    The Chair notes that some Members may have additional 
questions for this witness, 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 this witnesses and to place his 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.
    With that, this hearing is adjourned.
    Thank you.
    [Whereupon, at 2:03 p.m., the hearing was adjourned.]

                            A P P E N D I X


                           October 27, 2021
                           
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