[Senate Hearing 117-76]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 117-76

                   NOMINATIONS OF GARY GENSLER AND ROHIT 
                                     CHOPRA

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                            NOMINATIONS OF:

    GARY GENSLER, OF MARYLAND, TO BE A MEMBER OF THE SECURITIES AND 
                          EXCHANGE COMMISSION

                               __________

 ROHIT CHOPRA, OF THE DISTRICT OF COLUMBIA, TO BE DIRECTOR, BUREAU OF 
                     CONSUMER FINANCIAL PROTECTION

                               __________

                             MARCH 2, 2021

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
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                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
45-766 PDF                 WASHINGTON : 2022                     
          
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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                       Elisha Tuku, Chief Counsel

                        Jan Singelmann, Counsel

                 Dan Sullivan, Republican Chief Counsel

                 John Crews, Republican Policy Director

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                         TUESDAY, MARCH 2, 2021

                                                                   Page
Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    54
Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     3

                               WITNESSES

Senator Ben Cardin of Maryland...................................     5
Senator Chris Van Hollen of Maryland.............................     6
Senator Richard Blumenthal of Connecticut........................     7

                                NOMINEES

Gary Gensler, of Maryland, to be a Member of the Securities and 
  Exchange Commission............................................     8
    Prepared statement...........................................    55
    Biographical sketch of nominee...............................    57
    Responses to written questions of:
        Chairman Brown...........................................   114
        Senator Toomey...........................................   119
        Senator Menendez.........................................   132
        Senator Tester...........................................   132
        Senator Warren...........................................   134
        Senator Van Hollen.......................................   138
        Senator Sinema...........................................   139
        Senator Crapo............................................   141
        Senator Scott............................................   142
        Senator Tillis...........................................   144
        Senator Kennedy..........................................   146
        Senator Lummis...........................................   149
        Senator Moran............................................   151
        Senator Cramer...........................................   158
        Senator Daines...........................................   159
Rohit Chopra, of the District of Columbia, to be Director, Bureau 
  of Consumer Financial Protection...............................    10
    Prepared statement...........................................    72
    Biographical sketch of nominee...............................    73
    Responses to written questions of:
        Chairman Brown...........................................   160
        Senator Toomey...........................................   163
        Senator Tester...........................................   173
        Senator Warren...........................................   175
        Senator Van Hollen.......................................   175
        Senator Sinema...........................................   176
        Senator Crapo............................................   177
        Senator Scott............................................   178
        Senator Tillis...........................................   181
        Senator Kennedy..........................................   182
        Senator Moran............................................   183
        Senator Cramer...........................................   187

              Additional Material Supplied for the Record

Letters submitted in support of Nominee Gary Gensler.............   191
Letters submitted in support of Nominee Rohit Chopra.............   210

                                 (iii)

 
              NOMINATIONS OF GARY GENSLER AND ROHIT CHOPRA

                              ----------                              


                         TUESDAY, MARCH 2, 2021

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., remotely, via WebEx, Hon. 
Sherrod Brown, Chairman of the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The hearing will come to order. This 
hearing is in a virtual format. A few reminders as we begin. 
Once you start speaking there will be a slight delay before you 
are displayed on the screen. To minimize background noise, 
please click the Mute button until it is your turn to speak or 
ask questions. You should all have one box on your screens 
labeled Clock, that will show you how much time is remaining. 
For witnesses, you will have 5 minutes for opening statements. 
For all Senators, the 5-minute clock still applies for your 
questions. At 30 seconds remaining for statements and questions 
you will hear a bell ring to remind you that your time is 
almost expired. It will ring again when your time has expired. 
If there is a technology issue we will move to the next witness 
or Senator until it is resolved.
    To simplify the speaking order process, Ranking Member 
Toomey and I have agreed to go by seniority for this hearing.
    Today we consider the nominations of two distinguished 
public servants: Rohit Chopra to serve as Director of the 
Consumer Financial Protection Bureau, and Gary Gensler to serve 
as a Chairman of the Securities and Exchange Commission.
    Most of us have met with them. Most of us have been 
impressed with their knowledge, their commitment, and their 
passion to serve, especially during the current public health 
crisis. Thank you, Commissioner Chopra, thank you, Mr. Gensler, 
for your willingness to serve.
    You are both nominated to lead parts of our Government 
whose job is to stand up for the millions of Americans who do 
not have a corporate lobbyist, who do not have a Super PAC, who 
never get bailouts or golden parachutes. And you will take on 
these roles at a time when so many people do not feel like they 
have a voice in our economy, or anyone on their side in our 
government.
    Your job will be to prove them wrong, to fight for all the 
workers and families and communities that have been left out 
and looked down on by the Washington elite, and have been 
preyed on by Wall Street. Even before the pandemic, workers; 
wages were not keeping up with the cost of living and raising a 
family. The cost of housing, childcare, prescription drugs all 
have gone up. We know 40 percent of Americans are not able to 
come up with $400 in an emergency.
    The racial wealth gap has increased. The average white 
family now has ten times the wealth of the average Black 
family. And most stunningly, we have the widest racial home 
ownership gap in 50 years. In fact, the gap is as big today as 
it was when it was legal to refuse to sell someone a home 
because of the color of their skin.
    Then the coronavirus pandemic hit, and millions of workers 
who were one emergency away from draining their savings or 
turning to a payday lender or being evicted were all facing 
emergencies at once. Millions of homeowners are behind on their 
mortgage and at risk of foreclosure, including nearly one in 
six Latino homeowners and one in five Black homeowners.
    Today's nominees understand the challenges we face. And 
after years of allies of the largest corporations and the 
biggest banks running these agencies, and setting government up 
to fail, Mr. Chopra and Mr. Gensler are here to fight for 
everyone else.
    Congress created the Consumer Protection Bureau to be a 
voice for all the Americans who too often do not have one in 
Washington. During its first 10 years, the Bureau delivered 
results, made new, strong rules that protect consumers from 
abusive practices, and returned more than $12 billion to more 
than 29 million Americans who were cheated and preyed on by 
shady lenders and sometimes by big banks.
    Mr. Chopra has the expertise and the track record to lead 
the Bureau at a time when workers and their families are 
desperate for someone to look out for them. He has a deep 
understanding of financial markets and a strong record of 
protecting consumers and small businesses, promoting 
competitive markets, and holding bad actors accountable.
    In 2018, the Senate voted unanimously to confirm Mr. Chopra 
as an FTC Commissioner, and since then, he has worked with 
members of both parties on a wide array of issues important to 
American consumers.
    As Commissioner, he worked with Democratic and Republican 
state attorneys general, something Mr. Bloomberg used to be 
before coming to the Senate, to protect American small 
businesses and consumers from foreign goods that were flooding 
the market with fake ``Made in the USA'' labels. He has pushed 
the FTC to crack down on Big Tech, including authorizing the 
agency's current lawsuit against Facebook. He has also earned 
the endorsement of veterans and military organizations because 
of his long record of standing up for servicemembers, veterans, 
and military families that have been preyed on by Wall Street 
banks and predatory lenders.
    At the CFPB, Mr. Chopra served as the agency's first 
student loan ombudsman, directing the agency's work in the $1.7 
trillion student loan market, and working with state attorneys 
general of both parties to bring enforcement actions. With Mr. 
Chopra leading the CFPB, Americans can be confident they will 
have someone looking out for them.
    Turning to Mr. Gensler, we consider his nomination at a 
time when it has become more and more obvious to most people 
that the stock market is detached from the reality of their 
lives. People have watched stock prices go up and up during 
this pandemic, even though only half of U.S. households have 
stock investments. They have seen corporations pay dividends to 
shareholders, while rolling back hazard pay for workers and 
laying people off.
    As Chair of the CFTC, and prior to that as a senior 
official in the Treasury Department, Mr. Gensler delivered 
results and ensured accountability. That is why he has been 
nominated for this job. He led the charge in 2012 to crack down 
on the big banks that had manipulated interest rates and gotten 
away with it. He will bring that same focus to the SEC.
    Markets should be a way for families to save and invest for 
their kids' education or a down payment on a home or a secure 
retirement, not a game for hedge fund managers that workers 
seem to always lose. Mr. Gensler will bring the focus back to 
the people who make this country work, and take on anyone on 
Wall Street looking to game the system. That means upgrading 
climate risk disclosure requirements that are out of date. It 
means punishing misconduct. It means enforcing the protections 
on the books. And it means working with other agencies to head 
off growing problems before they become emergencies that hurt 
the economy.
    We have seen what happens when markets do not have real 
safeguards. People are left to fend for themselves. Just look 
at the electricity market in Texas.
    Ultimately, both of these roles are about one question: 
Whose side are you on?
    I am confident both nominees will stand up for all the 
workers and their families who have not had that voice. I look 
forward to hearing how each of you will help chart the course 
out of this pandemic and build a brighter future for our 
country in the years ahead.
    Senator Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman, Mr. Gensler, and 
Commissioner Chopra. Welcome to both of you. Thank you for your 
willingness to serve. You have been nominated to lead two 
agencies that can have a very substantial impact on the U.S. 
economy. After taking a devastating hit last spring, the U.S. 
economy has thankfully, now, in recovery mode. But there are 
any number of actions the Federal Government could take that 
would stifle this ongoing recovery. If Federal agencies like 
the CFPB and the SEC were to impose burdensome and restrictive 
regulations, including, for instance, back-door regulations by 
enforcement, well, that could limit consumers' access to 
credit, hamper job growth by limiting access to capital 
markets, and restrict the ability of publicly traded companies 
to act in the best interest of their owners, the shareholders. 
Any or all of these would impede economic growth.
    Today I hope we are going to learn whether Mr. Gensler and 
Commissioner Chopra would take such actions as the heads of the 
SEC and the CFPB.
    Commissioner Chopra has been nominated to serve as Director 
of the CFPB, and as we consider his nomination I think it is 
important to remember the CFPB's history. It was created by our 
Democratic colleagues through the Dodd-Frank Act as arguably 
the most unaccountable agency the history of the Federal 
Government. It is an agency with a single director, who, until 
recently, even the President of the United States could not 
remove. That, of course, was deemed unconstitutional, and 
rightly so. But it is still not accountable to Congress through 
the appropriations process.
    Under President Obama, the CFPB pursued an activist, 
antibusiness agenda that limited consumer choice, drove up the 
cost of credit, and hamstrung job creators through 
overregulation. The CFPB repeatedly engaged in overreach and 
abuse of its authorities. For example, it took a regulation-by-
enforcement approach that the D.C. Circuit Court held violated 
the bedrock principles of due process. It routinely overstepped 
its jurisdiction, like investigating for-profit college 
accreditation, which the courts shut down. And it used public 
pressure tactics like to name and shame businesses like 
publishing unverified consumer complaints.
    Now based on Commissioner Chopra's record, I am concerned 
about whether or not he would return the CFPB to the 
hyperactive, often lawbreaking, antibusiness agency that is was 
under the Obama administration, and I say this because 
Commissioner Chopra helped set up the CFPB, and then served as 
the agency's student loan ombudsman during the Obama 
administration. In that role, he was known to have a hostile 
relationship with many lenders and used name-and- shame tactics 
to pressure them.
    At the FTC, Commissioner Chopra has continued to take an 
aggressive antibusiness stance. The Wall Street Journal 
editorial board has noted Commissioner Chopra, and I quote, 
``has a record at the FTC and CFPB that suggests deep hostility 
to for-profits schools and other parts of the private 
economy,'' end quote.
    In one FTC case, three of his fellow commissioners publicly 
rebuked his dissent, in a case for its, quote, ``disregard of 
facts and law,'' and for making misleading claims and relying 
on fake assertions.
    Finally, we know that Commissioner Chopra favors 
unaccountable regulators with vast powers. He proposed creating 
one, a superagency that would regulate politicians and think 
tanks and nonprofits. So this raises concerns about how he 
would wield power at the CFPB, and I will remind my colleagues 
the CFPB remains led by a sole director, not accountable to 
Congress through the appropriation process, and as a sole 
director there would be no other commissioners to potentially 
restrain that sole director. I hope today we will hear some 
information that will provide further insight into Commissioner 
Chopra's plans for the CFPB, if he is confirmed.
    As for Mr. Gensler, Mr. Gensler has been nominated to serve 
as Chairman of the SEC. There is no question he has a great 
deal of knowledge about securities markets. The capital markets 
that the SEC regulates are the envy of the world and an 
important engine for economic growth and job creation. 
Facilitating capital formation will be particularly crucial to 
our current economic recovery.
    The SEC has historically administered the Federal 
securities laws on a bipartisan basis. But there are some who 
want the SEC to stray from its tradition of bipartisanship by 
using its regulatory powers to advance a liberal, social, and 
cultural agenda on issues ranging from climate change to racial 
inequality. Based on Mr. Gensler's record, I am concerned that 
he may be inclined to use the SEC in this inappropriate manner. 
But security laws are not the appropriate vehicle to regulate 
the climate nor to correct racial injustice, nor to intimidate 
companies regarding political spending. We have environmental 
civil rights and political spending laws to do that.
    At the CFTC, Mr. Gensler had a history of pushing the legal 
bounds of the agency's authority. One FTC rule on position 
limits was overturned in court. Another rule on cross-border 
swaps was viewed by critics, including international 
regulators, as exceeding the FTC's authority. So this raises 
questions about whether he will also push the legal bounds of 
the SEC's authorities, in particular, in an attempt to advance 
a liberal social agenda.
    I hope that today's hearing will provide further insight 
into Mr. Gensler's plans for the SEC, if he is confirmed, and I 
look forward to hearing from both Commissioner Chopra and Mr. 
Gensler.
    Chairman Brown. Thank you, Ranking Member Toomey. I am 
pleased to welcome three of my colleagues, two of them visitors 
to the Committee, Senators Cardin and Van Hollen, who will 
provide an introduction of Mr. Gensler, and Senator Blumenthal 
from Connecticut, who will provide an introduction to Mr. 
Chopra. Senator Cardin is the senior Senator from Maryland, a 
guest of this Committee. You are recognized for your 
introduction of Mr. Gensler.

   STATEMENT OF BEN CARDIN, A U.S. SENATOR FROM THE STATE OF 
                            MARYLAND

    Senator Cardin. Well, Chairman Brown, Ranking Member 
Toomey, thank you for giving me the opportunity to introduce a 
fellow Marylander, Gary Gensler, to this Committee for his 
nomination hearing to be Chair of the SEC.
    On a personal note, I have known the Gensler family all my 
life. The Gensler family represents the best values of serving 
our community. Gary's commitment to public service is for all 
the right reasons. Government should work for everyone fairly. 
I am proud to endorse his nomination to be the next Chair of 
the SEC.
    He has broad experience for this critical position of 
oversight of a key part of our financial system. He has the 
experience in the Executive branch, Legislative branch, and 
private sector. It takes an aggressive, fair, and consumer- 
focused Chair of the SEC at the helm to truly protect the 
interests of all Americans.
    It is with this important mission and responsibility in 
mind that brings me to Mr. Gensler. Mr. Gensler is uniquely 
equipped to serve in this role, by his experience in the 
financial sector and academic and his commitment to public 
service. After serving in several roles at the Treasury 
Department, crafting policies on domestic finance in the 1990s 
and 2000s, Mr. Gensler was awarded Treasury's highest honor, 
the Alexander Hamilton Award in recognition of his service.
    He is also no stranger to this Committee, having served as 
senior advisor to former Chair and Marylander, Paul Sarbanes, 
and working to reform corporate responsibility, accounting, and 
securities laws as part of the Sarbanes- Oxley Act. Mr. Gensler 
went on to become one of the leading financial reformers in the 
wake of the Great Recession, serving as Chair of the Commodity 
Futures Trading Commission under President Obama.
    During his time at the CFTC, he brought much-needed 
oversight and transparency to future markets, playing a central 
role in implementing the Dodd-Frank law's swaps markets reform. 
He was a tough regulator but a fair one, tasked with 
challenging responsibility after the passage of Dodd-Frank. I 
know that Mr. Gensler will work to ensure that the United 
States leads the world in fighting corruption and ensuring 
transparency in its markets to protect U.S. investors.
    Now Professor of the Practice of Global Economics and 
Management at MIT Sloan School of Management, Mr. Gensler 
conducts research and teaches on blockchain technology, digital 
currencies, financial technologies, and public policies.
    So, Mr. Chairman, I am pleased to be joined by my 
colleague, Senator Chris Van Hollen, in recommending to this 
Committee for confirmation, Gary Gensler, to be the next Chair 
of the SEC.
    Chairman Brown. Thank you, Senator Cardin. We now call on a 
respected member of our Committee, Banking, Housing, and Urban 
Affairs, Senator Van Hollen, also from Maryland. Chris, thank 
you for joining us again.

STATEMENT OF CHRIS VAN HOLLEN, A U.S. SENATOR FROM THE STATE OF 
                            MARYLAND

    Senator Van Hollen. Thank you, Mr. Chairman, Ranking Member 
Toomey, members of the Committee. Congratulations to both of 
these nominees, Mr. Chopra and Mr. Gensler, for being 
nominated, and I am thrilled to join my partner and senior 
Senator from Maryland, Ben Cardin in recommending strongly to 
the Committee Gary Gensler to chair the Securities and Exchange 
Commission.
    Senator Cardin has covered his Maryland roots. Gary is a 
good, dear friend. But for the purposes of today's hearing the 
most important thing are his stellar qualifications and great 
judgment. Gary Gensler is somebody who combines a brilliant 
mind with a good heart and excellent judgment. He does have the 
expertise to take on this important responsibility at this 
time, and I am absolutely confident that, if confirmed, he will 
serve our country admirably and well in this position.
    In the State of Maryland, Mr. Gensler was the Chairman of 
the Maryland Financial Consumer Protection Commission, where he 
earned a reputation for championing the consumers' interests 
with respect to students, veterans, and servicemembers, and I 
must say, he had a great bipartisan track record. He forged 
unanimous agreement by members of the commission and 
legislation that they recommended passed the General Assembly 
on a bipartisan basis.
    Senator Cardin has mentioned his important work with the 
former Chairman of this Committee, Senator Sarbanes. And, of 
course, Mr. Gensler is known as one of the quiet heroes of the 
response to the Great Recession. As head of the CFTC, he was 
one of the people that did impose financial accountability on 
big banks and other financial institutions. He cracked down on 
the manipulation of the London Interbank Offered Rate, or 
LIBOR, which sets interest rates on many bank loans, and his 
work on that front resulted in charges being brought against 
five financial institutions who paid $1.7 billion in penalties.
    So in addition to his current cutting-edge efforts in 
cryptocurrencies and blockchain technology, Gary Gensler is the 
right person for this job. I want to just say to his three 
wonderful daughters, Isabel, Anna, and Lee, we are proud of 
your dad and it is good to see, I think, Isabel joining Gary 
there at home.
    So thank you, Mr. Chairman, and Members of the Committee. I 
strongly recommend this nomination to the Senate.
    Chairman Brown. Thank you, Senator Van Hollen. Senator 
Blumenthal I would like to recognize. Thank you for joining us 
as a guest of this Committee. As Attorney General of 
Connecticut and now as a Senator he has got lots of expertise 
in these issues. Senator Blumenthal.

STATEMENT OF RICHARD BLUMENTHAL, A U.S. SENATOR FROM THE STATE 
                         OF CONNECTICUT

    Senator Blumenthal. Thank you so much, Chairman Brown and 
Ranking Member Toomey. I am honored, very honored, to visit 
with the Committee on this occasion with such eminently 
qualified, distinguished nominees for their respective posts, 
and really, I could not be prouder to introduce to the 
Committee Rohit Chopra, because I could not imagine a better 
person to head the Consumer Financial Protection Board at this 
critical time. It is, indeed, an economic crisis that has 
burdened particularly communities of color, and Rohit Chopra is 
sensitive to the challenges that those communities of color 
encounter in this perfect storm of economic crisis. Consumers 
can be sure you will be in their corner and have their back.
    He has a great mind and a deeply good heart, and I have 
seen him fight for consumers, but fairly so, heeding the need 
for bipartisanship and listening to stakeholders on both sides 
of issues. He is, indeed, tough but fair, insightful, and 
perceptive, but he also has reverence to the American values 
that have motivated him throughout his extraordinary career, at 
the highest academic institutions and then in public service.
    As the current Chair of the Consumer Protection Committee, 
and formerly Ranking Member, and as you observed, Chairman 
Brown, Attorney General of the State of Committee for 20 years, 
I have been involved in observing the importance of fair, tough 
enforcement of consumer protection laws, and he fits that need 
right now.
    But I have also seen his work, his fight to protect the 
``Made in America'' label, which means more jobs for Americans. 
That ``Made in the USA'' label deserves enforcement. His 
vigilance to the harms of Big Tech, collaborating with state 
attorneys general and with his Republican colleagues, 
benefiting consumers and competition. His expertise and 
experience in protecting household and students from unfair and 
burdensome practice. And, of course, he has been saluted by 
veteran organizations. As a member of the Veterans' Affairs 
Committee, as is the Chairman, I am very, very proud to 
recognize the strong endorsements that he has received from 
military and veterans organizations for his work in protecting 
them against the kinds of predatory threats that exist now more 
than ever.
    I believe that tough and fair enforcement of consumer 
protection laws is actually pro-business, because it protects 
the good guys from an unlevel playing field when those kinds of 
competitive or consumer laws are violated by members of the 
business community who may be trying to cut corners, and 
putting the good guys at a disadvantage. I think Rohit Chopra 
will be an extraordinarily distinguished head of the CFPB, and 
I look forward to his serving with distinction.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Blumenthal, and thank 
you, Senator Cardin, both of you, for being guests of this 
Committee.
    Let's move on to the nominees. Mr. Gensler and Mr. Chopra, 
if you would please. You can adjust your cameras or not. It is 
up to you. Stand and raise your right hand.
    Do you swear or affirm that the testimony that you are 
about to give is the truth, the whole truth, and nothing but 
the truth, so help you God?
    Mr. Gensler. I do.
    Mr. Chopra. I do.
    Chairman Brown. And do you agree to appear and testify 
before any duly constituted committee of the Senate?
    Mr. Gensler. I do.
    Mr. Chopra. I do.
    Chairman Brown. Thank you. You may be seated.
    Mr. Gensler, you are now recognized for 5 minutes to 
provide your opening statement. Both of you, I know Isabel has 
been introduced four times now, but both of you feel free to 
introduce family members that are watching or nearby or sitting 
over your shoulder in your Maryland apartment or in your 
Maryland home.
    So, Mr. Gensler, if you would begin first, for five 
minutes. Thank you.

 STATEMENT OF GARY GENSLER, OF MARYLAND, TO BE A MEMBER OF THE 
               SECURITIES AND EXCHANGE COMMISSION

    Mr. Gensler. Chairman Brown, Ranking Member Toomey, members 
of the Committee, it is an honor to appear before you. Two 
decades ago, I served on this Committee's staff under Chairman 
Paul Sarbanes, who we sadly lost late last year. And today, I 
am proud to be here as President Biden's nominee to chair the 
Securities and Exchange Commission.
    I have spent my entire professional career in and around 
financial markets, in the private sector, in state and Federal 
Government, and now in academia, and I believe our markets are 
the finest in the world.
    But they did not become that way through happenstance. In 
the shadow of the Great Depression, Congress created the SEC to 
protect investors, to maintain fair, orderly, and efficient 
markets, and to facilitate capital formation. In the decades 
since, we have seen that when the SEC does its job, when there 
are clear rules of the road and a cop on the beat to enforce 
them, our economy grows and our nation prospers.
    But when we take our eyes off the ball, when we fail to 
root out wrongdoing, or to adapt to new technologies, or to 
really understand novel financial instruments, things can go 
very wrong. And when that happens, people get hurt.
    Twelve years ago, when I became Chair of the Commodity 
Futures Trading Commission, our economy was reeling from the 
financial crisis. My fellow commissioners and I took decisive 
action, on a bipartisan basis, to increase transparency and 
reduce risk in the $400 trillion swaps market. And I am proud 
that 85 percent of our actions were passed with bipartisan 
support.
    If confirmed as SEC Chair, I will work with my fellow 
commissioners, the SEC's exceptional staff, and the Members of 
Congress to ensure our markets remain the world's best. That 
means strengthening transparency and accountability in our 
markets so people can invest with confidence, and be protected 
from fraud and manipulation. It means promoting efficiency and 
competition, so our markets operate with lower costs to 
companies and higher returns to investors. It means making sure 
companies, incumbents and entrepreneurial startups alike, can 
raise needed capital to innovate, expand their operations, and 
contribute to economic growth. And above all, it means making 
sure our markets serve the needs of working families.
    I am a product of a working family. Senator Cardin was kind 
enough to say he knew my folks. Neither of my parents went to 
college, but my father was able to take his mustering-out pay 
from World War II and start a small business that would 
eventually send my four siblings and me to college. That is the 
kind of economic opportunity that should be available to each 
and every American, no matter who they are. I believe our 
markets are essential to providing that opportunity.
    That is because capital markets touch every part of our 
economy. They enable businesses to develop new products, build 
new facilities, and grow their payrolls. They help working 
families save for retirement and invest in their children's 
futures. And although it may not seem intuitive, when someone 
goes to take out a mortgage or open a credit card, our capital 
markets are on the other side of those transactions as well.
    We cannot take any of this for granted. Markets, and 
technology, are always changing. Our rules have to change along 
with them. In my current role as a professor at MIT, I research 
and teach on the intersection of technology and finance. I 
believe financial technology can be a powerful force for good, 
but only if we continue to harness the core values of the SEC 
in service of investors, issuers, and the public.
    Before I close, I do want to introduce and thank my three 
daughters: Isabel, who is here with me in Maryland, over there, 
and her older sisters Anna and Lee, who are watching remotely. 
They are the lights of my life, and I would not be here today 
without their love and support.
    I thank you, and I look forward to your questions.
    Chairman Brown. Mr. Gensler, thank you. Commissioner 
Chopra, and feel free to introduce your family, if people are 
watching, and thank you.

 STATEMENT OF ROHIT CHOPRA, OF THE DISTRICT OF COLUMBIA, TO BE 
            DIRECTOR, BUREAU OF CONSUMER PROTECTION

    Mr. Chopra. Mr. Chairman, Ranking Member Toomey, and 
members of the Committee, my name is Rohit Chopra, and thank 
you for the opportunity to appear before you today, and thank 
you to Senator Blumenthal for that kind introduction.
    It is an honor to sit before you as President Biden's 
nominee to lead the Consumer Financial Protection Bureau. I am 
so grateful for the support of my family, friends, and 
colleagues, so many of whom are joining us virtually, and I 
wish we could be in the same room. I am especially thankful to 
my parents. I last saw them exactly 1 year ago to celebrate my 
mother's birthday, the longest stretch of time in our lives 
without being physically together, an experience that is all 
too common today.
    America, in March of 2021, is far different than of a year 
ago. Every week we have seen hundreds of thousands lost their 
jobs, local businesses have shuttered, and more than 500,000 
have died. And while there are some hopeful signs that the tide 
is turning, we must not forget that the financial lives of 
millions of Americans lay in ruin. Experts expect distress 
across a number of consumer credit markets, including an 
avalanche of loan defaults and auto repossessions.
    And there are other persistent pain points for consumers 
that are felt particularly acutely today, making it harder for 
those families to get back on their feet, even as this pandemic 
ends. Consumers continue to discover serious errors on their 
credit reports or feel forced to make payments to debt 
collectors on bills they already paid or never owed to begin 
with, including for medical treatment related to COVID-19. Many 
of these longstanding problems will make it more difficult for 
our country to sustain a full recovery.
    This is especially true when it comes to our housing 
market. For most of us, much of this last year has been spent 
at home. Our homes are more than physical structures. They have 
served as offices, schools, and so much more, providing safety 
and refuge during a deadly pandemic.
    But due to the economic devastation due to COVID-19, 
millions face the prospect of losing their home, with 
communities of color particularly at risk. Many have seen their 
jobs disappear and will not be able to easily resume their 
payments.
    In the last economic crisis a decade ago, we saw how 
unlawful and unavoidable foreclosures proved to be catastrophic 
in cities, small towns, suburbs, and rural areas alike, 
contributing to deeper social divisions and inequities. We once 
again face an important test to ensure that troubles in the 
housing and mortgage market do not sabotage the recovery of our 
local communities.
    And in the mortgage market especially, fair and effective 
oversight can promote a resilient and competitive financial 
sector, address the systemic inequities faced by families of 
color and more. But perhaps most importantly, administration of 
our laws can help families navigate their options to save their 
homes.
    Congress has entrusted the CFPB with carefully monitoring 
markets to spot risks, ensure compliance with existing law, 
educate consumers, and promote competition. This not only helps 
to protect Americans from fraud and other unlawful conduct, it 
helps ensure that businesses that follow the law, regardless of 
their size our clout, can compete.
    Three years ago, I sought the Senate's confirmation to 
serve as an FTC Commissioner, and I was honored to be 
unanimously confirmed, and to work with members of both parties 
to turn the page on some of the failed and outdated policies of 
the past.
    If confirmed to lead the CFPB, I pledge to be a good 
partner to each of you and approach the agency's mission with 
humility, an open mind, and attuned to market realities. I look 
forward to working with all of you to tackle the pressing 
problems that families face in their financial lives during 
this critical moment for our country.
    Thank you again, and I look forward to your questions.
    Chairman Brown. Thank you very much Commissioner Chopra.
    This question is directed to both of you. As you both know, 
many of us have advocated for that government and businesses 
should actually reflect the country that we are supposed to 
serve. It means diverse financial regulators as well as 
diversity at financial institutions in the Committee's 
jurisdiction. Commissioner Chopra, Mr. Gensler, will you each 
commit to considering and hiring diverse candidates for the 
most senior positions as well as throughout the agencies you 
will lead?
    Commissioner Chopra, begin, please.
    Mr. Chopra. Yes, sir.
    Chairman Brown. Mr. Gensler.
    Mr. Gensler. Yes, Mr. Chairman.
    Chairman Brown. Thank you. Mr. Chopra, I have seen the 
devastation that foreclosures can cause for families and 
communities. In the first half of 2007, my ZIP code in 
Cleveland, 44105, had more foreclosures than any other ZIP code 
in the country. The reason I tell that story over and over, and 
all of you on the Committee have heard it many times, is 
because 14 years later we are still trying to recover. During 
the current crisis forbearances and the foreclosure moratorium 
for federally backed loans have helped many homeowners remain 
in their homes, but more than 11 million families are behind on 
their rent or their mortgage payments. Millions of workers face 
layoffs and reduced hours as a result of the pandemic.
    Commissioner, what role can the CFPB play in helping to 
prevent another foreclosure crisis among these homeowners who, 
as you know, are disproportionately people of color?
    Mr. Chopra. Senator, we saw a decade ago the foreclosure 
crisis not only devastated economies, it widened wealth gaps, 
and it caused so much devastation to children and communities.
    You know, we learned from the last crisis that regulators 
missed some of the linkages between the mortgage market and 
broader economy. We saw too many unlawful foreclosures. It is 
going to be critical for the CFPB to monitor those markets, 
using the best available data and insights, enforce homeowner 
protections when it comes to foreclosure litigation, and work 
across the government so we do not see a deja-vu of that crisis 
again.
    Chairman Brown. Thank you, Commissioner.
    Mr. Gensler, in the last few months we have seen 
unprecedented volatility in trading in many stocks, most 
notably, GameStop. While trading drove the stock price from $18 
at the beginning of January to $325 at the end of the month, 
people are using the term ``gamification,'' but we know Wall 
Street has treated markets as a game for years. We cannot 
forget how this affects real people. Real people's hard-earned 
pension funds, their 401(k)s, their small business investment, 
their college savings, their down payments for homes, all at 
stake.
    Mr. Gensler, what does this volatility mean for them and 
the goal of a market that is fair for everyone, and what steps 
do you think SEC needs to take?
    Mr. Gensler. Mr. Chairman, in some ways it is a story of 
the markets themselves, the clash between buyers and sellers of 
opposing views. But in other ways this story is about this new 
technology and technology changing constantly financed.
    A few things, I think, or questions or, at least, in my 
mind if was honored to be confirmed. How to ensure the 
customers still get best execution in the face of payment order 
flow? How to protect the investors using trading applications 
with behavioral prompts designed to incentivize customers to 
trade more? How to ensure customers access to markets when 
those apps may, at times, fall short of needed margin funds? 
How to promote competition in markets when a few firms may come 
to dominate those markets? And how to update back-office 
infrastructure to lower risks and costs.
    Chairman Brown. Thank you, Mr. Gensler. Commissioner 
Chopra, my last question. One year into the pandemic, millions 
of Americans we know struggle to pay their bills. A recent 
Bureau report makes clear that financial institutions are 
essentially making things worse. Lenders have inaccurately 
reported consumers as delinquent to the credit bureaus, debt 
collectors illegally garnish consumers' wages or bank accounts, 
Federal student loans servicers provided borrowers with 
inaccurate information about payment relief options, including 
the servicer that handles the public service loans forgiveness 
programs.
    Outside of housing, which is obviously a very, very, very 
important category, what do you see as the biggest risk people 
face to their finances during the pandemic, and what role does 
the CFPB play?
    Mr. Chopra. Well, there are so many, whether it comes to 
credit reporting or debt collection, and if there are unlawful, 
egregious practices it is important for enforcement to make 
sure that they stop. That is what is best for consumers, that 
is what is best for the honest market participants, and that is 
the role Congress has asked the CFPB to play. It will also be 
critical for the CFPB to take a hard look at how big tech 
companies and others are entering financial services, the 
impact on our privacy and our personal data.
    So we must look at today's problems but also anticipate 
tomorrow's risks.
    Chairman Brown. Thank you, Commissioner. Ranking Member 
Toomey.
    Senator Toomey. Thank you, Mr. Chairman. My understanding 
is you had agreed, Mr. Chairman, that we would do two rounds of 
questions, so I would like to address my first rounds of 
questions to Mr. Gensler, and then I will use the second round 
for Mr. Chopra.
    Chairman Brown. Yes, there will be two rounds. We discussed 
that, yes.
    Senator Toomey. Yeah, great. Thank you. So, Mr. Gensler, I 
have got a couple of very simple questions, I think really 
basically yes-or-no questions. I recently wrote a letter to the 
Acting Chairman encouraging the SEC to undertake several non-
controversial, good government initiatives. I think you looked 
at that letter and described it to my staff as very thoughtful. 
Can you commit to us this morning to have the SEC evaluate 
whether or not to undertake the initiatives in my letter and 
report back to this Committee, in writing, if you decide not to 
pursue any of that?
    Mr. Gensler. Senator Toomey, as we also discussed in the 
private meeting I thought it was very helpful, a number of 
these initiatives, whether to shorten some of the settlement 
cycle and look at transfer agents. So I do look forward to, 
once confirmed, if confirmed, working the staff of the SEC and 
working with your staff and you on these matters.
    Senator Toomey. OK, thanks. And I do hope that that will 
include considering a faster settlement cycle on equities, 
because I think that is a big opportunity for us.
    Let me move on. The SEC, as you know, is currently 
reviewing a board diversity rule that NASDAQ is trying to 
impose on NASDAQ-listed companies. The rule would require their 
boards to have at least one woman and one person who identifies 
as a member of an underrepresented racial or ethic group or 
LGBTQ, or to explain why they have failed to meet that 
requirement. As you may know, every Republican on this 
Committee recently sent a letter to the SEC urging the SEC to 
disapprove of this proposed rule.
    While America's corporations certainly benefit from boards 
that have a diversity of perspectives and experiences, race, 
gender, and sexual orientation do not ensure any such 
diversity, furthermore, that NASDAQ should not use its quasi-
regulatory authority to impose social policies. And boards 
really should be acting in the shareholders' best interests to 
nominate simply the best, most qualified people as directors.
    Now I understand, I do not expect you to tell us this 
morning how you will vote, how you will rule on NASDAQ's 
specific board diversity rule, so let me just ask a more 
general question. Do you think that it is a good idea for 
company boards to be forced or pressured to comply with some 
kind of quota with respect to race, gender, and sexual 
orientation?
    Mr. Gensler. Senator, thank you, and I have taken a look at 
your letter, which is in a file, I think, of nearly 200 
comments, so I, if confirmed, will take that up, amongst all of 
that. But on your more general question, I do think that 
diversity in boards and diversity in senior leadership, as I 
had answered the Chairman earlier, benefits decision- making 
and it is something that I am committed to at the SEC and the 
leadership there. And I think that it is a positive step 
forward in the leadership at the SEC that, if confirmed, I am 
going to take on.
    Senator Toomey. So when we spoke by phone recently, I think 
you committed to basing disclosure requirements on materiality, 
that they had to be grounded in materiality. Is that a fair 
characterization?
    Mr. Gensler. Yes, Senator Toomey, that is.
    Senator Toomey. I am almost out of time here, so let me 
just say, so if a company, a business, a publicly traded 
company, spends a financially insignificant amount of money on, 
let's say, electricity, is it material whether that electricity 
came from renewable sources or not?
    Mr. Gensler. Senator, I think materiality, as the Supreme 
Court has said, it has got to be significant to the mix of 
information to a reasonable investor, and I think that test 
will always ground our economic analysis and how we move 
forward on this. In your hypothetical, it may not be material 
or it may be material, depending upon the total mix of 
information.
    Senator Toomey. So even though it is financially 
insignificant in my hypothetical, you think it could still be 
material.
    Mr. Gensler. I think that materiality is the total mix of 
information, and often a small piece of information is not 
material. You are right about that. But I would have to take it 
into context of the entire mix of information.
    Senator Toomey. I would just suggest that if it is 
financially insignificant I do not see how it could be 
material.
    Let me ask a different question. Apple's revenue last year 
was, I think, about $274 billion. If Apple spent $1 million on 
political spending on issue ads, would that be material, 
something that ought to have to be disclosed?
    Mr. Gensler. What we have found is materiality is defined 
as what reasonable investors are seeking to have to make their 
decisions either to invest or not to invest or to vote yes or 
vote no. And last year's proxy season, I think shares with us 
that many investors, well over 40 percent of investors in those 
proxy votes, actually think that that would be material to get 
such information.
    Senator Toomey. So even though it is completely 
insignificant, could not possibly affect any financial results 
whatsoever, you think it might be OK to mandate that 
disclosure.
    Mr. Gensler. I will be grounded in economic analysis, and 
the court's view of materiality is what investors, reasonable 
investors, want in the significant mix of information.
    Senator Toomey. But if this is financially insignificant 
information, and some investors would like to have it, why not 
leave it up to the companies to decide whether to disclose it, 
and thereby ingratiate themselves with investors who care about 
it?
    Mr. Gensler. Well, Senator, I think that it is about 
investors making a choice as to what is significant or what is 
material, to be more accurate, what is material for those 
investors. And I will always be grounded in the court's and the 
law and the economic analysis about materiality, what 
reasonable investors are seeking when they make decisions to 
invest or not to invest, or vote yes or vote no.
    Senator Toomey. Last question. There are two recent 
rulemakings by the SEC. One requires proxy voting advisory 
firms to provide investors with more transparent, accurate, and 
complete information about their business. The other, modernize 
the thresholds to limit the ability of shareholders to just 
oppress companies with repeated, failed special interest 
proposals.
    Do you have plans to revisit these rules, or do you intend 
to leave them as they are?
    Mr. Gensler. Senator, if confirmed I would want to work 
with the staff and the economists and fellow commissioners to 
understand those rules better and to see whether, for instance, 
in the proxy advisory area has it addressed the potential 
conflicts of interest, at the least amount of cost, and see if 
it positive and achieving the mission of the agency.
    Senator Toomey. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey. Senator Reed of 
Rhode Island.
    Senator Reed. Well, thank you very much, Mr. Chairman, and 
I want to thank the nominees.
    Mr. Gensler, in light of the volatile trading we have seen 
in securities traded by individual investors, some have pointed 
to payment for order flow, the practice in which market-making 
traded firms pay brokerages for the right to execute orders 
submitted by individual investors, as an area that deserves 
greater scrutiny and perhaps reform.
    Critics claim that payments for order flow warp the 
incentives of brokers and encourage them to maximize their 
revenue at the expense of retail investors by encouraging 
excessive trading. Supporters say it is misunderstood and helps 
ensure liquidity of investors.
    Now, if confirmed, Mr. Gensler, could I have your 
commitment that you will evaluate payment for order flow and 
regulated practices to determine whether retail investors truly 
benefit?
    Mr. Gensler. Senator Reed, yes, I think that technologies 
change and markets change, but we should always evaluate new 
approaches to markets, and if order flow is something that I 
think the recent events, as you rightly pointed out, raises, it 
is important to look at economically and look at whether retail 
investors are getting best execution in the context that you 
mentioned.
    Senator Reed. Thank you. And, of course, if they are not 
then I would presume you would take appropriate action to see 
that retail investors are protected.
    Mr. Gensler. At the core it is about protecting investors. 
That is the core of the mission of the agency.
    Senator Reed. Thank you very much, Mr. Gensler.
    Chairman Chopra, as you recall I was very active in the 
Dodd-Frank debate about the military, and from personal 
experience. We created, in your agency, the Office of 
Servicemember Affairs in the CFPB. Could you explain or 
elucidate how you can make better use of this office if you are 
confirmed?
    Mr. Chopra. Senator, there is no question that health of 
military families is also about health of our country. The 
Department of Defense has stated that the financial status of 
servicemembers directly relates their ability to keep a 
security clearance, to be able to do their jobs.
    So it will be important that our Office of Servicemember 
Affairs, if I am confirmed, is looking at risks to military 
families, veteran survivors, and others. There are some 
concerns that we have seen over the past few years, everything 
from issues in VA home loans to credit reporting issues, and 
ongoing issues with the Servicemember Civil Relief Act.
    I would hope to work closely with the Department of 
Justice, with adjutants general, with attorneys general, to 
make sure that the CFPB's Office of Servicemember Affairs 
continues to play a leading role in analysis, working with the 
DoD, and also making sure that we are taking the appropriate 
steps to protect servicemembers, veterans, and their families 
from abuses. There are so many firms that want to serve the 
military. Well, they should not have to compete with those who 
break the law.
    Senator Reed. Thank you very much, Commissioner. Another 
area of concern is student debt, and many ramifications. But my 
observation is that the previous operations of the CFPB stopped 
many of the appropriate actions that were being taken, for 
example, in the CARD Act report describing information about 
debit cards that are issued by colleges and universities.
    So will you consider returning to the prior practice of 
including information on campus financial products such as 
campus debt, card products, in the CARD report, and what do you 
see as the most consumer protections for students?
    Mr. Chopra. Senator, Congress has made it clear that there 
are concerns when it comes to financial products being offered 
to college students. We saw this issue in the CARD Act. But, of 
course, there are new products and services being offered to 
college students. We want to make sure that all students--high 
school students, those right out of college--are starting their 
financial lives with a good future ahead. We should educate 
them. We should work with the Department of Education and the 
Treasury on issues of common concern. And I am absolutely 
committed to making sure we are monitoring those markets and 
reporting to Congress on those trends.
    Senator Reed. Thank you very much, Commissioner. Thank you, 
Mr. Gensler. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Reed. Senator Shelby 
from Alabama.
    Senator Shelby. Good morning, Mr. Gensler. We are glad to 
have you before the Committee again, although in a remote kind 
of way because of COVID.
    Senator Toomey, a few minutes ago, got into economic 
materiality, and, of course, I do not recall the word 
``political materiality'' but there is a difference there. 
Could you talk about the difference between political 
materiality in dealing with a regulation as opposed to economic 
materiality, because I think there is a difference, Mr. 
Chairman.
    Mr. Gensler. Yeah. Senator Shelby, or as I used to call 
you, Chairman, it is so good to see you again, and if confirmed 
I look forward to working with you again.
    I am going to be grounded, if confirmed, in the economic 
side, economic analysis as well as what the courts have defined 
as material to a reasonable investor, in essence that it would 
have a significant effect on their decisions, given the whole 
mix of information they have. That is where I am going to be 
grounded.
    I am, of course, aware of the difference between that and 
the political ebb and flow of the day.
    Senator Shelby. Are you aware, and I am sure you would be, 
under the Obama administration, the SEC adopted what we call 
cost benefit analysis at some point. Do you believe in cost 
benefit analysis in dealing with any future regulation, or 
doing away with a regulation?
    Mr. Gensler. Senator, yes, for lots of reason. I am a 
professor of global economics and management so it is at the 
heart of what we do there, but I also think it at the heart of 
good decisionmaking for any rulemaking.
    Senator Shelby. How important would it be to the SEC to 
adhere to what was accomplished in, I believe, 2012, by the 
SEC? They are going through that today, and I assume if you 
were confirmed that you would follow that same trend.
    Mr. Gensler. If you are referencing cost benefit analysis--
--
    Senator Shelby. That is right.
    Mr. Gensler. --and the SEC's guidance, I do believe that, 
sir, that it is a good format, and the excellent staff at the 
SEC, I would turn to them and the economists and the teams 
there.
    Senator Shelby. I think if we look back in the history of 
the SEC, and we have seen a lot of working together, 
bipartisanships there, and so forth, putting the consumer first 
there, in other words, the investor, and so forth, would you be 
able to work with the Republicans on the committee there? You 
probably know them. And how important will that be to have a 
functioning SEC?
    Mr. Gensler. I think there is a real benefit to the 
American public five eyes, five minds, five different opinions. 
You are right, I have known both Hester Peirce and Elad Roisman 
for a number of years. One, Hester, who worked with you, I 
know. And we will have some differences from time to time. I 
just hope that when we differ we disagree agreeably. But I am 
going to look to see where we can work together.
    Senator Shelby. Let me ask you a question I have asked on 
the Banking Committee for the last 34 years, I guess, to every 
proposed Chairman and nominee for the SEC board. Who owns the 
corporation? Do the managers own it? Who owns it?
    Mr. Gensler. The shareholders.
    Senator Shelby. Shareholders. And management should work 
for the shareholders first, should they not?
    Mr. Gensler. Yes, Senator, that is correct.
    Senator Shelby. And you believe that and you know that is 
true in corporate America, do you not.
    Mr. Gensler. It is the law in I think all 50 states.
    Senator Shelby. Thank you. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Shelby. Senator Menendez 
of New Jersey.
    Senator Menendez. Thank you, Mr. Chairman. Congratulations 
to both of you on your nominations.
    Mr. Gensler, to date more than 1.2 million securities 
experts, institutional and individual investors, and members of 
the public have pressed the SEC for a political spending 
disclosure rule. That is a pretty significant amount of public 
input for any potential rule. Since there are no political 
spending disclosure standards, corporate executives can spend 
shareholder money that benefits them and not the business. It 
can be a lucrative setup. Insiders can use someone else's money 
to support political causes that they favor.
    The fact that so many companies have reevaluated their 
political contribution plans after the January 6th attack on 
the Capitol shows just how quickly companies have realized the 
potential contributions have on a material impact on their 
reputation and the viability of their businesses, which is why 
I am reintroducing my Shareholder Protection Act, which would 
require companies to disclose the details of political 
expenditure, and ask their shareholders for approval.
    Do you agree that political contributions by publicly 
listed corporations represent material information, information 
that could affect a company's financial performance and 
therefore should be disclosed to investors?
    Mr. Gensler. Senator, as we discussed in our private 
meeting, disclosures are critical to investors in promoting 
capital formation. Without prejudging a specific issue, I can 
assure you that I will be grounded, if confirmed, in the 
materiality standard that drives all those decisions on 
disclosure. And as you said, 1.2 million public comments to the 
SEC, but I would also say I would consider last year's proxy 
season, which I think was close to 80 shareholder proposals, if 
I am not mistaken, and over 40 percent of those investors 
voting supported it, even including Netflix adopted it, that 
they want to see what the companies they own are doing in the 
political arena.
    So, if confirmed, it is something that I think the 
commission should consider in light of the strong investor 
interest.
    Senator Menendez. Well, thank you for that answers. I 
believe that shareholder should know if their corporate 
executives are using their money as a piggy bank for their 
causes. To me, as an investor, that would be important.
    I know that the Ranking Member asked you questions about 
diversity, and he was talking about a mandated proposal. I 
would like to talk to you about just the question of disclosure 
again. I think disclosure to the American investing public is 
incredibly important. Disclosures investment to us, as a 
government, when very often we are called upon to solve the 
problems of these corporations when they face financial 
challenges, as we saw in the Great Recession, as we have seen, 
to some extent, in some of these companies as a result of the 
pandemic.
    So the problem is that corporate America has a diversity 
problem. Boards and executive officers across the United States 
do not look like the people of this country. I have conducted 
four diversity surveys of Fortune 100 companies since 2010. My 
latest survey revealed that over the past 10 years women and 
people of color have only made marginal gains in 
representations on corporate boards, senior executive 
management.
    I was originally hopeful that the SEC would help address 
this problem through its 2009 diversity disclosure rule, but 
unfortunately the 2009 rule failed to even define- -even 
define--diversity. And studies have shown that greater 
diversity on executive teams has led to greater profitability, 
and therefore better outcomes for shareholders.
    Do you agree that greater diversity tends to lead to better 
corporate performance, as found by McKinsey and others?
    Mr. Gensler. Senator, I am familiar with those studies, and 
they are well-crafted studies. My own experience is diversity 
is a very positive part of decision- making and it enhances 
that decisionmaking.
    Senator Menendez. And again, this is not forcing a 
corporation to make these decisions but simply disclosing. 
Given the relationship between diversity and performance, do 
you agree that investors should be informed about the policies 
companies have in place to promote diversity in their corporate 
leadership?
    Mr. Gensler. So if I can broaden it out, I think human 
capital is a very important part of the value proposition in so 
many companies, and Chair Clayton and the SEC took up some 
approaches to human capital, but I think it is always evolving 
and that we will look at what information investors want in 
this broad arena about the human capital, including diversity, 
at their companies they are investing in.
    Senator Menendez. Well, I will just close, Mr. Chairman, by 
saying a lot can be done to improve upon the 2009 diversity 
disclosure rule. It does not even define diversity. But I just 
think in one dimension, the Hispanic community, the largest 
minority in the country, trillion- dollar domestic marketplace 
spending, younger by a decade than the rest of the population, 
more brand loyal than any other group. You know, from a 
corporate perspective, I would like be on them like white on 
rice, but as a community I want us to know who is diversifying 
and who is representing the opportunities for us to have a say 
on corporate boards and senior executive management and 
procurement. So I hope you will look at that seriously.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Menendez. Senator Scott 
from South Carolina.
    Senator Scott. Thank you, Mr. Chairman, and thank you, Mr. 
Gensler, for being here with us today. I look forward to having 
a few minutes conversing about some of the more important 
issues that I find are the priorities that will look at. I will 
add to the conversation you were just having with Senator 
Menendez about diversity in the boardroom as well as in the C-
suite. I think they are important issues. I do think that how 
we determine the government's impact on that issue is really 
important.
    Mandates are something that I would adamantly oppose. 
Gathering more information can be helpful and instructive as 
long as we are not pursuing an outcome based on what we would 
see as implicit bias in some form or fashion. I think we have 
to be very careful how we step into this minefield, from my 
perspective, but it is important for us to make progress, and I 
look forward to having a longer, broader conversation with 
members of this Committee, as well as with you, sir, on ways 
that we might work together on achieving goals without having 
mandates.
    That being said, last year the Federal Reserve 13(3) 
emergency facilities discriminated against smaller NRSROs by 
requiring a rating from incumbent rating agencies to access 
relief. I worked with Senator Sinema to introduce bipartisan 
legislation to address this issue. The companion bill passed 
the House unanimously. Mr. Gensler, you have been around long 
enough to know that darn near nothing passes the House 
unanimously, no matter who is in control of the House. So 
having something that moves forward unanimously, I think, is a 
good sign that we all, left and right, right and left, all want 
to see introducing more agencies within the NRSROs.
    So my question for you, sir, is, do you believe that 
supporting open competition among NRSROs is important to 
protect investors and promote vibrant capital markets, and will 
you commit to opposing Federal Government action to further 
entrench the incumbent NRSROs? In other words, I think 
competition is absolutely essential, and even in the credit 
agencies if we can have more competition there, I believe that 
the newer agencies are oftentimes using more information to 
assess credit worthiness, and if that credit worthiness is 
accurate and consistent, introducing more competition there is 
going to be in the best interest of the consumer.
    Mr. Gensler. Senator Scott, I agree with you that 
competition is really important in the credit rating space and 
also, more broadly, in the capital markets, so I look forward 
to working with you and your staff and the excellent staff at 
the SEC to see how we can support and promote competition in 
the credit rating space, and even more broadly as well, by the 
way.
    Senator Scott. Yes, sir. Well, thank you for that. I do 
think it is really important for us to find a way to help those 
who are credit worthy to be scored as credit worthy. This is 
something that I have tried to be a champion of for the last 
few years, and the importance of that cannot be underscored in 
any other market than in the ability to engage in the financial 
markets. And I do believe that having diversity and/or 
competition, I should say, in the credit rating agencies 
themselves is one of the ways that we promote and encourage 
better and more accurate information so that those who view the 
information have a wealth of knowledge to pull from, and 
without that competition, whether it is a monopoly or duopoly, 
or the three that we have today, that it is probably not in the 
best interest long term of the consumer.
    Thank you, Mr. Gensler. I will return the rest of my time. 
I yield back the rest of my time.
    Chairman Brown. Thank you, Senator Scott. Senator Tester of 
Montana.
    Senator Tester. Thank you, Chairman Brown and Ranking 
Member Toomey, and I want to express my appreciation to Gary 
Gensler for meeting with me earlier today. I appreciate that 
conversation. Gary, I am going to give you a little break from 
questioning. Most of my questions, in fact, all my questions 
will at Mr. Chopra. And, Mr. Chopra, I appreciated our meeting 
too, even though it was a while back. I have got to think about 
what we talked about. And so that is why I want to ask these 
questions.
    The first one kind of goes down the same line that Senator 
Reed had talked to you about with servicemember and veteran 
protection. You have talked about, in the questions to Senator 
Reed you talked about being able to work with the Department of 
Justice and DoD, from a prosecution standpoint, I would assume.
    My question is, what would you do to address those who were 
harmed in the previous administration when the CFPB was not as 
functional as I would have liked, and did not take the action 
that they should have? How are you going to make a 
determination on who and what cases you are going to take a 
look at?
    Mr. Chopra. So, Senator, when it comes to servicemembers 
and veterans, I think we have so many sources of data and 
information, whether it is consumer complaints, whether it is 
our judge advocates general. We need to hear what is happening. 
I will tell you that I really want to make sure that we are 
listening carefully when it comes to mortgage and housing 
issues. We saw, a decade ago, illegal foreclosures of active-
duty servicemembers. You even had families flying back from 
overseas to take care of some of these issues. Those violations 
were egregious and we need to look at where we see consumer 
complaints to conduct trend analysis, what we are seeing in any 
supervision, to determine how to correct that.
    And again, I think most financial institutions want to stay 
on top of it, but there are some who, you know, we have seen 
have flouted the law when it comes to the servicemembers, when 
it comes to the Military Lending Act and other laws.
    So it will be a team effort. It will be a data-driven 
effort and also listening carefully to what the issues are. We 
cannot afford to have disruption again in our mortgage market, 
or, frankly, any of our other markets, when it comes to 
servicemembers and veterans.
    Senator Tester. Well, and I appreciate that, and I agree 
with you. I think the vast majority of folks who deal with our 
veterans appreciate what they have given to this country and 
treat them fairly. But for those outliers, we will call them. 
Hopefully you will prosecute to the fullest extent of the law, 
because I cannot think of a worse, quite frankly, inappropriate 
transaction to take place, when you are taking advantage of the 
people who have sacrificed and served this country. So thank 
you for that.
    I want to talk a little bit about QM. Look, the CFPB, 
making sure that folks have the ability to own their own home, 
is critically important. So my question to you is a bit 
general, but you can get in specific. What do you view as the 
most important considerations as the CFPB looks to revise the 
QM rules?
    Mr. Chopra. Senator, I have a completely open mind about 
this, and I look to what the statute says and what really 
Congress' goals are. The CFPB is not here to dictate housing 
finance policy. It is to make sure that the prohibitions, when 
it comes to our mortgage laws, are adhered to, and when it 
comes to QM, it is important that we balance the consumer 
protections that Congress has put into place with access, 
including for rural and other areas, as Congress has put forth. 
We do not want to go back to what we saw in the years leading 
up to the financial crisis, of liar loans and other fraud in 
the mortgage marketplace. Ultimately, we are stronger as an 
economy, stronger as a country, if mortgage lending is safe, 
broadly accessible, in a way that people can build wealth.
    So I am looking forward to getting input from everyone and 
determining on how that rule needs to evolve over time, and I 
look forward to working with you and others on the Committee.
    Senator Tester. Thank you, and I need to be very quick with 
this one, because my time is about out.
    Look, I do not think there is an area of the country that 
affordable housing is not an issue. What are your housing 
priorities once you are confirmed to CFPB?
    Mr. Chopra. I think I would want to work with the staff and 
others, but my intuition is we have to be ready for potentially 
looming problems when it comes to forbearances that might flip 
to foreclosures. I do not want to see another foreclosure 
crisis in this country, and we need to do everything we can to 
make sure the law is being followed and homeowners can navigate 
their options.
    Senator Tester. Thank you both. I appreciate your time. 
Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Tester. Senator Rounds 
from South Dakota.
    Senator Rounds. Thank you, Mr. Chairman. Let me just begin 
with Commissioner Chopra. Thank you for speaking with me 
recently about your interest in the CFPB. One of the topics we 
discussed was the CFPB Civil Penalty Fund and a number of 
concerns I have about the fund's transparency and how the money 
is used. Fines levied by the CFPB could range from $5,000 per 
day up to $1 million a day, which is a significant range with 
broad discretion given to the CFPB as to what level of fine is 
appropriate.
    Mr. Chopra, as you and I spoke the other day, I am not a 
fan of the CFPB, but I need to get into this a little bit with 
you.
    In addition to this broad range of fines that the CFPB has, 
the GAO has identified a number of opportunities in the past 
for the fund's transparency to be improved. Can you please 
share your thoughts on what you believe to be the appropriate 
uses for the Civil Penalty Fund and how you will work to 
promote transparency of the fines that are paid into the fund?
    Mr. Chopra. So, Senator, thank you again for sharing your 
concerns about this. I had chance to review the audits, review 
the statute again. You expressed a concern that those funds 
should not be used to subsidize Bureau operations. I completely 
agree. It would be inappropriate if the funds were not used for 
the statutory reason, that is primarily for victim redress. The 
law is clear that it is a victim's relief fund, and it can also 
be used for certain financial literacy efforts. You have my 
absolute commitment that it will not be used for any other 
purpose, and it would be inappropriate if it were.
    I will also look at ways to make sure that there is 
understanding about when there is an award to go to victims it 
needs to be clear about how those victims--the success rate of 
that, what amount of funds were returned. And anything we can 
do to make sure that that fund is for victim relief and its 
expressed statutory purposes, I am completely committed to. And 
inasmuch as there are any concerns about it, I am committed to 
correcting that.
    Senator Rounds. Thank you, and I think the point that you 
make that it is also for literacy would suggest that it is also 
available in terms of contracting with nonprofit organizations. 
Is it fair to say that that should also be fully disclosed with 
regard to any contracts made with other nonprofit organizations 
in the name of literacy?
    Mr. Chopra. Well, it better be. It is required to be 
disclosed. It is subject, as my understanding, according to the 
audits, to procurement law, and if it has not been then that 
needs to be fixed.
    So again, though, I do want to be clear. I do think the 
most important part of that fund is for victim relief. There 
are many consumers who are subject to fraud and the company is 
judgment-proof. Those penalties can be used to redress them. 
But again, if there are contracts, they better be disclosed.
    Senator Rounds. Thank you, Mr. Chopra.
    Mr. Gensler, once again thanks for taking the time to visit 
with me as well. Two of my colleagues that introduced you today 
touted your expertise in digital currencies. I am proud that 
crypto companies like Anchorage Trust have found a home in 
South Dakota. At the same time, I know that our outdated crypto 
regulatory regime is leading other organizations like the Diem 
Association to set up shop overseas.
    What can Congress and the SEC do to create a more forward-
thinking regulatory environment for innovators in this 
particular space?
    Mr. Gensler. Senator, thank you for having met with me and 
for that question. I think, as I teach at MIT on these 
subjects, that these innovations have been a catalyst for 
change. Bitcoin and other cryptocurrencies have brought new 
thinking to payments and financial inclusion, but they have 
also raised new issues of investment protection that we still 
need to attend to.
    And so I think, if confirmed at the SEC, I would work with 
fellow commissioners to both promote the new innovation but 
also, at the core, ensure core investor protection. It is 
something where security, for instance, it comes under the 
securities laws, it comes under the SEC. If there are 
exchanges, to trade those, to ensure that there is the 
appropriate investor protection on those exchanges. So provide 
technology but still stay true to our core values and investor 
protection and capital formation.
    Senator Rounds. Thank you. Thank you, Mr. Chairman. My time 
has expired.
    Chairman Brown. Thank you, Senator Rounds. Senator Warner 
from Virginia.
    Senator Warner. Thank you, Mr. Chairman. Let me start by 
saying I think we have got two great nominees here today, and I 
look forward to supporting both of them. Mr. Chopra, I think I 
am going to be hitting Mr. Gensler more, but I do appreciate 
our meeting, and I think you are going to do a great job.
    Mr. Gensler, I have long been fighting in a pretty obscure 
area around market structure, or trying to eliminate some of 
the conflicts of interest in our market structure that 
disadvantage retail investors. You may recall, back in 2017, I 
urged the SEC to do a maker-taker pilot. That pilot started, 
but the courts came in and shut it down, although it still said 
that the SEC could still do a rulemaking in that area. I think 
this whole question of market structure and payment for order 
flow, interest has been reignited around GameStop, and I look 
at the Robin Hood platform, where oftentimes it is being paid 
for its market flow by a number of prominent hedge funds.
    I sometimes think that the Robin Hood structure is somewhat 
similar to the Facebook structure. I am not sure if you are a 
customer of Robin Hood whether you are really a customer or a 
product, somewhat similar to the fact that users of Facebook, I 
think, are often used as products rather than as actual 
customers.
    We have seen, in the last year, close to $6 billion paid to 
brokers to route transactions through specific venues as 
opposed to really getting the best execution price for 
customers. I think that dramatically disadvantages retail 
investors. When you get confirmed, what will you be able to do 
to look at this issue?
    Mr. Gensler. Senator Warner, I think you are right that the 
technologies have raised very important policy issues on how we 
continue to promote efficient, fair, and orderly markets. And 
what we have found--you have named a collection of things, but 
I think that we will, with the excellent staff, look at market 
structure in the equity markets around payment for order flow, 
when, frankly, just a couple of handfuls of financial firms are 
buying most of the retail flow in America.
    I think it raises a question, a new challenge about, just 
as you mentioned, Facebook. What if a company, through the 
natural economics of network economics, collect and 
concentrates and dominates a field. We heard, in congressional 
testimony a week or so ago that one firm now has 40 to 50 
percent of the retail flow, and so what does that do to the 
pricing of capital in this country. I think those are important 
economic questions. And also best execution, as you say. What 
is it mean to be best execution in this context?
    Senator Warner. And I think what we have seen is someone 
may get a fractional, marginal price better, but because the 
spread is so large, and if you are controlling both ends of the 
trade, these firms can make a huge amount of money. Mr. 
Chairman, I think this is an area the Committee ought to be 
looking into. I think when the numbers come out even you would 
be shocked at some of the abuse I think that is going on.
    I want to drill down on my last question. We often hear 
that we need to do these kinds of rebates and payments to 
increase liquidity, but the remarkable thing is there are 9,000 
securities that trade in the equities markets. The top 10 
percent get about 77 percent of the volume, yet you have large 
firms like Fidelity that do not pay any broker payment fees, 
and oftentimes the other firms say, well, we need to permit 
these payment fees to bring about low-price commissions and to 
increase liquidity. You know, if we simply said we are not 
going to allow rebates and these oftentimes dark payments to 
those top 10 percent of the equities, because they have got 
enough liquidity, and still allow payments for the bottom 90 
percent, we could at least test out those products, because I 
think, as we have seen from entities like Fidelity, that do not 
do these brokerage payments, you can still have plenty of 
liquidity, and in these smart equities that do trade with a lot 
of liquidity, these payments just end up with some of the 
abuses taking place.
    In these last 15 seconds, would you commit to a full review 
of this market structure?
    Mr. Gensler. If confirmed, I look forward to working with 
the career staff, working with you, and doing a review of each 
of these issues of market structure that you have raised.
    Senator Warner. Thank you, Mr. Chairman. I will get to you, 
Mr. Chopra, on my written questions. Thank you so much, 
Chairman.
    Chairman Brown. Thank you, Senator Warner. And there will 
be a second round, for those that want to stay. The Ranking 
Member asked for that.
    Senator Tillis from North Carolina is recognized.
    Senator Tillis. Thank you, Mr. Chairman, and, Mr. Gensler, 
thank you for being here. Mr. Chopra, as well.
    Mr. Gensler, I would like to start with you, and I want to 
talk about the financial transaction tax and some of the 
proposals that we are hearing in Congress. I am sure you are 
aware, in 1984, Sweden imposed an FTT of 1 percent. Share 
prices rose. It had a negative impact, and I think probably 7 
years later they repealed that tax. The EU considered it and 
decided not to do it, for similar reasons.
    But now we are hearing proposals for a financial 
transaction tax here in Congress. Do you have any reason to 
doubt that a financial transaction tax in the United States 
would have the same kind of negative impact? I know that I 
think the U.S. Chamber estimated an 8.5 percent drop, or over 
$20,000, on average, IRA accumulation.
    So do you think that pursuing a financial transaction tax 
is a good idea, or do you think that it could have the same 
negative effects as it has demonstrated in other jurisdictions, 
not to mention movement of transactions offshore?
    Mr. Gensler. Senator Tillis, it is not something I have 
studied closely in preparation for this hearing, but I would 
note, we currently, in the U.S., have a very modest--it is 
modest--transaction fee to support the agency of the SEC, 
about, collectively about $1.8 billion.
    And so we do know that in that modest--it is still $1.8 
billion, but in that modest level that it survived. We have the 
deepest, most liquid markets, and there has not been a negative 
outcome in that range. But I have not studied it in the way 
that you are talking about.
    Senator Tillis. As a follow-up to this, could you possibly 
take a look at some of the proposal and give me some sense as 
to whether or not they could have the same kinds of negative 
impacts we have seen in other jurisdictions?
    Mr. Gensler. If confirmed, I look forward to meeting with 
you and your staff and having a dialog on this.
    Senator Tillis. I would like to move over to FSOC. In late 
2019, FSOC made several important changes to prioritize on 
activities-based approach, add transparency, procedural 
protections, and impose the cost benefit analysis to the 
systematic risk regulation designation process. Secretary 
Yellen, before the Committee, confirmed that she supported an 
activities-based approach. Do you support these types of 
important reforms?
    Mr. Gensler. I, if confirmed, look forward to working 
Secretary Yellen, working with all the members of the FSOC, on 
designations, if they are appropriate. There are activities 
that could be systemic. So, as I understand your question, yes.
    Senator Tillis. And also, I do not know if you can answer 
this or maybe give me an answer for the record, but I would 
also be curious as to whether or not you think the SEC has the 
necessary mandate and the tools necessary, if you were to 
pursue that approach. If you have got an opinion now you can 
state it. I have got about a minute and a half left, or you can 
just submit the answer for the record.
    Mr. Gensler. I will do it for the record then, sir.
    Senator Tillis. OK. In my remaining minute, one thing that 
I am still confounded by is how antiquated we are in the 
submission of information, the lack of electronic delivery. 
This is something I do not understand. I started my career in 
eliminating paper back in the 1980s, when it was not 
particularly easy to do. Now we get these reams of paper sent 
out that are never read. People go to the electronic version.
    So can I get a commitment from you to really make this a 
priority, to really help us figure out digital delivery 
alternatives and the elimination of paper when the recipient 
would prefer that approach?
    Mr. Gensler. Senator, yes. Two of the things I worked on in 
the Clinton administration, if I can go to back to there, was 
electronic delivery of Federal payments to individuals, and 
also working with, I think it was then Chairman McCain, working 
with him on something called the Digital Signature Act, or E-
Signature. So it is something I have worked on a long time, and 
I think technologies we should always embrace and move forward.
    Senator Tillis. Well, if confirmed, I hope that that is 
something that I can get your commitment to meet specifically 
on, because I would like for us to make significant progress 
there. We really have not, and I would appreciate your help and 
support and work with you on it, should you be confirmed.
    Mr. Gensler. I look forward to that, sir.
    Senator Tillis. Thank you. Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Tillis. Senator Warren 
from Massachusetts.
    Senator Warren. Thank you, Mr. Chairman, and welcome, Mr. 
Gensler. I remember your work at the CFTC, and I anticipate 
that you will show the same independence and courage as head of 
the SEC.
    So as you know, the SEC's job is to protect investors, 
maintain fair, orderly, and efficient markets, and facilitate 
capital formation. But it is falling down on the job. And so 
since we are limited for time, I am just going to pick three 
examples. The SEC is not requiring companies to make public 
disclosure about climate-related risks, the SEC is letting 
companies leave their investors in the dark about predatory 
private equity practices, and as GameStop recently 
demonstrated, the SEC stands by while the stock market too 
often functions like a casino, where the roulette tables are 
not on the level.
    So let me go back through these. Let me start with climate 
risk. Mr. Gensler, is there any reason why companies should be 
able to hide their climate risks from their investors?
    Mr. Gensler. Senator, no. I think that particularly 
materiality is a point here, but no, they should not be able to 
hide their climate risks.
    Senator Warren. OK, good. Now, let me go to private equity. 
Mr. Gensler, is there any reason why a company that rakes in 
millions and millions of dollars from buying up small 
businesses and closing them down should not have to disclose 
their general practices to their investors?
    Mr. Gensler. I think it is at the heart of the Investment 
Advisor's Act, that they would share their fees and any 
conflicts with their investors.
    Senator Warren. Well, their fees, and I presume the overall 
business model, the approach they are using. Is that right?
    Mr. Gensler. Yes. A description of their business model to 
their investors, their limited partners, usually, in that case.
    Senator Warren. OK. And then finally, let me ask about the 
tilted roulette tables on Wall Street. If someone has been 
cheated by a broker-dealer, hypothetically, for example, if 
Robin Hood cheated individual investors--hypothetically--should 
that company be able to use forced arbitration clauses to avoid 
getting sued and held accountable?
    Mr. Gensler. I think, Senator, that while arbitration has 
its place, I think it also important that investors, or in that 
case, customers, have an avenue to redress their claims in the 
courts.
    Senator Warren. Good. You know, as you know, the SEC has 
the power to require disclosures that will be helpful to the 
investing public, like climate risk disclosures and private 
equity practices, and Section 921 of the Dodd-Frank Act gives 
the SEC the authority to prohibit the use of forced arbitration 
by broker-dealers when it is, quote, ``in the public interest 
and for the protection of investors.'' In other words, the SEC 
has the tools to make the markets function better.
    So if you are confirmed, Mr. Gensler, will you commit to 
picking up those tools and using them to make the markets more 
honest and more transparent?
    Mr. Gensler. Senator, if confirmed, I look forward to 
looking at all the authorities, not just this one but all the 
authorities, to help protect investors, promote the capital 
formation and the efficient markets that we talked about. And 
this is an important authority that was vested in the agency, 
and looking at the economic analysis, working with fellow 
commissioners. I think we should look at all the authorities.
    Senator Warren. Well, I appreciate that. You know, Congress 
has given the tools to the SEC. We just need SEC to pick up 
these tools and use them. The SEC has been asleep on the job 
for long enough. It is time for the commission to get up off 
its behind and protect investors and consumers. And I expect to 
see progress on all of these areas under your leadership.
    So thank you for being here and thank you for your 
willingness to serve.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Warren. Senator Kennedy 
from Louisiana is here? I see his name.
    Senator Kennedy. Mr. Chairman, can you hear me?
    Chairman Brown. Senator Kennedy, yes, you are recognized.
    Senator Kennedy. Thank you. You caught me off-guard, Mr. 
Chairman.
    Chairman Brown. That is all right. It is hard to do to you.
    Senator Kennedy. Well, thank you.
    Mr. Chopra--am I saying your name right, sir?
    Mr. Chopra. It is Chopra, sir.
    Senator Kennedy. Chopra. I apologize. I want to ask you 
about our credit bureaus. Do you know what I mean by our credit 
bureaus?
    Mr. Chopra. I do, sir.
    Senator Kennedy. These companies collect data about whether 
we pay our bills or not, and they sell it to businesses, so 
businesses can decide whether to lend us money or extend us 
credit. Is that a pretty good description?
    Mr. Chopra. Yes, and increasingly they are using that data 
for much more, as well.
    Senator Kennedy. But the credit bureaus make their money 
from the businesses. They do not make their money from the 
consumer.
    Mr. Chopra. That is correct. The consumers are the product, 
usually, not the customer.
    Senator Kennedy. So if, as a consumer, a business reports a 
debt that I did not pay, to the credit bureau, the credit 
bureau is going to be less concerned about the accuracy of that 
information than they would be if the credit bureau was 
depending upon me, as the consumer, to pay their bills. Is that 
a fair assessment?
    Mr. Chopra. Yes, that is correct, and that is some of the 
big issues we are facing, not only when it comes to credit 
bureaus but also the mass data bases by big tech companies that 
are increasingly part of financial services.
    Senator Kennedy. Well, here is what I am driving at, Mr. 
Chopra. Why would we not want to pass a bill that would direct 
the credit bureaus to establish a formal, easily accessible, 
efficient, and effective appeals process for a consumer? Let's 
suppose a business says, ``You did not pay a bill, in the right 
amount, and on time,'' and you disagree with that. It can 
really hurt your access to credit if that is reported to a 
credit bureau. Why wouldn't we want to tell the credit bureaus, 
``Look, you are going to set up a formal process to hear 
consumers out who think they have been wronged''?
    Mr. Chopra. So, Senator, accuracy is critical for the 
credit reporting system to work, and there are too many 
consumers who have problems.
    Senator Kennedy. Yeah, but would you support a bill like 
that, Mr. Chopra?
    Mr. Chopra. Well, I would love to look at it, but I think 
the idea of making sure that consumers can dispute and get 
answers, that is part of the Fair Credit Reporting Act, but I 
would definitely like to make sure that consumers have more 
say----
    Senator Kennedy. I know--excuse me for interrupting--I know 
it is the law, but I do not think it is going to be properly 
effectuated until we put in a formal process and pass a bill, 
and insist to the credit bureaus, look, even though you do not 
get money from consumers you are going to have to pay attention 
and listen seriously and attentively when they tell you you 
have got bad information.
    Let me move to Mr. Gensler. Mr. Gensler, good morning. You 
were there in '08 and '09. You played a very critical role in 
our response to the meltdown. Why didn't anybody on Wall Street 
go to jail?
    Mr. Gensler. Senator Kennedy, I share your concern about 
that. We, at the CFTC, held folks accountable for rigging the 
interest rate market, for manipulating the currency markets----
    Senator Kennedy. Yes, sir, but why didn't anybody go to 
jail?
    Mr. Gensler. Those are questions I share with you, sir. I 
mean, I was responsible for running a civil law enforcement 
agency and we, every day, brought the evidence, the law, and 
the facts together in front of courts and held people 
accountable.
    Senator Kennedy. I know, but who made the call? Somebody at 
Justice had to have said, ``We are not going to put these 
thieves in jail.'' Who did that?
    Mr. Gensler. Well, I think you are right that it is largely 
the Department of Justice, and these are hard cases to try, 
hard cases to piece together and show intent, or what--I 
remember the term was called scienter, the Latin form. But that 
is the Department of Justice, sir.
    Senator Kennedy. Yeah. OK. Am I out of time, Mr. Chairman?
    Chairman Brown. Thank you, Senator Kennedy. Senator Cortez 
Masto from Nevada is recognized.
    Senator Cortez Masto. Thank you. Thank you for this 
hearing. Congratulations, gentlemen, both of you, for your 
nominations.
    Mr. Gensler, let me just start with you in a follow-up to 
my colleague's questions to you. During the foreclosure crisis, 
you were not working at Justice at that time. Is that correct?
    Mr. Gensler. No, Senator, I was not.
    Senator Cortez Masto. And the agency that you were working 
at did not have really criminal enforcement actions. Is that 
correct?
    Mr. Gensler. That is correct. As an attorney general of a 
state you appreciate these distinctions, so I thank you.
    Senator Cortez Masto. Thank you.
    So let me ask you an area that I know is a concern for all 
of my colleagues. As more individuals begin to engage with the 
financial markets through no-fee, online trading platforms I am 
concerned that investors may get in over their heads with large 
and complicated trades on apps that gamify the stock market, 
and we have seen the horrific results of that.
    So if confirmed, can I ask you, what steps would you take 
as Chair of the SEC to protect investors who want to be 
involved in the stock market but may be less knowledgeable 
about trading risks?
    Mr. Gensler. Senator, I thank you. I think that every day 
on the job I am going to be animated by working families and 
protecting investors as a key mandate of the agency. I think 
technology has provided greater access, but it also raises 
interesting questions, and the one that you mentioned about 
``gamification'' also raises interesting questions about what 
does it mean when balloons and confetti are dropping and you 
have behavioral prompts to get investors to do more 
transactions on what appears to be a free trading app but then 
there is this payment behind the scenes, sort of this payment 
for order flow?
    I think we are going to need to sort of study that and 
think about it, and what does this mean for our marketplace.
    Senator Cortez Masto. Well, I know many of my colleagues on 
both sides of the aisle are concerned about this, so we look 
forward to working with you, moving forward.
    And let me just touch on one issue that was brought up, 
this idea that diversity and inclusion and equity in corporate 
America is somehow a quota. It is not a quota, and that is the 
problem we have here. And I think my goal, and many of my 
colleagues--and this is why we support NASDAQ's proposal to 
increase transparency into the composition of the boards of 
exchange-listed companies, is because we need a paradigm shift. 
We need a cultural change. It is not a checkbox. It is not a 
quota.
    And I think we have heard, from my colleagues, the 
importance of why this is of benefit to our companies. Because 
of the McKinsey-published studies, we know that this really is 
a benefit to the companies long term, including when it comes 
to their profits, when they are actually really engaging in 
diversity, inclusion, and equity.
    So I want to make sure you know that. Many of my colleagues 
supported what NASDAQ is doing in this space, so please be 
aware of that.
    Mr. Chopra, I know I do not have much time, but thank you 
also for your willingness to serve. So we have talked about 
this. I am a strong advocate for restitution for harmed 
consumers. Not only should we provide relief to people who are 
overcharged or misled, but we should discourage the bad actors 
from continuing that deceptive practice in the future. And I 
have made it very clear. I was concerned by CFPB's enforcement 
actions under the previous administration which failed to 
provide restitution for consumers.
    So could you elaborate on your view on providing 
restitution for people who really were dealt with unfair, 
deceptive, and abusive practices?
    Mr. Chopra. Yeah. So, Senator, when victims of fraud and 
misconduct are not made whole that does not just hurt them. It 
also hurts every other business who is trying to follow the law 
and treat them the right way. I have pushed hard against the 
FTC's approach of these no-money, no-fault settlements in 
egregious fraud. It is something that economically just does 
not make sense. When you rip someone off and do not have to pay 
them back, how is that really much of a sanction?
    So restitution is a critical part of the CFPB's law 
enforcement work in order to make victims whole, as Congress 
intended.
    Senator Cortez Masto. Thank you, and I appreciate that 
position.
    I have only got a few minutes left. The other area that I 
would love to work with you on, and we have talked to many, but 
for small businesses, what, in general, do you see the role for 
supporting our small businesses through the CFPB?
    Mr. Chopra. Well, I think a lot of our regulators and 
agencies need to make sure that there is not unlawful practices 
in small business lending at the FTC. We take action against 
companies that have even threatened to break small business 
owners' jaws if they did not pay it back. We, at the CFPB, 
Congress has asked the agency to implement a small business 
data collection. I do think enforcing the law to protect small 
businesses is absolutely critical right now. Small businesses 
are facing extinction. I have worked with you a lot, Senator, 
about issues facing franchisees. We have to make sure that the 
bedrock of our community of small business does not go away 
after this pandemic, and it is absolutely critical.
    Senator Cortez Masto. Thank you. Thank you, Mr. Chairman. I 
know my time is up.
    Chairman Brown. Thank you, Senator Cortez Masto. Senator 
Hagerty, I believe, is here.
    Senator Hagerty. I am.
    Chairman Brown. Senator Hagerty, you are recognized.
    Senator Hagerty. Chairman Brown, thank you. Ranking Member 
Toomey, thank you as well, for holding this hearing for two 
very important regulators in our financial regulatory 
landscape.
    You know, in America our financial markets, as Senator 
Toomey rightly noted in his opening remarks, are the envy of 
the world. I was just on a call with our bankers in Tennessee 
who were expressing their concerns that we maintain that 
strength and that we be certain that we not allow regulators to 
use the regulatory construct in the financial markets to 
backdoor social policies that could have an adverse impact on 
our economy, and frankly, much better addressed in other 
arenas. We have a very rapidly evolving technology landscape, 
we have new market entrants coming aboard, and we certainly 
should not take America's market leadership for granted.
    I think all of us want to maximize our economic recovery, 
and it is certainly important not to use ideologically driven 
regulatory practices at a time when we need to see our economy 
open up.
    My first question is for Mr. Gensler, and, Mr. Gensler, we 
have discussed this before, and you know I am concerned very 
much about arbitrary and capricious, potentially overly 
reaching regulatory rulemaking. You and I talked about the 
importance of cost benefit analysis. I know that you talked 
about this with others on the Committee, but I want to just 
highlight again our discussion about taking an economic 
approach, as you have described, and the great importance of 
utilizing cost benefit analysis moving forward.
    But moving into another arena, I want to compliment you on 
the undertaking that you have had in digital assets, the role 
that you have played at the MIT media lab. I think it is going 
to be very instructive here. And if we think about the area of 
financial regulations in such rapidly innovating markets, I 
think it is very challenging, from a regulatory standpoint, to 
manage that type of environment. To put it another way, using a 
Tennessee terminology, you don't want to be shooting where the 
rabbit was.
    My question to you, Mr. Gensler, and it is an open- ended 
one, if you could share your perspective on the SEC's role, 
under your leadership, if you are confirmed, in how you will 
approach digital assets.
    Mr. Gensler. Senator, I thank you for that opening. I share 
your thoughts. It is always important to update our market 
oversight to new technologies, but I believe foremost to be 
technology neutral. And I say that because this new technology 
of cryptocurrency and potentially central bank digital 
currencies comes along, it is important to stay true to our 
principles of investor protection and capital formation, but at 
the same time be technology neutral.
    So I think that at the SEC it is really to the extent that 
somebody is offering an investment contractor security that is 
under the SEC's remit, and they have exchanges that operate 
there, then we have to make sure there is investor protection. 
If it is not that, and it is a commodity, as bitcoin has deemed 
to be, it is either a question for Congress, how Congress would 
want to that to be overseen, or it is possibly a question for 
the Commodity Futures Trading Commission.
    But I would work with the staff, I would work with fellow 
commissioners and see how we can move forward, and to the 
extent investors can be protected and invest in these markets, 
that they are allowed to do so, but to do so in, again, the 
core function of investor protection and capital formation.
    Senator Hagerty. I appreciate your cognizance of your 
jurisdiction, and also, and importantly, the role of the 
Congress in overseeing this and dealing with it. This is an 
area where I think we have great potential for leadership, if 
handled right, and I think we should be very careful not to 
have too heavy a hand. But bringing your experience and your 
expertise to bear, I think you can make a significant mark in 
this rapidly evolving market, and I want to make certain that 
we take the right touch and the right coordinated approach 
between our legislative oversight and the role that you will 
play, if you are confirmed, running this important independent 
agency. Thank you.
    Mr. Gensler. Well, I thank you, and if I can appropriate 
your line about not shooting where the rabbit was, I thank you 
for that too.
    Senator Hagerty. Tennesseans all understand that, Mr. 
Gensler. Thank you.
    Mr. Gensler. Thank you.
    Chairman Brown. Thank you, Mr. Gensler. I have already 
appropriated it. Sorry.
    Senator Hagerty. Senator Van Hollen from Maryland.
    Senator Van Hollen. Thank you, Mr. Chairman, and Ranking 
Member, and congratulations again to Mr. Chopra and Mr. Gensler 
on your nominations. And if I am not able to get to the second 
round, Mr. Chopra, I will submit some questions for the record.
    Mr. Gensler, you and I had a chance to speak before this 
hearing, and I raised some concerns and some specific 
legislation I have introduced that I consider sort of SEC good 
housekeeping principles. One is a bill that I have introduced 
with Senator Fischer around 10b-5 plans. The other one deals 
with the 8-K trading gap. Both bills are intended to provide 
investors and the public with confidence that CEOs and other 
insiders are not taking advantage of insider information.
    My question for you today is, will you commit to working 
with me and providing technical assistance as we work to pass 
these bills?
    Mr. Gensler. Senator, I wanted to start by just thanking 
you for that warm introduction about an hour and a half ago to 
the Committee, as you and I have known each other about 20 
years, and that was very kind of you.
    But yes, I look forward, if confirmed, to work with you and 
your staff providing technical assistance, and having the staff 
of the SEC help as well.
    Senator Van Hollen. Right. I think we have seen many 
stories, and there may even be ongoing investigations in the 
summer reports about insiders gaming the system. Right now the 
rules allow too much gaming, and so I intend to work with you 
to close those loopholes.
    Let me go back a little bit to the questions that Senator 
Toomey and some others have referenced regarding corporate 
disclosure rules and materiality, what kind of information they 
provide to shareholders. You cited the Supreme Court standard 
regarding a reasonable investor and what a reasonable investor 
would want to know. And, of course, that information changes 
over time, right? I mean, 20 years ago we would not necessarily 
see climate change risks as something that is essential to the 
success of a particular company.
    Would you say it is important for the SEC to keep an open 
eye to the evolving interests of the reasonable investor to 
ensure that the disclosure rules match their demands for 
information?
    Mr. Gensler. Yes, Senator, and I think that the importance 
here is that--and the courts have helped define this--that it 
is the investor community that gets to decide what is material 
to that. It is not a government person like myself. It is all 
about that reasonable investor, do they think it is significant 
in the mix of information. And so I am going to be guided by 
that, and I concur with you, in 2021, there are tens of 
trillions of dollars of invested assets that are looking for 
more information about climate risk, and I think then the SEC 
has a role to play to help bring some consistency and 
comparability to those guidelines.
    Senator Van Hollen. And with respect to corporate political 
spending, I mean, Senator Toomey, I think, gave the example of 
how, you know, that spending may represent a small fraction of 
a company's assets. But wouldn't a reasonable investor, or is 
it something we should look into, whether a reasonable investor 
believes that there is a reputational risk to a company if they 
are spending secret money in politics and that becomes known 
and revealed? Isn't reputational risk something that a 
reasonable investor might consider?
    Mr. Gensler. I think, Senator, you are correct that what 
does a reasonable investor think is in that mix of information 
with a buy a stock, sell a stock or a bond, or vote yes or no. 
And it is up to those investors, and then to work to help 
provide some guidance to issuers to provide that information in 
that context.
    Senator Van Hollen. Thank you. Now, in addition to serving 
on the Banking and Housing and Urban Affairs Committee I now 
chair a subcommittee on the Appropriations Committee that 
oversees financial services in general government, the FSGG 
subcommittee. And in 2016, the GSA submitted, with approval 
from the SEC, a prospectus to Congress to authorize a lease for 
a new headquarters facility for the SEC in the District of 
Columbia. That prospectus was formally approved by the House 
and the Senate Committees of Jurisdiction in 2018. Congress has 
also appropriated $263 million to the SEC for the headquarters 
move.
    If confirmed, will you transfer the appropriated dollars to 
GSA so the headquarters project can advance?
    Mr. Gensler. Senator, as we discussed in some private 
meetings, if confirmed, I would work with the SEC staff and the 
GSA to better get up to speed on this. I know it is an 
important matter that you have raised. I have not been yet 
briefed on the matter because it is confidential negotiations 
between GSA and various potential real estate options, as I 
understand it.
    Senator Van Hollen. But you would agree that it is 
important for the SEC to follow the direction that Congress has 
provided her.
    Mr. Gensler. I would agree that it is always important, not 
just on real estate but also on other mandates from Congress, 
to follow congressional will.
    Senator Van Hollen. I appreciate that answer, and this is a 
case where I think, you know, Congress has spoken
    Thank you to both our nominees. Mr. Chairman, thank you.
    Chairman Brown. Thank you, Senator Van Hollen. Senator 
Lummis from Wyoming.
    Senator Lummis. Thank you, Mr. Brown. I have questions in 
this round for Mr. Gensler, and it is nice to see you again, 
Mr. Gensler.
    In some quarters the SEC has a reputation for being a black 
hole for innovators. Do you agree that we need to provide more 
legal clarity through rulemaking and no-action letters to 
innovators in the digital asset space and in the blockchain 
industry, specifically?
    Mr. Gensler. Senator, I thank you. I thank you for our 
conversation in the last week on these matters and others.
    I do think that technology in markets constantly change and 
evolve and that it is important for the SEC to provide guidance 
and clarity. Sometimes that is a clarity that will be thumbs-
up, but even if it is thumbs-down it is important to provide 
that, whether it is through guidance or no-action letters, as 
you mentioned.
    Senator Lummis. I do not know if you are aware of this, but 
Wyoming was the first in the U.S. to enact consumer protection 
laws for digital assets, including virtual currency. That 
happened in 2019. What are some of the ways we can work 
together to ensure consumer protection for digital assets that 
does not also hamper innovators?
    Mr. Gensler. Senator, I was aware. I think that your 
legislature and Governor enacted 13 separate acts in the 
digital space in Wyoming.
    I think it is important to protect consumers and investors. 
One of area consumer protection is around the custody of their 
funds. Digital assets, the actual ownership relies on something 
called a private key in cryptography, and ensuring that that is 
really that custody works, and I know Wyoming has looked at 
that, New York, and some other states. I believe, actually, 
South Dakota may have as well. I hope I did not leave out any 
of the members' states.
    But I think also investor protection, which goes beyond 
just the custody of assets, but to ensure that these markets 
are free of fraud and manipulation. And I think that is the 
greater challenge, frankly, because the markets for some 
markets usually operating overseas but some markets have been 
really rife with fraud and scams. So trying to protect the 
investors against that fraud and manipulation.
    Senator Lummis. You know, in 2018, you said, in front of 
the House Agriculture Committee, that blockchain technology has 
real potential to transform the world of finance. Could you 
talk more about how this technology can promote financial 
inclusion and reduce risk and create new markets?
    Mr. Gensler. Well, I think it is already doing some of that 
right now, that it has been a catalyst for change. Central 
banks around the globe are really looking at how to provide 
more inclusive payment structure, more inclusive payment 
tokens, and so that is in one area as a catalyst for change. 
But it is also other payment system providers are looking say 
how do we provide payment systems that operate 24 hours a day, 
7 days a week, and at lower cost, both cross-border and 
domestically?
    Blockchain technology itself is a shared accounting system, 
if I might say, and I think that has also led to some new 
thoughts about how to do trade finance, and even medical 
records technology and the like.
    So I teach it. I am neither a maximalist nor a minimalist 
but I think that is has really been a catalyst for change in 
numerous areas.
    Senator Lummis. Well, I have a lot to learn about 
blockchain itself. My only understanding of it is the 
application of bitcoin, but it will be interesting to see how 
it is useful in other areas and can be done in a way that 
actually saves money.
    I am going to switch subjects, quickly, to energy. You have 
proposed a greater focus on environmental issues as part of 
your regulatory portfolio. My state of Wyoming's economy is 
heavily dependent on the energy sector, and our state 
government revenues, especially. Because of that, our state 
government revenues are declining right now, dramatically 
declining, because of the change in focus in our energy 
economy.
    Have you considered the practical impacts on Wyoming's 
economy by making it more difficult for energy companies to 
raise capital?
    Mr. Gensler. Well, Senator, I think that the disclosure 
regimes, or climate risks that we were discussing earlier 
actually can be pro-issue or pro-corporation and pro-investors. 
Investors, from time to time, change the information they would 
want, and what they are just asking for more is about material 
climate risk, climate risk that the investors see as material. 
I think that can be also pro-issuer, pro-energy company, to get 
some consistency, comparability, some clear rules as to how to 
do this. Right now we have a little bit more of investors are 
asking for it and issuers are not entirely sure how to address 
all those. So I think it is pro-energy company to do such 
disclosures.
    Senator Lummis. Thank you, Mr. Gensler. Mr. Chairman, I 
yield back.
    Chairman Brown. Thank you, Senator Lummis. Senator Smith 
from Minnesota.
    Senator Smith. Thank you, Chair Brown and Ranking Member 
Toomey, and I want to just welcome Mr. Gensler and Mr. Chopra 
to the Committee. It was really wonderful to have a chance to 
visit with you a little bit over the last few weeks. I think 
you both bring outstanding credentials and experience to these 
roles, and I look forward to supporting your confirmations, so 
thank you so much for being with us.
    I want to just start with Mr. Chopra, and I want to talk 
with you a little bit about the issue of student loans and 
Federal student loan servicing, if we could. So prior to the 
pandemic, I heard from a lot of Minnesotans--this is an issue 
around the country--struggling to pay their student loans and 
struggling, especially, to get into and then stay enrolled in 
income-driven repayment plans and the Public Service Loan 
Forgiveness Program. And these are teachers and firefighters, 
people that are interested in public service.
    I am really grateful that the Biden/Harris administration 
has put Federal student loans on pause until September, and I 
am very concerned about the ongoing challenges that we have 
related to getting good quality student loan servicing.
    So, Mr. Chopra, we know that it is essential for student 
loan servicing to be done well, so that borrowers are able to 
access critical programs like the Student Loan Forgiveness 
Program, and I would like to hear your thoughts about this. 
What can we do to ensure high-quality Federal student loan 
servicing, and how will you approach oversight to this, and 
what can the Consumer Finance Protection Bureau do to protect 
student loan borrowers and ensure access to important programs 
like these loan forgiveness programs?
    Mr. Chopra. So thank you, Senator. You know, one of the 
things that I have always kept front and center is it is 
critical for regulators not to make the same mistakes that were 
made in the lead-up to the financial crisis. The costs of 
inaction were too high. And some of the same issues that we saw 
in the mortgage servicing market I think were creeping into the 
student loan servicing market years ago.
    There are many benefits, many programs, many contractual 
entitlements in a borrower's loan note that they are eligible 
to enroll in, and if servicers or debt collectors are 
misrepresenting those options, that is a big problem. With 
respect to the Public Service Loan Forgiveness Program, many 
members of the military and teachers depending upon that when 
making their own career decisions.
    So it is critical that loan servicers live up to their 
obligations. I understand there has been some improvement when 
it comes to how the servicers are performing. We are at a 
critical moment, when so many borrowers are going to have to 
restart their payments and servicers communicating and making 
sure that borrowers can navigate their options, and it is all 
done lawfully--that is very critical--and the CFPB has a big 
role to play in working with the Department of Education and 
state attorneys general, state licensers, to make sure that all 
of that is happening lawfully so we can avoid an avalanche of 
defaults when any moratorium might end.
    Senator Smith. I really appreciate that. I could not agree 
with you more. I think that we face some major long- term 
fallout from this pandemic, including student loan issues, 
including housing issues, and I think particularly my heart is 
people who feel like they were trying to do everything right, 
they were following the rules as they understood them, and then 
it feels like these student loan services are just pulling the 
rug right out from under them. And this is a classic moment 
where we need more energy and more oomph behind those that are 
protecting consumers, especially folks that are looking for 
ways to make a contribution through public service and then 
have that ripped right out from under them. So thank you.
    Mr. Chopra. Yes, and just to add one thing. So many people 
are entering a very tough job market, and they are also leaving 
school with an enormous amount of debt. And we have seen when 
you enter a tough job market it can be hard to stay afloat, and 
people fall financially behind. We need to make sure they do 
not default and start off their financial lives, you know, with 
more trouble, foreclosing the ability to maybe getting a home 
or start a small business. We need to make sure that law is 
being followed.
    Senator Smith. Exactly. Thank you. Thank you very much.
    Mr. Gensler, I am about out of time, but I just wanted to 
thank you for your responses to questions of several of my 
colleagues about the importance of providing some sort of 
standardized and mandatory system for laying out systemic 
climate risks. I think that this contributes to transparency 
for investors, as you suggested just a moment ago in your 
response to Senator Lummis, and I think that it also helps us 
to really understand what the systemic risk is to asset 
valuation as well as to financial markets. So thank you very 
much for that.
    And I have one thing that I am going to follow up with you 
on, having to do with an issue that is important to a group of 
people who care about new registration forms for indexed linked 
annuities, and I will follow up with you on that. You and I had 
a chance to talk about that a little bit.
    Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Smith. Senator Moran, I 
believe, is not here. Has Senator Cramer arrived yet? And has 
Senator Daines arrived yet? And Senator Sinema is----
    Senator Daines. Mr. Chairman, this is Senator Daines.
    Chairman Brown. OK. Go for it, Steve. Senator Daines from 
Montana is recognized.
    Senator Daines. Great. Thanks, Mr. Chairman. I appreciate 
it much.
    So I want to talk about the issue of these proxy advisor 
duopolies. As you know, proxy firms provide a variety of 
services to shareholders. Most notably, they provide advice at 
their shareholder meetings, typically public traded companies. 
There are two dominant proxy firms. There is International 
Shareholder Services, ISS, and Glass Lewis. They control about 
95 percent of the proxy advisor industry, which really 
constitutes a duopoly. It has become the de facto standard set 
of corporate governance in the U.S., without any meaningful 
input from shareholders or issuers.
    This is an area that is attracted by partisan attention in 
the past, most notably through the House passage of the 
Corporate Governance Reform and Transparency Act. A similar 
version was sponsored by Senator Reed and other current members 
of the Committee, including Senators Tillis and Kennedy.
    So this is the question, Mr. Gensler. Are you concerned 
about this lack of competition in the market for proxy advisor 
services and concerned that some proxy advisory firms may have 
significant conflicts of interest, which may impact the 
objectivity of the voting recommendations?
    Mr. Gensler. Senator, thank you, and thank you for taking 
some time last week for our discussion. I do think that in all 
parts of the capital market, whether it is proxy advisors, 
whether it was the earlier question about credit rating 
agencies and so forth, competition is a good thing to bring 
about transparency and lower cost and more efficiency. So I 
would share that even in this space as well.
    I think that it does bring efficiency to many pension funds 
to have proxy advisors. It is a service that helps pension 
funds and investors through the proxy season. And you also 
raised conflict. I think it is the role of an agency like the 
SEC to try to, through transparency and other rules, to address 
potential conflicts of interest, and we saw some of these 
before the '08 crisis in the credit rating area, and I know 
that the commission has attempted to do that through some rule-
writing last year in the proxy advisor space. I do think they 
bring some efficiency and help a lot of pension funds through 
what otherwise would be a hard slog to consider 3,000 votes or 
something in the course of just a few weeks.
    Senator Daines. Thank you. You know, you said earlier, in a 
response to a question, that you have some concerns about one 
firm having 40 or 50 percent of the payment for order flow. For 
example, ISS has both a research and a consulting arm. Do you 
think the SEC has responsibility to ensure that the proxy 
advisor systems function properly and that investors receive 
the most accurate as well as most up-to-date information prior 
to voting proxies?
    Mr. Gensler. I think that as the SEC did last year address 
proxy advisors it is within the authorities and it is something 
that, if confirmed, I would work with the staff and my fellow 
commissioners and with you to see if there were things that 
were yet to be addressed that needed to be addressed. But I 
also think they provide an important role in the markets during 
the proxy season.
    Senator Daines. Thank you. I shift to enforcement actions. 
I have been concerned, the SEC, under past commissioners, has 
based enforcement actions on previous settlements and staff 
guidance. In your opinion, how should the SEC's enforcement 
division decide whether to engage in enforcement action, and 
when would the issuance of guidance or rulemaking might be more 
appropriate?
    Mr. Gensler. Well, I was honored to chair another agency, a 
civil law enforcement agency, smaller but still very important 
to the markets, and I think of it is enforcement. It is 
following the facts and the law where the facts and the law 
take you, but it is to stamp out fraud and manipulation in the 
markets and it is to use limited resources to effectuate where 
there are the greatest problems in the market.
    So that is my philosophy. I think that, as you say, if 
there is a rulemaking that is very different than enforcement. 
Enforcement is about following the facts in the law and using 
limited resources to sort of change market behavior. If there 
are, unfortunately, a bunch of small fraud shops, you have got 
to go after them, but the first four or five or six you go 
after then maybe the others start to clean up their behavior.
    Senator Daines. Thank you. I know I am out of time, but 
these are two really quick questions, and that would be, would 
you commit to making offenses against senior citizens an 
enforcement priority? We have got a lot of problems with 
schemes in Montana that affect our seniors.
    Mr. Gensler. It is a very important--those less able to 
protect themselves need the SEC even more.
    Senator Daines. The Ponzi schemes as well, going after 
Ponzi schemes? Do you commit to enforcing there?
    Mr. Gensler. Yes. We did at the CFTC. I will, if confirmed, 
at the SEC.
    Senator Daines. OK. Thanks, Mr. Gensler. Thank you, 
Chairman.
    Chairman Brown. Thank you, Senator Daines. Senator Ossoff 
from Georgia.
    Senator Ossoff. Thank you, Mr. Chairman. Thank you to our 
nominees.
    Mr. Chopra, the largest investment banks are very heavily 
subsidized, and many would argue these massive financial 
institutions are dominant not because they are efficient at 
capital allocation or risk management, or because they offer 
the best products to consumers, but instead because they 
receive trillions in government bailouts, low-interest loans, 
and quantitative easing.
    Do you agree with this assessment, and is this, in your 
view, a form of regulatory capture?
    Mr. Chopra. Well, Senator, too big to fail is a huge 
problem that Congress sought to fix in Dodd-Frank, and we 
should continue to make sure that that happens. We want 
competition on the merits. We want to make sure there is a 
market structure, where small banks, small financial 
institutions can compete fair and square. And it is not fair if 
they cannot, and our regulators need to be attuned to every 
single consumer and institution, not just the largest ones. I 
deeply agree with that.
    Senator Ossoff. I appreciate that, Mr. Chopra, and building 
on that theme, during this pandemic, much like during the 
crisis in '07-'08, the 12 or 13 largest banks have received 
trillions in emergency cash. It is provided on an overnight 
basis, and there are no such instantaneous emergency cash 
facilities for credit unions or regional banks, let alone 
ordinary people who have had to wait months for stimulus 
checks. And I would note that many Members of Congress who 
currently oppose sending cash to ordinary people in a pandemic, 
raise no concerns about the massive scale of cash and cheap 
loans provided to Wall Street banks.
    Why is it so much easier for major banks to access 
emergency financial support in a crisis, and how could we level 
the playing field?
    Mr. Chopra. Well, Senator, you are right. Small businesses, 
households did have a tougher time getting a lifeline of 
support, and I know that that was a struggle.
    You know, one of the things that our Federal Reserve 
chairman has talked about, and others, is modernizing our 
payment system so that we can have a more real-time system. We 
cannot be falling behind other countries. We see that China is, 
in many ways, investing in faster payments in a stable coin. 
These are things that will help consumers and businesses get 
money faster, to their benefit. And, you know, I strongly 
support the Fed's efforts to modernize that payment system so 
that everyone can have equal access.
    Senator Ossoff. Thank you, Mr. Chopra, and I would note 
that the Retail Payments Office at the Fed is based at the 
Atlanta Fed.
    I want to ask you now about financial technology. We saw, 
this week, a report that Walmart has hired two former Goldman 
Sachs executives, and Walmart's investments in fintech signal 
an interest in expanding the provision of financial services to 
its massive customer base. On the one hand, more competition 
could benefit consumers. On the other hand, there are looser 
regulations for industrial loan companies, which could threaten 
financial stability, and the entry into the banking sector of a 
retail giant like Walmart could raise antitrust concerns.
    What are the implications for consumers and for regulators 
of these developments in digital banking, of the prospective 
entry of Walmart into the banking sector, and how can 
policymakers address them?
    Mr. Chopra. So, Senator, while this is not a core issue of 
the CFPB, it is something I have thought about quite a bit in 
my current role at the FTC. We have seen how large technology 
platforms are increasingly entering financial service. 
Facebook's Libra proposal drew a lot of scrutiny from this 
Committee as well as regulators all over the world, with 
respect to how it might impact privacy, fair competition, and 
even compliance with our money-laundering laws.
    So I do think we have to make sure we are looking at the 
issues that are facing our country today but also these other 
issues coming down the pike when it comes to market structure. 
I do not want to see a banking system or financial services 
system where new market entrants cannot get in and cannot get 
in and win the day. Dominant players should not be able to 
squelch out competition, and that is something we need to 
always be mindful of.
    Senator Ossoff. Thank you, Mr. Chopra. Mr. Chairman, I 
yield back.
    Chairman Brown. Thank you, Senator Ossoff. That concludes 
the first round. The second round, a number of members from 
both sides would like questions. I think that I will start, but 
I think that Ranking Member Toomey has asked that Senator Scott 
be the first Republican called on, so, Tim, I will call on you 
after my--I will not go the entire 5 minutes, and I will more 
strictly enforce the 5-minute rule too. We were fairly 
liberal--pardon the adjective there, Senator Scott--fairly 
liberal with enforcement, but we will not be this time.
    Mr. Gensler, companies and investors have acknowledged the 
need for improved and consistent climate risk disclosures. The 
SEC last addressed this in 2010. Acting Chair Lee has recently 
undertaken a review of the earlier guidance. Mr. Gensler, are 
you going to do more than that?
    Mr. Gensler. Chair Brown, as we have discussed in this 
hearing, I think that increasingly investors really want to see 
tens of trillions of dollars of assets behind it, want to see 
climate risk disclosures. I think issuers would benefit from 
such guidance, so I think through good economic analysis, 
working with the staff, putting out to the public to get public 
feedback on this, this is something that the commission, if I 
am confirmed, I would work on.
    Chairman Brown. Thank you. Commissioner Chopra, one 
question for you. In the past few years we have seen a lot of 
changes in consumer finance markets. Companies are increasingly 
offering consumer financial products through mobile apps or 
using new methods of underwriting, such as relying on 
alternative credit debt or algorithms that use artificial 
intelligence.
    What are some of the most significant developments you have 
seen in consumer finance, and what do you see as new risk to 
consumers from these developments?
    Mr. Chopra. Senator, technology will play such an important 
role in our lives in every sector of the economy, but we also 
need to understand more clearly how mass data collection on all 
of us is impacting our privacy, the security of our data, and 
ultimately the decisions made by these algorithms.
    I think there are real questions about transparency. I have 
noted that there are many types of algorithmic decisionmaking 
where simply people are unable to ascertain why a certain 
decision was made. It has raised questions about 
discrimination, as evidenced by Secretary Carson's complaint 
against Facebook in the housing context, and so many others.
    So looking at how big data, particularly by large platforms 
who have detailed behavioral data on all of us, is something we 
must carefully look at, because it will change financial 
services fundamentally, and we need to make sure that we have a 
vibrant and competitive market and not one that is simply 
dominated by a few.
    Chairman Brown. Thank you, Commissioner Chopra. Before 
turning to Senator Scott I want to enter into the record 
letters of endorsement from a bipartisan group of 26 state 
attorneys general, veterans, and military service 
organizations, as well as a broad coalition of civil rights 
consumer and housing organizations in support of Mr. Chopra's 
nomination, and letters from investor protection advocates, 
state regulators, and investment professionals in support of 
Mr. Gensler's nomination. Without objection they are entered 
into the record.
    Senator Scott from South Carolina for the second round.
    Senator Scott. Thank you, Senator Brown, and, Senator 
Brown, I noted your comments about liberalism and conservatism. 
I will just note that even if it is just the amount of time 
that we each get for asking questions, any time you move toward 
the conservative aisle I am happy to see that kind of movement 
from you, sir. So thank you very much for sharing those 
enlightening comments with me.
    Mr. Chopra, to you, sir. This is an easy question, I hope. 
Do you agree that Congress did not provide the CFPB regulatory 
oversight authority over insurance products and the insurance 
industry?
    Mr. Chopra. Yes, sir. That is an explicit exclusion from 
Title X of Dodd-Frank. The CFPB does not have authority over, I 
believe it is firms regulated by state insurance industry.
    Senator Scott. Yes, sir, and as an old insurance guy 
myself, I am really impressed with the level of integrity and 
success that we have had in the state regulated insurance 
industry, and I hope that we are able to maintain that 
equilibrium as we move forward.
    Another question for you, sir. I am confident every Senator 
here today supports responsible consumer protections and a 
robust, transparent marketplace of consumer products and 
services. I am also certain that every Senator present would 
agree that regulated entities should have the right to know 
what the rules of the road are before being charged with 
breaking them.
    Unfortunately, when the CFPB was first established, its 
leadership quickly established that enforcement, rather than 
clearly articulated rules for regulated entities, would be the 
primary mechanism for protecting consumers. The CFPB's frequent 
use of enforcement and supervisory authority as an extension of 
rulemaking had a chilling effect on the marketplace, as firms 
began to exit certain business lines rather than risk running 
afoul of the Bureau's vaguely defined and constantly shift 
standards.
    So my question, sir, is, if confirmed, will you strongly 
commit to the continued improvement of overall transparency, 
efficiency, and effectiveness of the CFPB's supervision and 
enforcement programs?
    Mr. Chopra. Yes, and 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. 
Ultimately, that is what creates a vibrant market, and that is 
something that the CFPB must do, adhering to all of the 
procedures Congress has laid out. I am absolutely committed.
    Senator Scott. Thank you, sir. My last question, 
understanding the conservative nature of the time remaining is 
important, Chairman Brown, there is no doubt that the 
availability of responsible small-dollar credit is essential to 
millions of Americans and plays a key role in helping consumers 
whether temporary cash-flow imbalances, unexpected expenses, or 
income shortfalls during really challenging times like the 
pandemic that we are coming out of.
    In acknowledgment of that, the CFPB, FDIC, FRB, NCUA, as 
well as the OCC issued a joint policy statement at the outside 
of the COVID-19 emergency that encouraged financial 
institutions to offer responsible small-dollar loans to both 
consumers and small businesses. In the year since that 
statement was released, CFPB and other financial regulators 
have taken a number of positive actions to facilitate the 
ability of financial institutions to more effectively meet the 
small-dollar credit needs of their communities and their 
customers.
    As director, what actions would you take, both 
independently and in coordination with other financial 
regulators, to encourage the availability of, and access to, a 
wide variety of credit choices for consumers?
    Mr. Chopra. So, Senator, I want to work closely with all of 
those agencies you have mentioned, including the National 
Credit Union Administration, which has its own small-dollar 
rubric. I also want to make sure that it is more than just 
access to credit. It also about access to one's money. The fast 
consumers can control their money, and sometimes they have to 
wait days and days for it, that makes it harder for them to 
make ends meet. I referenced, to one of your colleagues, the 
importance of us having a modernized payment system. All of 
these actions will make it easier for consumers to have control 
of their own destiny and ultimately lead a strong financial 
life.
    Senator Scott. Thank you, sir. With 7 seconds left, let me 
just to Ranking Member Toomey, thank you for the time. Chairman 
Brown, have a good day.
    Chairman Brown. Thank you, Senator Scott. Senator Warren is 
next. I see her screen is open but I do not see her. If she is 
not here--she is here. Senator Warren, you are next, for 5 
minutes, and we are enforcing the 5 minutes more strictly this 
round, so thank you.
    Senator Warren. I am still here. I am sorry, Mr. Chairman. 
I could not hear you, so thank you.
    Mr. Chopra, congratulations on your nomination. You have 
been a long-time advocate for consumers, and I have no doubt 
you are the right person to lead the Bureau at this moment. But 
you have a big task ahead of you. The last administration's 
appointees acted like they worked for the giant banks that they 
were supposed to regulate. So it is clear that the Bureau needs 
to return to its core mission of protecting consumers.
    So I want to ask you about your plans for one of the areas 
where the past leadership of the Bureau failed the most, and 
that is enforcing the fair lending laws that are designed to 
protect consumers from discrimination. In 2017, one of the very 
things that Mick Mulvaney did when he took over as acting 
director was to gut the Bureau's Fair Lending Office and strip 
the attorneys of enforcement power, and, no surprise, 
enforcement actions plummeted.
    So can you talk about your own plans for holding banks and 
financial companies accountable for discrimination?
    Mr. Chopra. So, Senator, thank you. I do not think this is 
just a problem at the CFPB. FTC, where I work, did not file a 
single enforcement action on the Equal Credit Opportunity Act 
for years and years. I do not believe agencies should nullify 
Congress. We should enforce the laws that have been delegated 
to us. And it is particularly important when it comes to 
antidiscrimination. There are new ways in which financial 
institutions are using behavioral advertising, new forms of 
data collection, and we need to make sure that we are offering 
a robust way to understand how they can comply and hold them 
accountable when they are not. Our Fair Lending and Equal 
Opportunity Office at the CFPB, I had a chance to work with 
them the last time I worked there, is established by Congress, 
and it should play a critical role in making sure the law is 
being followed and meeting the objectives set out in the act.
    Senator Warren. Good. I am very glad to hear you say that, 
Commissioner Chopra. You know, the whole problem of 
discrimination in financial services exacerbates racial wealth 
inequalities, and I am glad that you are going to make this a 
priority.
    It is long past time to send a signal to Wall Street that 
the Bureau is not going to turn the other way and look away 
when big financial institutions discriminate against Black, 
Latino, Asian, and Native customers. So thank you for that 
commitment.
    I also want to talk about the upcoming housing cliff that 
is facing millions of Americans. During the 2008 financial 
crash, financial regulators focused on helping banks and turned 
their backs, largely, on American families. The results was 
that about 10 million families lost their homes, with that 
burden falling heaviest on families of color. In response, the 
Obama administration established the CFPB to make sure that 
never happens again.
    Now, fast forward to the COVID-19 pandemic. Forbearance 
measures have staved off a similar wave of foreclosures, but 
those protections are not going to last forever. The good news 
is that unlike 2008, we now have an agency that is dedicated to 
putting consumers first.
    So let me ask you, Commissioner Chopra, can you explain the 
urgency of the current crisis and how you plan to use the 
Bureau's tools to prevent the mistakes that were made during 
the Great Recession from just happening all over again?
    Mr. Chopra. I would be remiss if I did not acknowledge the 
role you played in the establishment of the Bureau, and I know 
something I have spoken with you and many other members on this 
Committee, is that what happened in the mortgage market in the 
years leading up to Lehman, and the foreclosures that took 
place after, we have seen report after report after report 
about how devastating that was to families, to their future, to 
our economy, and it impacted our entire financial system. So 
the CFPB has been entrusted to monitor those mortgage markets, 
work side by side with each other regulator, work with states, 
and use the tools in the toolbox to spot those risks.
    And while Congress has hit pause on many of the troubles in 
the mortgage market, we are not out of this. Based on the data 
that I look at, many families are going to struggle. They have 
lost income. They may not be able to resume, and we should make 
sure that they can stay in their homes when they have that 
ability to do so, and not be deceived about what their options 
are. No one should be kicked out during a quarantine, 
particularly if they have been lied to. I really believe that 
strongly.
    Senator Warren. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Warren and Commissioner 
Chopra.
    Ranking Member Toomey in the second round.
    Senator Toomey. Thank you, Mr. Chairman. Mr. Chopra, while 
the CFPB director is now finally removable by the President, 
the CFPB remains unaccountable to Congress in the sense that it 
is not subject to the appropriations process. In a 2016 
interview at the University of Pennsylvania, you were asked 
about proposals for making the CFPB subject to appropriations 
or making it a five-person commission.
    At the time, you said that Congressmen who vote for these 
policies must be perceived as, quote, ``shilling for predatory 
lenders,'' end quote, and that, quote, ``supporting gutting the 
CFPB like that by starving it of resources or creating 
structures that don't allow it to do its job, there is no real 
good argument for it other than representing those who are 
essentially breaking the law,'' end quote.
    Well, in fact, Mr. Chopra, I, and many of my colleagues, 
have long and continued to support the policies of the ability 
to remove a CFPB director by the President, making it 
accountable to Congress by making it subject to appropriations, 
and for me, it is about accountability.
    So let me ask you, is it still your view that my colleagues 
and I just want to shill for, quote, ``predatory lenders and 
represent lawbreakers''?
    Mr. Chopra. No, Senator, but when it comes to the banking 
regulators, the Comptroller of the Currency----
    Senator Toomey. I just want to be clear, so you are 
retracting what you said back in 2016?
    Mr. Chopra. I am happy to look at that. If I said that I 
think many people's concerns about accountability are 
principal, and it is certainly not the case that everyone is 
just doing the bidding. I regret that if I said that, but 
ultimately I do believe that independent agencies are able to 
stay more clear of political influence, are able to exercise 
judgment carefully, and the Comptroller of the Currency and 
others, I do believe----
    Senator Toomey. I understand. I understand that you could 
disagree with the opinion and the conclusion about the best 
mechanism for accountability, but I am glad to hear that you 
are retracting the impugning of the motives of those of us who 
feel as we do. And I would be happy to provide the video for 
you, if you have a question about whether that is accurate.
    Let me ask you this. Last year, the CFPB affirmed that 
supervisory guidance does not have the force or effect of law, 
and this year it issued a rule to codify that principle. So I 
certainly welcome this commitment to the rule of law, 
especially in light of the CFPB's troubling past practice of 
taking enforcement action based on supervisory guidance.
    I think in our previous conversation you agreed with this 
step taken by the CFPB. I just want to be clear. Are you 
committing to complying with this law, with this rule, or do 
you intend to revisit and attempt to change this rule that was 
passed this year, and codify that principle?
    Mr. Chopra. Yeah, so, Senator, I appreciate the question. 
Guidance cannot impose obligations. That is not the appropriate 
way in which new laws are created or is outside of the 
regulatory process. I understand your concerns but I have not 
read that rule very specifically. But supervisory guidance is 
really supposed to be there to help institutions be able to 
understand how to best comply. It can cover, sometimes, 
emerging issues that provide guidance, but I agree with----
    Senator Toomey. Yeah, this is about sticking with the rule 
that codifies the principle that guidance cannot act as a rule.
    My last question here has to do with the indirect auto 
lending. This was an egregious example of the CFPB's 
enforcement crusade, and it specifically relied on a very 
controversial, disparate impact theory, and it was issued by a 
supervisory bulletin rather than a proper rule. The GAO 
confirmed that the CFPB's bulletin functioned as a rule and 
was, therefore, subject to the Congressional Review Act, and 
Congress, as you know, overturned this misguided policy.
    Now when you and I spoke last week I asked you if you 
intended to reopen the issue that Commerce had closed through 
the CRA and create some new version of an auto lending rule 
premised on the disparate impact area, and I think you 
committed to me that you would not do that. Did I have that 
right, and will you confirm that commitment today?
    Mr. Chopra. The Congressional Review Act resolution has 
nullified that guidance document, and the CFPB will continue to 
adhere to that, if I am confirmed, and I will continue to 
monitor any of these concerns you have, to work with you 
further. But that has been nullified, and that is now the law.
    Chairman Brown. Time has expired. Thank you, Senator 
Toomey. Senator Warnock of Georgia, you are recognized for 5 
minutes.
    Senator Warnock. Thank you so very much, Chairman Brown. It 
is great to be here with you, and let me say how excited I am 
to be named chairman of this Committee's Subcommittee on 
Financial Institutions and Consumer Protection.
    Chairman Brown. We are too. Thank you.
    Senator Warnock. Thank you. I look forward to working with 
you and Ranking Member Toomey and the subcommittee's ranking 
member, Senator Tillis, to ensure stability in our financial 
markets and to protect consumers.
    Commissioner Chopra, thank you so much for appearing before 
this Committee today. As I travel across Georgia, I am hearing 
a lot, and I heard a lot during my campaign, from student loan 
borrowers. And that is a story that I know personally. I am the 
first college graduate in my family, and I would not be here 
were it not for Pell grants and low- interest student loans.
    But students who are borrowing money now are just getting 
crushed under the debt, and the student loan burden has real 
implications, not only for the borrowers but for our economy. 
People are not able to buy homes, start small businesses, the 
kinds of things that move our economy forward, and, of course, 
this is disproportionately impacting Black and brown borrowers, 
particularly Black women.
    I know that you previously served as the student loan 
ombudsman at the Bureau, and what I would like to know is, as 
director, what would you do to protect loan borrowers from 
predatory student loan companies, servicers, and debt 
collectors, and where are the places and opportunities for real 
reform?
    Mr. Chopra. So, Senator, I am glad you mentioned this 
because I really think about the problem you raised as a double 
whammy. For many people of color, families of color, they are 
more likely to need to borrow to go to college, and then in 
many cases, after graduating, continue to face a wage gap. In 
many cases, the data has shown that African American females 
with college degrees have not really seen their wages go up, 
even after all of that studying, and that means that the debt 
that they bear is even more difficult to service.
    So there are a lot of problems in our student loan system, 
when it comes to schools and government policies, but also the 
CFPB has to make sure it is doing its job to make sure the law 
is being followed when it comes to lending, when it comes to 
servicing, when it comes to debt collection. I want to re-
engage with the states, with the Department of Education, if 
confirmed, to make sure that those borrowers are not set more 
behind.
    This has implications for an entire generation, but also 
the issue you raised about the racial wealth gap. It is very, 
very critical that we get this right.
    Senator Warnock. Well, thank you. I look forward to working 
with you on this issue. It is my view that our young people 
should not have to mortgage their future just to have a shot at 
a future, and it pressing not only for them but for our entire 
economy.
    In the remaining minutes that I have, in 2013, you 
testified before this Committee and talked about how 
servicemembers, veterans, and military families were too often 
the canary in the coal mine, as you put it then, when it came 
to breakdowns in consumer finance markets. We have seen members 
of our military and active duty deployed literally forced to 
fly back home from combat zones to save their homes from 
illegal foreclosures, its own kind of combat.
    Can you talk about your experience enforcing and expanding 
consumer protections, especially for our military families, and 
how you would use the tools and resources at the Bureau to 
protect military borrowers?
    Mr. Chopra. So, Senator, thank you. I have had the honor of 
testifying before this Committee several times before, and I do 
believe that how institutions treat members of the military can 
be a canary in the coal mine for others. It is true that 
military families, they move more, they have more complex 
situations. It can be tricky. And if institutions are 
improperly foreclosing on them, throwing them into default, 
overcharging them, misreporting information on their credit 
bureaus, it can raise questions about whether they have the 
processes and the agility to deal with complex situations.
    I was very proud to work with other agencies on a massive 
SCRA-related investigation and enforcement action involving a 
nationwide student loan overcharging scam. We have to make sure 
we are continuing to work with the Justice Department, with 
other regulators, to crack down on that, especially as we 
anticipate risks in the mortgage market.
    Senator Warnock. Well, thank you so much, Commissioner 
Chopra. Our military men and women in uniform are obviously 
putting it all on the line for us, to protect us, and the least 
we can do is protect them from abusive practices in our 
financial systems, and I look forward to working with you to do 
that.
    Chairman Brown. Thank you, Senator Warnock. Senator Tillis 
for the second round.
    Senator Tillis. Thank you, Mr. Chair. Mr. Chopra, thank 
you, and congratulations on your nomination. I want to go back 
on, you know, the CFPB is authorized to prevent unfair and 
deceptive practices, and I think you know that Congress has 
used these terms deliberately, with the backdrop of the FTC 
president establishing limits on these authorities. I think 
even former Director Cordray was careful to adhere to the 
President.
    But I understand, in a Department of Transportation rule to 
define unfair and deceptive practices, you urged that agency to 
treat those authorities as significantly broader than the same 
authorities under the FTC and the CFPB.
    Should I infer from that that you are willing to go further 
than even Director Cordray did on expanding the CFPB 
authorities?
    Mr. Chopra. So, no, Senator. I think if I understand your 
question, the Department of Transportation has a different 
fairness jurisdiction. The CFPB's unfairness authority I 
believe word for word is harmonized with the FTC Act. I believe 
in staying within the four corners of the law. I am happy to 
answer additional questions about that Department of 
Transportation comment letter, but it is a different unfairness 
standard than what exists in the FTC Act or in the Dodd-Frank 
Act.
    Senator Tillis. Can I infer from that that you would at 
least use rulemaking if you were to go in to clearly define 
what an abusive practice would be, subject to rulemaking?
    Mr. Chopra. So ultimately we would have to enforce the law 
as written. There have been a number of cases where courts and 
others have found that the fact patterns meet the prongs of, in 
this case, the prohibition on abusive acts and practices. The 
last director has actually promulgated a rule on short-term 
lending that specifies certain abusive practices, particularly 
the repeated debiting of accounts that may lead to overdraft 
fees.
    Ultimately, we need to enforce the law, and at times 
rulemaking can be a tool that has been used. But I take from 
your question that it is important that it is clear, and we do 
what we can to make sure that what the law requires is 
understandable, and ultimately we have to follow what Congress 
has written in that statute and be subjected to judicial 
scrutiny.
    Senator Tillis. Thank you. I just have one other question. 
Knowing this is the second round I will try and be brief. This 
relates to a broader issue that I see. I have seen comments 
from high-ranking officials. I have seen guidance that has 
effectively become de facto rules, where the industry sees a 
nod in a certain direction, they feel like they have to really 
conform to something that is not a rule, which adds a lot of 
costs, a lot of complexity, a lot of uncertainty.
    Do you think that it is appropriate that a guidance 
effectively becomes a rule, or that even a speech or a comment 
that you could make in an interview could actually drive an 
entirely new regulatory regimen for the industry?
    Mr. Chopra. Well, Senator, I particularly worry about this 
type of uncertainty for small players, new players. They do not 
have a bunch of people working in Washington for them to track 
all of this. Being as transparent as possible has to be always 
a priority. I understand what you are saying and it is 
important that that be communicated through all the appropriate 
channels.
    That being said, there is a place, in my view, for the 
agencies to speak at industry conferences, talk about data and 
trends, talk about new developments, be able to explain how 
they might want to think about that. But I understand what you 
are saying and I am very committed to that transparent 
communication, particularly as it relates to making sure that 
small players can compete with larger incumbents.
    Senator Tillis. Thank you, Mr. Chopra. Thank you, Mr. 
Chair.
    Chairman Brown. Thanks, Senator Tillis. Senator Menendez 
for a second round.
    Senator Menendez. Thank you, Mr. Chairman. Mr. Chopra, we 
are in the midst of a full-blown student debt crisis, with 43 
million of our fellow citizens owing $1.5 trillion in student 
loan debt. And instead of helping provide relief to those 
borrowers by regulating a student loan market plagued by 
harmful practices, our country's consumer watchdog was asleep 
at the wheel, in my perspective, for the last 4 years.
    So I think that student loan debt shakes the very 
foundations of the American middle class. You know, I can 
refinance anything in my life except student loan debt. If I 
was able to do so, for example, there would be great 
opportunities to buy my first home, be an entrepreneur, start a 
business. It would have an enormous economic ripple effect for 
the individual as well as for society as a whole.
    So as the lead consumer watchdog, does the CFPB have 
authority to oversee and supervise that $1.5 trillion worth of 
consumer debt, including debt owed to the Federal Government?
    Mr. Chopra. Yes. My understanding, the existing law and 
implementing regulations, those entities, servicers, debt 
collectors, they are covered as consumer financial products and 
services.
    Senator Menendez. And do you believe the extent of the 
current student debt crisis calls for the use of the Bureau's 
full slate of authorities to ensure that Federal and private 
student loan servicers are complying with consumer financial 
protection laws?
    Mr. Chopra. Yes, so, Senator, student loans used to 
actually be more of the exception, and now they are the norm. 
While I was at the Bureau the last time, the agency reported 
that student loans had crossed the trillion-dollar market. It 
is now $1.7 trillion. There were years when more than 1 million 
Americans were defaulting, even when they had a legal 
entitlement to loan modifications and income-driven repayment.
    This has to be something--it is one of the biggest consumer 
credit markets in our country, after mortgages, and we have to 
make sure that the law is being followed. And I do. I have seen 
some real improvements over the last decade in the activities 
of some of these firms, and I hope that that continues, and I 
hope that there are high levels of compliance with the laws 
that Congress has passed.
    Senator Menendez. Well, thank you for that. During your 
tenure as the student loan ombudsman, the CFPB returned over 
$750 million to wronged student borrowers. That is the type of 
work I would like to see the CFPB return to.
    And then, finally, I want to follow up on Senator Warnock's 
questions to you about the disproportionate impact students 
loans have on minority communities. I, like him, who grew up 
poor, in a tenement in Union City, the first in my family to go 
to college, would have never done so without the Pells, 
Perkins, and work-study. So I am very familiar, first-hand 
knowledge of the consequences. But should the Bureau examine 
whether student loan servicers are violating civil rights laws 
or engaging in other unlawful conduct that disproportionately 
hurts minority student loan borrower?
    Mr. Chopra. So many of those firms are subject, and I 
believe all of them, to the Equal Credit Opportunity Act. We 
have seen that it is critical to ensure that there is 
appropriate enforcement of that law, not just on the 
origination side but also as established guidance as it applies 
to the other parts of the consumer credit lifecycle.
    We cannot really make a mistake when it comes to this. You 
know, ensuring that our antidiscrimination laws are adhered to 
is important for the goals that the Congress has set out in 
those laws.
    Senator Menendez. Well, thank you. I look forward to 
supporting your nomination and to your leadership of the agency 
upon confirmation.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Menendez. Either Senator 
Lummis, if she is coming back, or Senator Hagerty, if he is 
coming back, or Senator Lummis, if she is coming back, or 
Senator Daines, who has come back.
    Senator Daines, your second round, and try to stick to 5 
minutes. Thank you.
    Senator Daines. Chairman Brown, your ability to handle the 
juggling here is quite impressive, I will say.
    Chairman Brown. It is not complicated.
    Senator Daines. Well, it is not an easy task here with our 
Senators who are going in and out. I do not envy you. But thank 
you, Mr. Chairman.
    These questions here are for Mr. Chopra. As you know, 
following the Supreme Court's decision in the Seila Law LLC v. 
CFPB case, the director of the CFPB is removable for any reason 
and serves at the pleasure of the President. We are now only 
considering your nomination because the prior director resigned 
at the request of the President with 3 years left in her term. 
And regardless of where one stands in the political spectrum, I 
hope everyone can agree that this instability at the top of an 
agency with such vast power is frightening.
    So my question is, do you agree that the CFPB should be led 
by a multi-member commission versus one person?
    Mr. Chopra. So, Senator, it is the job of Congress to 
determine the appropriate agency structure. Some of our 
financial regulators are led by a single director, removable an 
Executive official, the Federal Housing Finance Agency, I 
believe, the Comptroller of the Currency. Others are set up as 
boards or commissions.
    I currently sit on a commission, a multi-member body. 
Ultimately, Congress is vested with the authority to establish 
these structures----
    Senator Daines. No, no, it is--you are exactly right. It is 
our responsibility, not yours. I was just curious, as somebody 
who, as you say, sits on a commission today, and also you are 
very knowledgeable of the CFPB, just what are your thoughts 
about--would it better serve the American people if it was a 
multi-member commission versus led by one person? I am curious 
of your opinion, your thoughts.
    Mr. Chopra. Well, in my view, regardless of it is a single 
director or a multi-member commission, there needs to be 
accountability. There needs to be responsiveness. Some 
commissions work well, some single directors work well, and the 
opposite can be true too.
    Where I sit, at the FTC, this agency has missed some of the 
worst abuses when it comes to invasions of privacy by Big Tech, 
has failed to enforce some of its core orders. I do look at the 
CFTC, under Gary Gensler's leadership, that did actually take 
appropriate actions, was responsive, was transparent. 
Ultimately, again this is Congress' decision. But what I am 
committed to is no matter what the structure is, we have to 
follow the law, adhere to the law, be responsive to Congress 
and the public.
    Senator Daines. Yeah, no, I think the concern I am hearing 
from many out there that we serve, the American people, is just 
the fact it can swing wildly between political parties, 
regarding different regulatory philosophies, you know, at the 
whim of the person at the helm and President who appoints them. 
So it is a concern. Obviously, I wanted to raise it, and I have 
heard that from many of my constituents back home in Montana.
    Mr. Chopra. I appreciate that.
    Senator Daines. Anyway, thank you. I will keep going on the 
time. So here is a question. I came from the private sector, 
spent most of my career there. Is business a harmful force?
    Mr. Chopra. Senator, there is no one more who thinks, than 
me, that business is one of the best forces for our lives in 
America. I am not a lawyer, nor is Mr. Gensler. I studied 
business. I worked in the private sector. I believe that 
business is, frankly, what Thomas Jefferson wanted for a free 
country.
    What I do have a problem with is when particularly large 
actors can bully small businesses or break the law and not be 
held accountable. At the FTC, we laid the hammer on small 
businesses. We go after the individuals, we take everything, 
but sometimes do not treat a larger firm using the same set of 
scrutiny, even though the law is exactly the same.
    Senator Daines. Right. So would you prejudge, in any way, a 
business' actions, based on whether you had an unfavorable view 
of the industry that it is part of?
    Mr. Chopra. Absolutely not. That is not the job of an 
agency. The job is to administer the law that the Congress has 
set, and that would be inappropriate to have whims or views 
about particular types of businesses.
    Senator Daines. So the concern I have is you dissented 
regularly, with astonishing regularity, from FTC actions 
because you complained the penalties were not punishing enough. 
So your record at the FTC I know raised some concern for many 
on this Committee.
    Mr. Chopra. Well, Senator----
    Chairman Brown. Please wrap up.
    Mr. Chopra. ----Senator, I do not believe--I do not know if 
the Senator has frozen--Senator, I do not believe that--I am 
happy to share any of the opinions I have written. I believe 
that over 93 percent of decisions were unanimous. But I do have 
a problem when fraudsters get off with not having to redress 
their victims. We are sometimes not doing enough to hold 
businesses accountable when it comes to the harm that they 
cause, even when it is an outright violation of the law. I 
certainly objected to the FTC's Facebook settlement, which was 
subject to, in my view, not even fixing the core problem that 
led to the massive violations.
    And, Senator, I am happy to discuss that more with you, but 
ultimately we want honest business to be able to thrive and to 
compete and for bad actors to be held accountable if they 
commit fraud.
    Senator Daines. Thank you, Mr. Chairman.
    Chairman Brown. The time has expired. Thank you.
    Senator Daines. Yeah, thanks.
    Chairman Brown. Senator Lummis for 5 minutes. I think you 
are last. Go for it.
    Senator Lummis. Thank you, Mr. Chairman. Hello, Mr. Chopra. 
It is nice to see you again.
    My first question is about usury laws. They have 
historically been the provenance of state legislatures. My 
state of Wyoming even has a usury cap. I, in fact, remember the 
debate because I was a state legislator at the time.
    Dodd-Frank prohibits the CFPB from imposing maximum 
interest charges on consumer credit. Do you agree that the CFPB 
lacks the authority to impose a usury cap?
    Mr. Chopra. So, Senator, my understanding is that you are 
right, that usury caps, interest rate caps, that is primarily 
the provenance of states, and I believe there is some explicit 
language in Title X of Dodd-Frank that prohibits the CFPB from 
establishing something like that. I am happy to look at it more 
closely if there are more specific questions, but that is my 
understanding of the law.
    Senator Lummis. Nope, great answer. That is fabulous. Thank 
you.
    Now, if confirmed, you will have the honor of being a 
member of the FDIC board, and Congress has specified that 
industrial lending companies are entitled to deposit insurance 
if they have a safe and sound plan of operation. This is the 
easiest question you will be asked today. Will you consider the 
individual merits of each and every application and grant 
deposit insurance to an ILC with a safe and sound plan of 
operation?
    Mr. Chopra. Yes. I will follow the law when it comes to 
applications. I will, of course, rely heavily on the FDIC 
staff. That is their real expertise. But inasmuch as 
applications are subject to these laws and regulations, of 
course, that should be the standard by which they are evaluated 
by.
    Senator Lummis. Thank you. And my last question, Chairwoman 
McWilliams was confirmed by the Senate to set the direction of 
the FDIC. Section 6b of the FDIC bylaws allows two members of 
the FDIC board to call a special meeting of the board. Since 
you will not be the chairperson of the FDIC board, will you 
commit not to force votes on matters the FDIC chairwoman has 
not included on the board's agenda?
    Mr. Chopra. So, Senator, I am actually not familiar with 
these rules of procedure, but I am happy to take questions for 
the record. Is the question that the chairwoman has a statutory 
right to call meetings--and I apologize if I am not fully 
understanding all of it, but I am happy to take a close look.
    Senator Lummis. OK. It is a bylaws thing, and you bet, I 
will submit questions for the record. And thank you very much 
for your time.
    Mr. Chopra. Absolutely, Senator, and thank you for----
    Senator Lummis. That is all I have. I get to yield back 
almost 2 minutes. Thank you.
    Chairman Brown. Thank you, Senator Lummis. Is Senator 
Hagerty here? I assume not, so we are drawing to a close. I 
think he is not.
    Well, thank you to Mr. Gensler and Commissioner Chopra for 
being here today and providing testimony, at the longest 
Committee meeting I remember in the Senate Banking, Housing, 
and Urban Affairs Committee, with the interest from so many 
members in the second round.
    For Senators who wish to submit questions for the record, 
these questions are due by the close of business this coming 
Friday, March 5. For our witnesses, please submit your 
responses to questions for the record by noon on Monday, March 
8. We obviously want to move on nominations quickly is the 
reason for the squeeze time period. Thank you gain.
    With that, the hearing is adjourned. Thank you all.
    [Whereupon, at 1:04 p.m., the hearing was adjourned.]
    [Prepared statements, biographical sketches of nominees, 
responses to written questions, and additional material 
supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    Today we consider the nominations of two distinguished public 
servants: Rohit Chopra to serve as Director of the Consumer Financial 
Protection Bureau, and Gary Gensler to serve as a Chairman of the 
Securities and Exchange Commission.
    Most of us have met with them. I am impressed with their knowledge, 
their commitment, and their passion to serve, especially during the 
current public health and economic crisis. Thank you, Commissioner 
Chopra and Mr. Gensler.
    You are both nominated to lead parts of our government whose job is 
to stand up for the millions of Americans who don't have a corporate 
lobbyist, who don't have a Super PAC, who never get bailouts or golden 
parachutes.
    And you will take on these roles at a time when so many people 
don't feel like they have a voice in our economy, or anyone on their 
side in government.
    Your job will be to prove them wrong; to fight for all the workers 
and families and communities that have been left out and looked down on 
by the Washington elite, and preyed on by Wall Street.
    Even before the pandemic, workers' wages were not keeping up with 
the cost of living and raising a family--the cost of housing, 
childcare, prescription drugs had all gone up. We know 40 percent of 
Americans aren't able to come up with $400 in an emergency.
    The racial wealth gap has increased: the average white family now 
has 10 times the wealth of the average Black family.
    We have the widest racial home ownership gap in 50 years--in fact, 
the gap is as big today as it was when it was legal to refuse to sell 
someone a home because of the color of their skin.
    Then the coronavirus pandemic hit--and millions of workers who were 
one emergency away from draining their savings, or turning to a payday 
lender, or being evicted, were all facing emergencies at once.
    Millions of homeowners are behind on their mortgage and at risk of 
foreclosure--including nearly one-in-six Latino homeowners and one-in-
five Black homeowners.
    Today's nominees understand the challenges we face. And after years 
of allies of the largest corporations and the biggest banks running 
these agencies, and setting government up to fail, Mr. Chopra and Mr. 
Gensler are here to fight for everyone else.
    Congress created the Consumer Protection Bureau to be a voice for 
all the Americans who too often don't have one in Washington.
    During its first ten years, the Bureau delivered results: the CFPB 
made new, strong rules that protect consumers from abusive practices, 
and returned more than $12 billion to more than 29 million Americans 
who were cheated and preyed on by shady lenders and big banks.
    Mr. Chopra has the expertise and the track record to lead the 
Bureau at a time when workers and their families are desperate for 
someone to look out for them.
    He has a deep understanding of financial markets and a strong 
record of protecting consumers and small businesses, promoting 
competitive markets, and holding bad actors accountable.
    In 2018, the Senate voted unanimously to confirm Mr. Chopra as an 
FTC Commissioner, and since then, he has worked with members of both 
parties on a wide array of issues important to American consumers.
    As Commissioner, Mr. Chopra worked with Democratic and Republican 
state attorneys general to protect American small businesses and 
consumers from foreign goods that were flooding the market with fake 
``Made in the USA'' labels.
    He has pushed the FTC to crack down on Big Tech, including 
authorizing the agency's current lawsuit against Facebook.
    He has also earned the endorsement of veterans and military 
organizations because of his long record of standing up for 
servicemembers, veterans, and military families that have been preyed 
on by Wall Street banks and predatory lenders.
    At the CFPB, Mr. Chopra served as the agency's first student loan 
ombudsman, directing the agency's work in the $1.7 trillion student 
loan market, and working with state attorneys general of both parties 
to bring enforcement actions against student loan debt relief scams.
    With Mr. Chopra leading the CFPB, Americans can be confident 
they'll have someone looking out for them.
    Turning to Mr. Gensler, we consider his nomination at a time when 
it's become more and more obvious to most people that the stock market 
is detached from the reality of their lives.
    People have watched stock prices go up and up during this pandemic, 
even though only half of U.S. households have stock investments. 
They've seen corporations pay dividends to shareholders, while rolling 
back hazard pay for workers and laying people off.
    As Chair of the Commodity Futures Trading Commission, and prior to 
that as a senior official in the Treasury Department, Mr. Gensler 
delivered results and ensured accountability.
    He led the charge in 2012 to crack down on the big banks that had 
manipulated interest rates for years, and gotten away with it. He will 
bring that same focus to the SEC to ensure our markets are fair and 
transparent.
    Markets should be a way for families to save and invest for their 
kids' education or a down payment on a home or a secure retirement--not 
a game for hedge fund managers that workers always lose. Mr. Gensler 
will bring the focus back to the people who make this country work--and 
take on anyone on Wall Street looking to game the system.
    That means upgrading climate risk disclosure requirements that are 
out of date, punishing misconduct, and enforcing the protections on the 
books. And it means working with other agencies-like the banking 
regulators-to head off growing problems before they become emergencies 
that hurt the economy.
    We've seen what happens when markets don't have real safeguards, 
and most people are left to fend for themselves--just look at the 
electricity market in Texas.
    Ultimately, both of these roles are about one question: whose side 
are you on?
    I am confident both nominees will stand up for all the workers and 
their families who haven't had that voice. They will help us create a 
better economy, with a growing middle class that everyone has the 
opportunity to join.
    I look forward to hearing how each of you will help chart the 
course out of this pandemic and build a brighter future in the years 
ahead.
                                 ______
                                 
                   PREPARED STATEMENT OF GARY GENSLER
        To Be a Member of the Securities and Exchange Commission
                             March 2, 2021
    Chairman Brown, Ranking Member Toomey, Members of the Committee, it 
is an honor to appear before you. Two decades ago, I served on this 
committee's staff under Chairman Paul Sarbanes, who we sadly lost late 
last year. And today, I am proud to be here as President Biden's 
nominee to chair the Securities and Exchange Commission.
    I have spent my entire professional career in and around the 
financial markets-in the private sector, in state and Federal 
Government, and now in academia. And I believe our markets are the 
finest in the world.
    But they didn't become that way through happenstance. In the shadow 
of the Great Depression, Congress created the SEC to protect investors; 
to maintain fair, orderly, and efficient markets; and to facilitate 
capital formation.
    In the decades since, we have seen that when the SEC does its job--
when there are clear rules of the road and a cop on the beat to enforce 
them--our economy grows and our nation prospers.
    But when we take our eyes off the ball--when we fail to root out 
wrongdoing, or to adapt to new technologies, or to really understand 
novel financial instruments--things can go very wrong. And when that 
happens, people get hurt.
    Twelve years ago, when I became chair of the Commodity Futures 
Trading Commission, our economy was reeling from the financial crisis. 
My fellow commissioners and I took decisive action to increase 
transparency and reduce risk in the $400 trillion swaps market. I'm 
proud that 85 percent of our actions passed the commission with 
bipartisan support.
    If confirmed as SEC chair, I will work with my fellow 
commissioners, the SEC's exceptional staff, and the members of Congress 
to ensure our markets remain the world's best.
    That means strengthening transparency and accountability in our 
markets, so people can invest with confidence, and be protected from 
fraud and manipulation.
    It means promoting efficiency and competition, so our markets 
operate with lower costs to companies and higher returns to investors.
    It means making sure companies--incumbents and entrepreneurial 
startups alike--can raise needed capital to innovate, expand their 
operations, and contribute to economic growth.
    And above all, it means making sure our markets serve the needs of 
working families.
    I'm a product of a working family. Neither of my parents went to 
college. But my father was able to take his mustering-out pay from 
World War II and start a small business that would eventually send my 
four siblings and me to college.
    That is the kind of economic opportunity that should be available 
to each and every American--no matter who they are. I believe our 
markets are essential to providing that opportunity.
    That's because capital markets touch every part of our economy. 
They enable businesses to develop new products, build new facilities, 
and grow their payrolls. They help working families save for retirement 
and invest in their children's futures. And although it may not seem 
intuitive, when someone goes to take out a mortgage or open a credit 
card, our capital markets are on the other side of those transactions 
as well.
    We cannot take any of this for granted. Markets--and technology--
are always changing. Our rules have to change along with them. In my 
current role as a professor at MIT, I research and teach on the 
intersection of technology and finance. I believe financial technology 
can be a powerful force for good--but only if we continue to harness 
the core values of the SEC in service of investors, issuers, and the 
public.
    Before I close, I want to introduce and thank my three daughters--
Isabel, who is here with me in Maryland, and her older sisters Anna and 
Lee, who are watching remotely. They are the lights of my life, and I 
wouldn't be here today without their love and support.
    Thank you. I look forward to your questions.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                   PREPARED STATEMENT OF ROHIT CHOPRA
        To Be Director, Bureau of Consumer Financial Protection
                             March 2, 2021
    Mr. Chairman, Ranking Member Toomey, and Members of the Committee, 
thank you for the opportunity to appear before you today, and thank you 
to Senator Blumenthal for his kind introduction.
    It is an honor to sit before you as the President's nominee to lead 
the Consumer Financial Protection Bureau. I am very grateful for the 
support of my family, friends, and colleagues who are joining us 
virtually. I am especially thankful to my parents. I last saw them 
exactly one year ago to celebrate my mother's birthday, the longest 
stretch of time in our lives without being in the same room--an 
experience that is all too common today.
    America in March 2021 is far different than America of 1 year ago. 
Every week, hundreds of thousands lost their jobs. Local businesses 
shuttered. And more than 500,000 have died.
    While there are some hopeful signs that the tide is turning, we 
must not forget that the financial lives of millions of Americans are 
in ruin. Experts expect distress across a number of consumer credit 
markets, including an avalanche of loan defaults and auto 
repossessions.
    Other persistent pain points for consumers are particularly acute 
today, making it harder for families to get back on their feet. 
Consumers continue to discover serious errors on their credit reports 
or feel forced to make payments to debt collectors on bills they 
already paid or never owed to begin with, including for medical 
treatment related to COVID-19. Many of these longstanding, pervasive 
problems will make it more difficult for our country to sustain a full 
recovery.
    This is especially true when it comes to the housing market. For 
most of us, much of this last year has been spent at home. Our homes 
are more than physical structures: they have served as offices, 
schools, and much more, providing safety and refuge during a deadly 
pandemic.
    But due to the economic devastation stemming from COVID-19, 
millions face the prospect of losing their home, with communities of 
color particularly at risk. Many have seen their jobs disappear and 
will not be able to easily resume their rent and mortgage payments.
    In the last economic crisis a decade ago, we saw how unlawful and 
avoidable foreclosures proved to be catastrophic in cities, small 
towns, and rural areas alike, contributing to deeper social divisions 
and inequities. We once again face an important test to ensure that 
troubles in the housing market do not sabotage the recovery of our 
local economies.
    In the mortgage market, fair and effective oversight can promote a 
resilient and competitive financial sector, and address the systemic 
inequities faced by families of color. Perhaps most importantly, 
administration of consumer protection laws can help families navigate 
their options to save their homes.
    Congress has entrusted the Consumer Financial Protection Bureau 
with carefully monitoring markets to spot risks, ensuring compliance 
with existing law, educating consumers, and promoting competition. This 
not only helps to protect Americans from fraud and other unlawful 
conduct, it also ensures that law-abiding businesses, regardless of 
size, can compete.
    Three years ago, I sought the Senate's confirmation to serve as an 
FTC Commissioner. I was honored to be unanimously confirmed and to work 
with members to build a new bipartisan consensus to turn the page on 
some of the failed and outdated policies of the past.
    If confirmed to lead the CFPB, I pledge to be a good partner to 
each of you and approach the agency's mission with an open mind and 
attuned to market realities. I look forward to working with you to 
tackle the pressing problems that families face in their financial 
lives during this critical moment for our country.
    Thank you again, and I look forward to your questions.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                       FROM GARY GENSLER

Q.1. Where have you excelled in past positions in hiring and 
promoting people of color?
    Where is there room for improvement?

A.1. Incorporating diversity, equity and inclusion into the 
workplace is an area where all leaders should strive for 
continuous improvement, and I take that responsibility 
seriously. I am proud to have hired diverse staff at the CFTC 
and with the members I recruited for the Biden-Harris Agency 
Review Team for independent financial regulatory agencies 
identify as a person of color.

Q.2. In August 2011, President Obama issued an Executive Order 
establishing a coordinated, Governmentwide initiative to 
promote diversity and inclusion in the Federal workforce. The 
executive order reads, in part, that ``Attaining a diverse, 
qualified workforce is one of the cornerstones of the merit-
based civil service . . . To realize more fully the goal of 
using the talents of all segments of society, the Federal 
Government must continue to challenge itself to enhance its 
ability to recruit, hire, promote, and retain a more diverse 
workforce. Further, the Federal Government must create a 
culture that encourages collaboration, flexibility, and 
fairness to enable individuals to participate to their full 
potential.'' The order required each agency to establish an 
agency-specific diversity, equity, and inclusion strategic plan 
with specific objectives.
    Coordinated, Governmentwide initiatives to promote 
diversity and inclusion in the Federal workforce are critical 
to attracting and retaining the best talent to our agencies. If 
confirmed, I will work with staff at the SEC as well as fellow 
Commissioners to honor the principles of this Executive Order.
    Please describe your commitment to diverse hiring at the 
Securities and Exchange Commission (SEC). Will you review and 
update the SEC's diversity, equity, and inclusion strategic 
plan to ensure it contains specific objectives?

A.2. Diversity, equity and inclusion are critical to attracting 
and retaining the best talent to accomplish the SEC's mission. 
To fulfill this commitment, specific plans and objectives 
against which performance is measured are important, and if 
confirmed, I plan to review and update the SEC's diversity, 
equity, and inclusion plan to do so.

Q.3. Will you commit to establishing a system for reporting 
regularly on the SEC's progress in implementing an agency-
specific diversity, equity, and inclusion strategic plan and in 
meeting the objectives under the plan?

A.3. Meeting diversity, equity, and inclusion goals requires 
appropriate planning and measurement of progress against 
specific objectives. If confirmed, I will establish systems to 
track diversity, equity and inclusion as well as the agency's 
success at meeting goals.

Q.4. Will you commit to transparency on workplace policies, 
salaries, and benefits? What is your plan for implementing 
these policies?

A.4. If confirmed, I will work with the SEC's Office of Human 
Resources, the Office of Minority and Women Inclusion and SEC 
staff, including the SEC employee bargaining unit, to create a 
workplace that has fair and transparent policies to promote 
diversity, equity and inclusion.

Q.5. What are some short- and long-term strategies for 
addressing disparities in participation in the securities 
markets and financial literacy?

A.5. Women and people of color in the United States have 
historically been underrepresented in the securities markets. 
If confirmed, I will work with the Director of the Office of 
Minority and Women Inclusion to use all statutory tools 
available to advance participation in the markets. Financial 
literacy is one important tool available to the SEC to increase 
access to information to inform sound investment decisions. If 
confirmed, I will work with the Office of the Investor Advocate 
and Office of Investor Education and Advocacy to ensure the 
Commission's financial literacy programs are meeting goals.

Q.6. Have you previously implemented and required diversity, 
equity, and inclusion training for all employees and implicit 
bias training for managers within your purview?

A.6. While leading the CFTC, I followed all guidance suggested 
by our Office of Minority and Women Inclusion as it relates to 
employee training. On the Biden-Harris Agency Review Team for 
independent financial regulatory agencies, on which I served as 
a team captain, antidiscrimination training was required.

Q.7. Will you commit to implementing and requiring diversity, 
equity, and inclusion training for all employees within your 
purview? What is your plan for implementing these trainings?

A.7. Diversity, equity and inclusion training is an important 
tool to improve the performance of any workplace. If confirmed, 
I will work with the Office of Human Resources and the Director 
of the Office of Minority and Women Inclusion to examine 
training options available and implement a training plan and 
schedule as appropriate.

Q.8. Will you commit to implementing and requiring implicit 
bias training for managers within your purview? What is your 
plan for implementing these trainings?

A.8. Implicit bias training for managers is an important tool 
to ensure that any workplace is free from the types of bias 
that can prevent employees from meeting their full potential 
and fulfilling the mission of the organization. If confirmed, I 
will work with the Director of the Office of Minority and Women 
Inclusion to examine training options available and implement a 
training plan and schedule as appropriate.

Q.9. Please describe how you view the role of SEC Chairman in 
appropriately serving BIPOC? How do you view the SEC's role in 
furthering racial equity?

A.9. Three areas in which the SEC can serve these communities 
include promoting internal diversity at the agency in terms of 
hiring and promotion; diversity at regulated entities, in terms 
of the Office of Minority and Women Inclusion's authority to 
conduct voluntary diversity surveys within the financial 
services industry; and in policies that meet the mission of the 
SEC to protect investors, maintain fair, orderly and efficient 
capital markets and promote capital formation. If confirmed, I 
will work to advance progress on these three areas as well as 
others.

Q.10. Please list at least 3 specific areas of focus/priorities 
for advancing racial equity, diversity, and inclusion at the 
SEC. What specific measures will you use to evaluate success in 
these areas, and over what period of time?

A.10. If confirmed, three areas in which I will focus efforts 
on racial equity include internal diversity at the agency in 
terms of hiring and promotion; diversity at regulated entities, 
in terms of the Office of Minority and Women Inclusion's 
authority to conduct voluntary diversity surveys within the 
financial services industry; and in policies that can help 
reduce the wealth gap, including access to capital for 
minority-owned businesses. If confirmed, I will use established 
metrics to measure progress, working with the OMWI and with the 
Office of the Investor Advocate, Office of Investor Education 
and Advocacy and Office for the Advocate of Small-Business 
Capital Formation.

Q.11. Please describe how you plan to work with and engage the 
financial services sector to serve BIPOC and dismantle systemic 
racism's impact in those sectors? How, specifically, will you 
hold the industry accountable on these issues? How will you 
accelerate private sector efforts to achieve more inclusive 
leadership?

A.11. If confirmed, I plan to set an example in leadership at 
the SEC and would encourage private sector leaders to do the 
same. If confirmed, I would look to encourage diversity in 
terms of employment at regulated entities by using tools at the 
disposal of the Office of Minority and Women Inclusion, 
including the authority to conduct voluntary diversity surveys 
within the financial services industry.

Q.12. How do you plan on incorporating the views and work of 
the Office of Minority and Women Inclusion across the SEC?

A.12. If confirmed, I plan to work directly with the Director 
of the Office of Minority and Women Inclusion to advance the 
statutory goals set forth by Congress under Section 342 of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act of 
2010 which directs the Office to advance ``the fair inclusion 
and utilization of minorities, women, and minority-owned and 
women-owned businesses in all business and activities of the 
agency at all levels, including in procurement, insurance, and 
all types of contracts.''

Q.13. The SEC has outside advisory councils and task forces 
comprised of industry leaders, academics, nonprofits, and other 
stakeholders. They serve as volunteers but have significant 
influence being appointed by and working closely with you. 
Should your agency be judged by its success in populating these 
groups with more diverse advisors on these councils and task 
forces, and if so, over what period of time?

A.13. Advisory groups serve an important role in informing the 
work of the SEC. Given that membership on these advisory groups 
is on staggered fixed terms, the Commission should be judged on 
its work over time to promote diversity, equity and inclusion 
as membership terms expire and new members are appointed.

Q.14. What specific measures will you use to evaluate the SEC's 
success in understanding and addressing the needs of BIPOC? 
Will you regularly report to Congress on the progress being 
made on these measures?

A.14. If confirmed, I will leverage the SEC's talented staff to 
understand the economic data related to the Commission's 
tripartite goals of investor protection, capital formation, and 
maintaining fair, orderly and efficient markets. This includes 
understanding the needs of BIPOC investors and issuers run or 
owned by minority and women entrepreneurs. As the nation begins 
to recover from the economic devastation caused by the 
coronavirus, it is important to understand how all communities 
are faring to ensure an equitable recovery. If confirmed, I 
will include updates on that work during my engagements with 
Congress.

Q.15. An agency's budget reflects its values and goals. How do 
you plan to allocate and sufficiently resource internal and 
external efforts to advance DEI as part of the agency's annual 
budget process? How will you ensure sufficient financial 
support for the agency-specific diversity, equity, and 
inclusion strategic plan to ensure you are able to meet the 
objectives established under that plan in a reasonable time 
period?

A.15. If confirmed, I will work with the SEC staff, including 
the Director of the Office of Minority and Women Inclusion, to 
understand what budget resources the agency needs to advance 
goals related to diversity, equity and inclusion. Budget 
requests to Congress will include a description of the 
resources needed by the agency to advance all DEI goals.

Q.16. Accurate information about the financial situation of 
public companies is essential for honest securities markets. In 
2002, Congress passed the Sarbanes-Oxley Act of 2002, creating 
the Public Company Accounting Oversight Board (PCAOB) in 
reaction to major corporate accounting fraud, including at 
Enron and WorldCom.
    Please explain your view on the importance of the PCAOB to 
protect investors. Also, will you commit that if you are 
confirmed you will work to strengthen the PCAOB and to ensure 
its professionalism and independence?

A.16. I had the honor of working on the Senate Committee for 
Banking, Housing and Urban Affairs under the leadership of 
Senator Paul Sarbanes, a great public servant we recently lost. 
Sarbanes-Oxley was bipartisan legislation, signed into law by 
President Bush, which created the PCAOB to ensure that audit 
firms are held to high independence standards and are subject 
to effective oversight--two critical weaknesses exposed by the 
Enron and WorldCom failures. If confirmed, I will ensure that 
both the SEC and the PCAOB are fulfilling their missions, as 
envisioned by Congress, to provide that audit firms fulfill 
their gatekeeper function of ensuring that the financial 
disclosures on which our market transparency depends are 
complete, accurate and reliable.

Q.17. The statutory mandate in section 1504 of the Dodd-Frank 
Wall Street Reform and Consumer Protection Act is fundamentally 
about enhancing transparency to promote transparency, 
accountability and to combat corruption. This provision 
required issuers in extractive industries to disclose their 
payments to foreign governments so those governments can be 
held accountable for the money being paid to those governments. 
As Acting Chair Lee observed in opposing the final rule, that 
goal is in keeping with the United States' long history as a 
leader in international efforts to combat corruption, and with 
the SEC's role in anticorruption efforts: enforcing the Foreign 
Corrupt Practices Act, ensuring compliance with anti- money 
laundering rules, and participating in the important work of 
the Financial Action Task Force to combat money laundering and 
terrorist financing.
    The modified rule adopted by the Commission in December 
2020, fell far short of these goals, allowing payment 
information to be aggregated to such a degree that the 
resulting disclosures will obscure information crucial to 
anticorruption efforts and material to investment analysis. The 
rule also contradicted the Commission's own economic analysis. 
As a result, it will severely restrict the transparency and 
anticorruption benefits that the disclosure statute required. 
Will you consider reviewing the 1504 rule to better take into 
account the explicit transparency and accountability goals 
identified by Congress in the statute, and bring it more 
closely into alignment with international anticorruption and 
transparency standards?

A.17. The SEC in December finalized a rule to fulfill its 
congressionally directed mandate under Section 1504 of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act of 
2010. This is after the Congress vacated the original rule with 
a Congressional Review Act challenge in 2017. If confirmed, I 
will take a close look at the updated rule to see if it 
fulfills the anticorruption intended by Congress while also 
providing investors with useful information to guide their 
investment decisions.

Q.18. In recent years, exchange-traded vehicles (ETVs) have 
become increasingly complex. Episodes of market volatility 
highlight those complex features and risks for investors. So 
that investors may better understand the features and potential 
risks of complex ETVs, will the Commission continue its work to 
consider the issues raised by such products, including as 
described in the Joint Statement Regarding Complex Financial 
Products and Retail Investors, which may include ``additional 
obligations for broker-dealers and investment advisers relating 
to complex products, as well as point-of-sale disclosures or 
policies and procedures tailored to the risks of complex 
products'' as discussed in the Joint Statement?

A.18. Investor protection is at the heart of the SEC's mission. 
Disclosures and sales practices and procedures should be 
tailored to the complexity of the product being sold and should 
be mindful of providing needed information especially for 
retail investors. If confirmed, I will work with the Divisions 
of Corporation Finance, Trading and Markets, Investment 
Management, and Economic and Risk Analysis, as well as the 
Office of the Investor Advocate to review the effectiveness of 
existing regulatory requirements and where needed to implement 
new rulemakings, guidance or other policy actions.

Q.19. Sustainable investment focused on environmental, social 
and governance (ESG) matters by some measures now represents 
approximately $17 trillion in assets under management in the 
U.S. Acting Chair Lee has hired a new Senior Policy Advisor on 
Climate and ESG. What other steps can be taken to ensure 
continuing ESG expertise throughout the SEC?

A.19. If confirmed, I commit to building on the work of Acting 
Chair Lee to hire experts who will prioritize providing 
investors with the material information they need to make 
investment decisions, while providing consistent and clear 
reporting obligations for issuers.

Q.20. The Legal Entity Identifier (LEI), an ISO and adopted 
U.S. standard, is a part of 26 U.S. regulations. The LEI's 
origin is rooted in Commodity Futures Trading Commission 
regulations following the Great Recession. The U.S. government, 
however, remains dependent on more than 50 identification 
schemes. More work needs to be done to unify government data.
    Will you support the inclusion of standards, like the LEI, 
in future SEC regulations?

A.20. While serving as Chairman of the CFTC, I oversaw the 
initial adoption of a legal entity identifier regime, which 
helped both the private and public sectors in identifying and 
measuring risk across the financial system. This allowed 
regulators to better protect our markets and assisted internal 
risk management efforts within firms. If confirmed, 
incorporating LEI across rulemakings represents one tool to 
improve risk monitoring while cutting costs for the industry 
and I would seek to support such a standard where appropriate.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                       FROM GARY GENSLER

Q.1. Congressional Oversight--Please provide your philosophy on 
how the SEC under your chairmanship will approach and respond 
to Congressional information requests (both for documentary 
information and oral testimony), if you are confirmed.

A.1. I believe that Congressional oversight is important. While 
Chairman of the CFTC, I testified over 50 times before 
Congress. If confirmed, I am committed to ensuring that the SEC 
is responsive to oversight requests and provides Congress with 
the information that it needs consistent with appropriate law 
and regulation.

Q.2. If confirmed, do you intend to respond to information 
requests differently depending on who is making the 
Congressional information request (whether it's the chair of 
the Congressional committee, the ranking member, or another 
member of Congress)? Please answer ``yes'' or ``no.'' If your 
answer is ``yes,'' please fully explain why you intend to 
respond differently depending on who is making the 
Congressional information request.

A.2. I believe that Congressional oversight is important. While 
Chairman of the CFTC, I testified over 50 times before 
Congress. If confirmed, I am committed to ensuring that SEC is 
responsive to oversight requests and provides Congress with the 
information that it needs consistent with appropriate law and 
regulation.

Q.3. Do you agree that Congress has long played a critical role 
in oversight of the executive branch? Why or why not? Will you 
commit that, if confirmed, you will timely respond to and fully 
comply with all Congressional information requests, including 
but not limited to requests for records, to the SEC? Please 
answer ``yes'' or ``no.'' If your answer is ``no,'' please 
explain why.

A.3. Agencies, including the SEC, should be responsive to the 
public and to Congress. At the same time, the SEC's must carry 
out the constitutional duties assigned to it, including 
pursuing ongoing law enforcement matters or protecting 
confidential supervisory information. If confirmed, I will 
ensure that the SEC is responsive to oversight requests while 
meeting the Commission's enforcement and confidentiality 
obligations, as well as any other appropriate law and 
regulation.

Q.4. Will you commit that, if confirmed, you will make yourself 
and any other SEC employee expeditiously available to provide 
oral testimony (including but not limited to briefings, 
hearings, and transcribed interviews) to the Committee on any 
matter within its jurisdiction, upon the request of either the 
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If 
your answer is ``no,'' please explain why.

A.4. While Chairman of the CFTC, I testified over 50 times 
before Congress. As I said at last week's hearing, I agree to 
appear and testify before any duly constituted committee of 
Congress. If confirmed, I am committed to ensuring that the SEC 
is responsive to requests for hearing testimony consistent with 
appropriate law and regulation.

Q.5. Do you believe that the SEC may assert any privileges or 
other legal justifications to withhold information (whether 
records or oral testimony) from Congress? Please answer ``yes'' 
or ``no.''

A.5. If confirmed, I will consult the agency's legal counsel so 
that the Commission can be responsive to Congress while 
ensuring that the SEC can carry out the statutory duties in 
which it is entrusted.

Q.6. If you answered ``yes'' to Question 5, please list every 
such privilege or other legal justification and provide the 
legal basis for why you believe the SEC may use such privilege 
or legal justification to withhold information from Congress.

A.6. If confirmed, I will consult the agency's legal counsel so 
that the Commission can be responsive to Congress while 
ensuring that the SEC can carry out the statutory duties in 
which it is entrusted.

Q.7. In an effort to be open and transparent with Congress and 
the public, will you commit not to assert any such privilege or 
legal justification against Congress that you listed above? If 
not, why not? If so, please identify all such privileges or 
legal justifications that you will commit to not assert against 
Congress.

A.7. If confirmed, I will consult the agency's legal counsel so 
that the Commission can be responsive to Congress while 
ensuring that the SEC can carry out the statutory duties in 
which it is entrusted.

Q.8. Employee Morale at CFTC--During your tenure as Chairman of 
Commodity Futures Trading Commission (CFTC) staff morale 
plummeted, going from above the median score for morale among 
Federal agencies to being in the bottom quarter of Federal 
agencies for morale. \1\
---------------------------------------------------------------------------
     \1\ Best Places to Work in the Federal Government, https://
bestplacestowork.org/rankings/detail/CT00.
---------------------------------------------------------------------------
    According to an article by Bloomberg, under your tenure the 
CFTC became ``one of the worst places to work among small 
agencies, receiving low marks for work-life balance, pay and 
quality of leadership.'' \2\ In your view, why did morale among 
CFTC employees crater during your tenure as Chairman of the 
CFTC?
---------------------------------------------------------------------------
     \2\ Jennifer Epstein and Benjamin Bain, Biden Taps Gensler as SEC 
Chairman, FTC's Chopra as CFPB Chief, Bloomberg (Jan. 17, 2021), 
https://www.bloomberg.com/news/articles/2021-01-18/biden-taps-gensler-
as-secchairman-ftc-s-chopra-as-cfpb-chief.

A.8. I was honored to work alongside the talented staff at the 
CFTC to implement dozens of statutorily required rulemakings in 
the wake of a financial crisis that cost U.S. investors, 
borrowers, homeowners and taxpayers trillions of dollars and 
wreaked havoc on millions of families, including families of 
employees of the CFTC. Bringing transparency to a $400 trillion 
over-the-counter swaps market during a difficult time for our 
country no doubt was a challenging task, especially for an 
agency that often did not receive budget resources from 
Congress commensurate with the responsibilities with which it 
was entrusted. I am proud of the CFTC staff for their 
dedication and service to our country in the face of these 
---------------------------------------------------------------------------
constraints.

Q.9. Use of Personal Email for Government Business--In a CFTC 
inspector general report entitled ``Review of the Commodity 
Futures Trading Commission's Oversight and Regulation of MF 
Global, Inc.'' the inspector general found that you 
consistently used your personal email to conduct government 
business from the very beginning of your tenure as CFTC 
Commissioner in 2009 until the collapse of MF Global, Inc. \3\
---------------------------------------------------------------------------
     \3\ Commodity Futures Trading Commission's Office of the Inspector 
General, Review of the Commodity Futures Trading Commission's Oversight 
and Regulation of MF Global, Inc (May 16, 2013) at v, https://
www.cftc.gov/sites/default/files/idc/groups/public/@aboutcftc/
documents/file/oigregulationmfglobal.pdf.
---------------------------------------------------------------------------
    If confirmed, will you commit to not using your personal 
email to conduct government business? If not, why not?

A.9. If confirmed, I will follow all legal and regulatory 
requirements related to email correspondence and related 
matters, including the Federal Records Act. The CFTC Inspector 
General looked at the issue and concluded that once the issue 
was flagged, this practice was ceased.

Q.10. Materiality--In your confirmation hearing, you confirmed 
to Senator Shelby that a corporation is owned by its 
shareholders, and management should work for the shareholders.
    Do you agree that directors owe a fiduciary duty to act in 
the best interests of shareholders?
    Do you agree that securities disclosure is meant to inform 
investment decisions of shareholders and potential investors 
and not for the purposes of noninvestor ``stakeholders''?
    As SEC Chairman, will you refrain from enacting any 
securities disclosures that will primarily advance the 
interests of noninvestment stakeholders?

A.10. If confirmed, materiality will guide my decisions as SEC 
Chair related to disclosure requirements under the Federal 
securities laws. The Supreme Court has held that information is 
material if there is a ``a substantial likelihood that the 
disclosure of the omitted fact would have been viewed by the 
reasonable investor as having significantly altered the `total 
mix' of information made available.'' Fiduciary duties of 
corporate directors is generally a matter of state law. For 
example, as I understand it, the Delaware courts have defined 
it as a duty owed to the corporation and its shareholders. If 
confirmed, I will follow the law in my consideration of 
policies that come before the Commission related to disclosure.

Q.11. In 2013, SEC Chairman Mary Jo White criticized attempts 
to use the SEC disclosure requirements for ``exerting societal 
pressure on companies to change behavior, rather than to 
disclose financial information that primarily informs 
investment decisions.'' \4\ Do you agree with her concern?
---------------------------------------------------------------------------
     \4\ https://www.sec.gov/news/speech/spch100113mjw

A.11. If confirmed, materiality will guide all my decisions as 
SEC Chair. The Supreme Court has held that information is 
material if there is a ``a substantial likelihood that the 
disclosure of the omitted fact would have been viewed by the 
reasonable investor as having significantly altered the `total 
mix' of information made available.'' If confirmed, I will 
follow the law in consideration of policies that come before 
---------------------------------------------------------------------------
the Commission related to disclosure.

Q.12. U.S. Supreme Court Justice Thurgood Marshall in TSC 
Industries vs. Northway, 426 U.S. 438 (1976), said that ``if 
the standard of materiality is unnecessarily low . . . 
management's fear of exposing itself to substantial liability 
may cause it simply to bury the shareholders in an avalanche of 
trivial information--a result that is hardly conducive to 
informed decisionmaking.'' Do you agree with Justice Marshall 
that a materiality standard that is ``unnecessarily low'' may 
bury ``shareholders in an avalanche of trivial information''?

A.12. If confirmed, materiality will guide all my decisions as 
SEC Chair. The Supreme Court has held that information is 
material if there is a ``a substantial likelihood that the 
disclosure of the omitted fact would have been viewed by the 
reasonable investor as having significantly altered the `total 
mix' of information made available.'' If confirmed, I will 
follow the law in consideration of policies that come before 
the Commission related to disclosure.

Q.13. Public companies and capital formation--Do you agree that 
unnecessary regulatory and litigation costs can deter companies 
from going public or staying public?

A.13. Unnecessary costs should be eliminated where possible. 
Whether a cost is unnecessary can depend on an individualized 
perspective. The total mix of factors influencing whether a 
company goes or remains public is complex and unique for each 
firm.

Q.14. If confirmed, will you work to reduce any unnecessary 
regulatory costs on public companies?

A.14. If confirmed, I will work with fellow Commissioners and 
SEC staff to eliminate unnecessary costs where possible. 
Whether a cost is unnecessary can depend on an individualized 
perspective. The total mix of factors influencing whether a 
company goes or remains public is complex and unique for each 
firm.

Q.15. If confirmed, will you work to reduce any unnecessary 
regulatory costs on private companies?

A.15. If confirmed, I will work with fellow Commissioners and 
SEC staff to eliminate unnecessary costs where possible. 
Whether a cost is unnecessary can depend on an individualized 
perspective. The total mix of factors influencing whether a 
company goes or remains public is complex and unique for each 
firm.

Q.16. Is it possible to have both robust public capital markets 
and robust private capital markets at the same time?

A.16. Yes.

Q.17. Are you concerned that capital formation is 
disproportionately concentrated within a select few geographic 
areas? If so, what steps would you undertake to promote capital 
formation in other geographic areas?

A.17. If confirmed, I will work to advance the mission of the 
SEC to protect investors; maintain fair, orderly, and efficient 
markets; and facilitate capital formation. Working through the 
Office of the Advocate for Small Business Capital Formation, we 
can take steps to raise awareness of these options, 
particularly in those regions and for those companies that are 
at greatest need.

Q.18. Under former SEC Chairman Clayton, the SEC revised rules 
to enhance capital formation, particularly for small and 
medium-sized companies. He reformed offering exemptions, 
shortened the period between integrated offerings, and expanded 
the definition of accredited investor. Will you commit to 
keeping these rules in place?

A.18. Capital formation and investor protection are at the 
heart of the mission of the SEC. Markets- and technology-are 
always changing. Our rules have to change along with them. If 
confirmed, I will holistically review capital formation rules 
related to small and medium-sized companies and make 
individualized determinations about whether to preserve, expand 
or revise such rules.

Q.19. Can you commit to exploring how to improve liquidity for 
the more thinly traded stocks of smaller companies?

A.19. The mission of the SEC includes a mandate to maintain 
fair, orderly and efficient markets. If confirmed, I will work 
every day to advance this mission, including through work to 
improve liquidity for thinly traded stocks of smaller 
companies.

Q.20. Can you commit to adopting rules to reduce the regulatory 
burden relating to providing research coverage of smaller and 
emerging growth companies?

A.20. The mission of the SEC includes a mandate to maintain 
fair, orderly and efficient markets. If confirmed, I will work 
every day to advance this mission, including through work to 
improve research coverage of smaller and emerging growth 
companies.

Q.21. Can you commit to create a ``finders'' regime to help 
small businesses find capital?

A.21. If confirmed, I will take responsibility for the 
rulemaking calendar including a review of the SEC's proposed 
Exemptive Order issued last year that would exempt certain 
``finders'' from broker registration requirements. I will work 
with the Commissioners and staff to determine whether further 
action is appropriate to advance the SEC's mission to protect 
investors, maintain fair, orderly, and efficient markets, and 
facilitate capital formation.

Q.22. On December 22, 2020, then-SEC Chairman Jay Clayton wrote 
to the SEC's Asset Management Advisory Committee (AMAC) 
regarding ``Thoughts on Future Progress of Private Investment 
Subcommittee.'' \5\ His letter outlined ways in which the SEC 
could allow more retail investors to access private equity. If 
confirmed, do you promise to thoroughly evaluate all of the 
options outlined in this letter?
---------------------------------------------------------------------------
     \5\ www.sec.gov/files/clayton-amac-letter-2020-12-22.pdf

A.22. If confirmed, I look forward to more thoroughly 
evaluating the letter and the various options outlined in it. I 
also welcome the opportunity to engage with your staff and you 
---------------------------------------------------------------------------
on investment opportunities available to retail investors.

Q.23. In a letter to the SEC Asset Management Advisory 
Committee dated December 22, 2020, then-Chairman Jay Clayton 
suggested that retail investors could have a relatively modest 
exposure to private equity and venture capital as part of a 
diversified target date retirement fund that is managed by a 
qualified registered investment adviser and has with a target 
date that is 20 years or more in the future. Do you have any 
objections to that suggestion?

A.23. If confirmed, I look forward to more thoroughly 
evaluating the letter and the various options outlined in it. 
If confirmed, I would want to work with industry participants, 
retail investors, and SEC Commissioners and staff in 
understanding the merits of this particular suggestion. As I 
discussed in the hearing last week, I will be guided by our 
statutes and the need to ensure that capital markets are 
serving working families.

Q.24. If confirmed, will you commit to continuing SEC efforts 
to explore the use of Business Development Companies (BDCs) and 
closed-end funds to facilitate retail exposure to private 
investments?

A.24. If confirmed, I look forward to learning about the 
Commission's activities and the views of the staff regarding 
investments in Business Development Companies and closed-end 
funds. More broadly, if confirmed I will consider new tools and 
strategies to support retail investors while ensuring that 
retail investors are protected and able to make suitable 
investments for themselves.

Q.25. Market structure--Can you commit to a robust review of 
the rules governing fixed income and Treasury market structure 
and, where appropriate, making rule changes to those rules?

A.25. If confirmed, I look forward to doing a robust review of 
rules on the fixed income and Treasury markets alongside the 
U.S. Treasury and Federal Reserve. I will work with fellow 
Commissioners and agency staff to continue the work begun by 
the SEC last year when it issued a rule proposal on ATS. It is 
important that our rules keep pace with changing technology and 
market events.

Q.26. Can you commit to evaluate how to best promote 
competition between national securities exchanges, alternative 
trading systems (ATS), market makers, and broker-dealers 
engaged in internalization to benefit investors?

A.26. Markets--and technology--are constantly changing. The 
overall U.S. equity market is a critical national asset that 
provides a vital mechanism for capital formation for firms and 
individuals; investment opportunities for Main Street; and 
economic growth. If confirmed, I will work with fellow 
Commissioners and SEC staff along with hearing from market 
participants on how best to promote transparency and 
competition in the equity markets. If confirmed, I would work 
with fellow Commissioners and SEC staff to examine market 
structure issues holistically to best maintain fair, orderly 
and efficient markets as many of the technical and economic 
issues of markets are highly interrelated.

Q.27. Harmonization of CFTC and SEC regulations--If confirmed, 
can you commit to work to harmonize SEC and Commodity Futures 
Trading Commission (CFTC) rules to implement Title VII of the 
Dodd-Frank Act, to the extent appropriate?

A.27. As a former Chair of the CFTC, I spent a great deal of 
time working to finalize Title VII rules at that agency. I 
agree that harmonizing Title VII rules between the CFTC and SEC 
is an important goal, and, if confirmed, I will work towards 
the goal of harmonization, where appropriate.

Q.28. Are there any other areas where there may be overlap of 
SEC and CFTC regulations on market participants (e.g., between 
commodity pools and registered investment companies)? If so, do 
you have any recommendations for further harmonization?

A.28. As I know firsthand from my time as Chair of the CFTC 
that the SEC and CFTC share jurisdiction over the swaps market 
and that harmonization is an important goal, where appropriate. 
There are a number of market participants that are regulated by 
both Commissions, with many market participants trading in the 
futures, swaps and securities markets. It is important that the 
CFTC and SEC have strong communication and coordination to 
ensure that our regulations align where appropriate in a way 
that provides strong investor protection, fair, orderly and 
efficient markets, and facilitation of capital formation.

Q.29. Money market funds--If confirmed, will you protect the 
SEC's jurisdiction to regulate money market funds?

A.29. Yes.

Q.30. If confirmed, will you ensure new SEC regulations for 
money market funds, if any, will be narrowly tailored and will 
not eliminate or significantly reduce the viability of money 
market funds as an investment?

A.30. Money market mutual funds are an important part of our 
financial ecosystem with nearly $5 trillion in investments. The 
regulatory framework governing such funds should ensure access 
to investors for this important product while also ensuring 
stability in our financial system. If confirmed, I will study 
SEC regulations adopted in the last decade to determine if they 
are working towards these goals.

Q.31. As part of any further changes to the rules regulating 
money market funds, will you commit to consider allowing a 
stable net asset value for institutional prime and 
institutional municipal money market funds?

A.31. If confirmed, I will seek the advice of staff, counsel 
and fellow SEC Commissioners on this subject.

Q.32. Systemic risk--I want to discuss guardrails on 
Systemically Important Financial Institution (SIFI) 
designations by the Financial Stability Oversight Council 
(FSOC).
    Should SIFI designations allow for due process, including a 
clear process for both designation and de-designation?
    Should they incorporate robust economic cost-benefit 
analysis?
    Should they first explore an activities-based approach to 
regulating a systemic risk, before considering a firm-specific 
SIFI designation?

A.32. FSOC designations should follow the statute as set 
forward in the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010 and any guidance or rulemakings issued 
therein.
    As I understand it, the FSOC process allows for multiple 
avenues for input for nonbank financial firms both during the 
multistage designation process and via established processes to 
de-designate, as evidenced by de-designations in the recent 
past. In making designation decisions, economic analysis is an 
important tool to consider. Further, Dodd-Frank provides for 
both entity designations and activities-based designations, as 
Congress recognized that both approaches are sometimes useful. 
Depending on the unique circumstance, either or both approaches 
may be warranted.

Q.33. Under what conditions, if any, would you support the FSOC 
or the Financial Stability Board (FSB) designating mutual 
funds, exchange-traded funds (ETFs), and money market funds as 
non-bank SIFIs?

A.33. If confirmed, my views on non-bank SIFI designation will 
be grounded in the legal requirements of the statute and the 
public interest in preventing systemic risk.

Q.34. Asset managers provide investment advice to clients. They 
do not bear the risk of investments made by their clients. 
Asset managers do not own the assets that they manage. Should 
asset managers be designated by the FSOC or the FSB as non-bank 
SIFIs? If so, under what conditions?

A.34. If confirmed, my views on non-bank SIFI designation will 
be grounded in the legal requirements of our laws and the 
public interest in preventing systemic risk.

Q.35. Under what conditions, if any, would you support work on 
climate change and sustainability by the FSOC, FSB, or 
International Organization of Securities Commissions (IOSCO)?

A.35. Collaboration with international regulators through the 
FSB and IOSCO can contribute to the SEC's three-part mission. 
International standards can help ensure investor access to 
consistent, comparable data that they can efficiently integrate 
into their investment processes. At the same time, it is 
important that any standards for market participants integrate 
the unique features of our domestic market, legal and 
regulatory infrastructure and the needs of local investors and 
issuers.

Q.36. Regulation Best Interest--What protection is provided by 
a fiduciary duty that is not provided by Regulation Best 
Interest?

A.36. When investors turn to financial professionals for advice 
and recommendations about their investments, advice that may be 
critical to their retirement security or their ability to fund 
a child's college education, they deserve advice that serves 
their best interests. If confirmed, I will work with my 
colleagues and the Commission staff to ensure that the 
Regulation Best Interest rule, as interpreted and enforced by 
the SEC, lives up to its best interest label.

Q.37. Do you believe that investors should have the choice of 
commission-based transaction investment advice?

A.37. I believe that investors should have access to a range of 
quality options when seeking investment advice and that 
regulations applied to providers of that advice must protect 
against self-dealing and mitigate conflicts of interest.

Q.38. In your book The Great Mutual Fund Trap, you were 
critical of asset-based fees charged by financial planners. In 
an era of low or no-commission brokerage accounts, do you still 
agree that an asset-based fee can be expensive--``a fifteen-
yard penalty for piling on'' as you described in your book?

A.38. Much has changed in the last 20 years since I coauthored 
the book. Investors should work directly with their financial 
planners to determine fee structures appropriate for their 
needs and objectives.

Q.39. Blockchain/Bitcoin/Digital Ledger Technology--Do you 
believe a cryptocurrency can transform from a ``securities 
token'' to a ``utility token''?

A.39. The securities laws define a security to include 
investment contracts. The Supreme Court has defined such 
investment contracts to include arrangements in which ``a 
person invests his money in a common enterprise and is led to 
expect profits solely from the efforts of the promoter or a 
third party.'' If confirmed, I will review questions of whether 
a crypto-currency is a security in light of the definition laid 
out by the Supreme Court.

Q.40. As suggested by SEC Commissioner Hester Peirce, would you 
consider whether to pursue an experimental safe harbor for a 
digital token offering?

A.40. If confirmed by the Senate, I look forward to engaging 
with Commissioner Peirce, other Commissioners and SEC staff on 
this issue.

Q.41. What role should blockchain and digital ledger technology 
play in clearance and settlement of securities transactions and 
payments?

A.41. I have spoken before of the potential of blockchain 
technology to serve as a catalyst for change. If confirmed, I 
would look forward to fostering an environment that is 
supportive of financial innovation while also ensuring that 
investors are protected, markets are fair, orderly and 
efficient, and capital formation is facilitated.

Q.42. Rulemaking best practices--The SEC has a statutory duty 
to adequately consider competition, efficiency, and capital 
formation in rulemakings. If confirmed, how will you enforce 
this requirement?

A.42. If confirmed, I will endeavor to fulfill the tripartite 
mission of the SEC to protect investors; maintain fair, 
orderly, and efficient markets; and facilitate capital 
formation along with following the statute to consider investor 
protection, competition, efficiency, and capital formation in 
rulemakings.

Q.43. Do you agree that policymaking should be done through 
notice and comment rulemakings in accordance with the 
Administrative Procedure Act, not through guidance, no-action 
letters, and enforcement actions?

A.43. I understand the Commission's statutory obligations under 
the Administrative Procedure Act. I also believe that guidance 
and no-action letters can play an important role in getting 
timely information out to market participants that provides 
clarity and reduces compliance costs.

Q.44. Do you agree with FTC Commissioner Rohit Chopra's 
testimony at your joint nomination hearing that guidance issued 
by Federal agencies should not impose obligations on regulated 
parties?

A.44. I understand the Commission's statutory obligations under 
the Administrative Procedure Act. I also believe that guidance 
and no-action letters can play an important role in getting 
timely information out to market participants that provides 
clarity and reduces compliance costs.

Q.45. In June 2020, the U.S. Court of Appeals for the D.C. 
Circuit struck down the SEC's fee cap pilot project. If 
confirmed, can you commit to developing guardrails that govern 
the SEC's use of pilot projects to prevent a similar outcome in 
the future?

A.45. If confirmed, I look forward to discussing the subject 
with SEC staff and Commissioners. I also look forward to being 
briefed by the Office of General Counsel on this case, how it 
progressed through the legal system, and the implications of 
the court's opinion for future SEC pilot programs.

Q.46. Enforcement--In Christopher v. SmithKline Beecham Corp., 
the U.S. Supreme Court reiterated that ``agencies should 
provide regulated parties fair warning of the conduct a 
regulation prohibits or requirements.'' 567 U.S. 142 (2012) 
(internal quotation marks, brackets, and citation omitted). As 
SEC Chairman, will you comply with this principle?

A.46. If confirmed, I will abide by all binding precedent 
consistent with the advice of the Office of the General Counsel 
at the Commission.

Q.47. Do you agree that the economic effects of corporate 
penalties often fall on shareholders instead of punishing those 
who are actually responsible for corporate misdeeds?

A.47. SEC enforcement actions can include penalties against a 
corporate entity, sanctions against individuals employed by an 
entity, or measures to prevent certain behaviors and practices. 
All of these tools should be available to our civil enforcement 
agencies to be deployed based on the facts and the law of each 
case.

Q.48. Will you commit to aggressive enforcement against 
microcap fraud?

A.48. If confirmed, I will endeavor to enforce against all 
fraud subject to SEC resource constraints

Q.49. Will you commit to aggressive enforcement against brokers 
and investment advisers who steal their clients' funds?

A.49. If confirmed, I will endeavor to work with SEC staff to 
enforce against all fraud subject to SEC resource constraints.

Q.50. Do you believe in a ``broken windows'' theory of 
enforcement, where all technical violations of SEC rules and 
regulations automatically trigger an enforcement action?

A.50. As Chair of the CFTC, I had the honor to lead a civil law 
enforcement agency. We endeavored every day to bring the facts 
and the law together in front of courts and hold people 
accountable. I believe it is essential that our regulations be 
backed by enforcement that is tough but fair. If confirmed, in 
choosing where to focus our limited enforcement resources, I 
would prioritize those actions that can be most effective in 
protecting the integrity of our capital markets and in ensuring 
that our most vulnerable retail investors are not taken 
advantage of. In making those decisions, I would work closely 
with, and rely heavily on, the judgement of the agency's very 
capable professional examinations and enforcement staff.

Q.51. Can you promise to work with other financial regulators 
to create a single bad actor database for enforcement actions?

A.51. If confirmed, I look forward to working with other 
financial regulators and self-regulatory organizations such as 
FINRA on this matter.

Q.52. Can you commit to reviewing the Rule 10b5-1 safe harbor 
for sales by insiders?

A.52. If confirmed, I look forward to working with fellow 
Commissioners and SEC staff to consider modernizing this 
provision.

Q.53. Public Company Accounting Oversight Board (PCAOB)--By 
statute (15 U.S.C. 7211(e)(1)), PCAOB members must be 
``appointed from among prominent individuals of integrity and 
reputation who have a demonstrated commitment to the interests 
of investors and the public, and an understanding of the 
responsibilities for and nature of the financial disclosures 
required of issuers, brokers, and dealers under the securities 
laws and the obligations of accountants with respect to the 
preparation and issuance of audit reports with respect to such 
disclosures.'' If confirmed, will you ensure that all 
appointments to the PCAOB Board clearly have these 
qualifications?

A.53. If confirmed, I will follow all applicable laws in 
appointing persons to the PCAOB Board.

Q.54. Traditionally, the SEC has taken recommendations from all 
of the SEC Commissioners on appointments to the Public Company 
Accounting Oversight Board (PCAOB). This helps ensure that the 
PCAOB works by consensus and that appointees have the relevant 
experience necessary to succeed as a PCAOB member. If 
confirmed, do you promise to take this approach for all 
appointments to the PCAOB Board?

A.54. If confirmed, I would consult with fellow Commissioners 
with regard to potential appointments to the PCAOB.

Q.55. Small Businesses--The Regulatory Flexibility Act (RFA) 
requires Federal agencies, including the SEC, to consider the 
effects of rules on ``small entities'' and consider whether 
alternative approaches could minimize the harm to small 
entities. The SEC has nine different definitions of the term 
``small entity'' to cover different types of SEC-regulated 
entities. These definitions generally rely on revenue-based 
dollar thresholds. The SEC last updated six of these 
definitions in 1982. The SEC updated one definition in 1986, 
and two definitions in 1998. For example, while the SEC 
definition of ``small entity'' for an investment adviser is 
having less than $25 million of assets under management (AUM), 
the Dodd-Frank Act raised the minimum amount of AUM to $100 
million in order to register with the SEC. Due to these 
outdated definitions, the SEC routinely argues that its rules 
do not impact small entities under the RFA. If confirmed, will 
you update these definitions, so that the SEC's impact analysis 
on small business in rulemaking is meaningful?

A.55. If confirmed, as part of the process of updating existing 
regulations, I believe it is appropriate to consider any 
applicable exemptions to assess their impact on market 
participants, including both issuers and investors.

Q.56. If confirmed, will you promise to tailor rules and 
compliance dates for small businesses, where appropriate?

A.56. If confirmed, when designing regulations, I believe it is 
appropriate to consider the risks posed by regulated entities 
on the basis of their size and complexity.

Q.57. SEC Management Practices--If confirmed, will you continue 
to provide SEC Commissioners with at least 30 days to review 
drafts of nonenforcement matters, as is current SEC practice?

A.57. If confirmed, I will provide fellow Commissioners with a 
reasonable opportunity to review drafts of nonenforcement 
matters. Commissioners may require more or less than 30 days, 
depending on the facts and circumstances of the matter being 
considered.

Q.58. If confirmed, will you continue to have weekly one-on-one 
meetings with each SEC Commissioner, as was practice under 
Chair Mary Jo White and Chairman Jay Clayton?

A.58. If confirmed, I look forward to working collaboratively 
with my fellow Commissioners and meeting with them frequently 
to maintain productive relationships and advance the work of 
the Commission.

Q.59. What approach will you take to finalizing the long-term 
lease for the SEC headquarters office?

A.59. My understanding is that the matter is the subject of 
confidential negotiations between the SEC and GSA, who are 
reviewing various potential real estate options. If confirmed, 
I will work with the SEC staff and GSA to get up to speed on 
this and to finalize the lease.

Q.60. Short Selling--Do you believe that short sellers 
generally contribute to price discovery in the marketplace, and 
also help reduce fraud?

A.60. Short selling has long been a fundamental part of 
markets, contributing to liquidity and the price discovery of 
securities and other financial assets. Short sellers also can 
identify potential problems within market participants. It was 
a short seller, for example, who first raised questions about 
Enron's accounting. There is also a potential, unfortunately, 
for abuses related to short selling, as there is with any 
market transaction.

Q.61. If confirmed, do you promise to not take any action that 
would make short-selling either illegal or impractical?

A.61. If confirmed, my focus with regard to short-selling would 
be on addressing fraud, manipulation and transparency in the 
furtherance of the SEC mission to protect investors, maintain 
fair, orderly, and efficient markets and facilitate capital 
formation.

Q.62. Consolidated Audit Trail--As the SEC continues to 
implement the Consolidated Audit Trail (CAT), will you commit 
that the CAT will not contain any personally identifiable 
information (PII) of investors?

A.62. I understand that the SEC under Chairman Clayton adopted 
rules to restrict the personally identifiable information in 
the Consolidated Audit Trail, namely restricting the date of 
birth and redaction of Social Security numbers, individual tax 
identification numbers, and account numbers. If confirmed I'd 
work with the SEC commissioners and staff to examine remaining 
issues, particularly the rule proposed on a unanimous basis 
last summer that pertains to data security.

Q.63. If you cannot commit to the exclusion of PII from the CAT 
database, will you commit the SEC to notifying each person 
whose PII is disclosed in the event of a CAT data breach?

A.63. Data security is of the utmost importance in the 
implementation of the CAT and I will continue to work with the 
SEC commissioners and staff to work through outstanding issues 
related to data security.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
               SENATOR MENENDEZ FROM GARY GENSLER

Q.1. Section 13(d) of the Securities Exchange Act of 1934 
requires investors who become the beneficial owners of more 
than five percent of an issuer's equity securities to report 
certain identifying information to the SEC. But if undisclosed 
or disclosed without sufficient information, such ownership 
stakes could undermine the security, transparency, and fairness 
of our capital markets.
    How do you believe the SEC should monitor equity markets to 
ensure that foreign investors are not accumulating significant 
shares in public companies, especially in the media and 
technology sectors, without filing the requisite disclosures?

A.1. The Commission has a number of mechanisms to monitor 
investors', including foreign investors', acquisition of 
significant ownership of public company stock. I believe that 
transparency is essential to well-functioning capital markets 
and, if confirmed, will work to ensure compliance with SEC 
regulations to promote market transparency.

Q.2. How would you propose to strengthen SEC enforcement in 
this area?

A.2. As Chair of the CFTC, I was honored to lead a civil law 
enforcement agency which endeavored every day to bring the 
facts and the law together in front of courts and held people 
accountable. If confirmed, I will bring this same commitment to 
accountability to the SEC.

Q.3. Section 956 of Dodd-Frank requires the OCC, the Federal 
Reserve, FDIC, NCUA, FHFA, and the SEC to jointly propose a 
rule to prevent executive compensation plans that encourage 
excessive risk in our financial system and threaten a repeat 
the events of the 2008 crisis. That rule is now 10 years 
overdue.
    If confirmed, will you make it a priority to finish the 
work of Dodd-Frank and finalize this rulemaking?

A.3. If confirmed, I will work with fellow commissioners, SEC 
staff and counterparts at other financial regulators to 
complete all rulemakings directed by Congress. While serving as 
the Chairman of the CFTC, we were able to finalize our 
congressionally-directed rulemakings related to Title VII in a 
timely and often bipartisan manner. If confirmed, I will 
consult with my counterparts to move forward on the joint 
mandates given to us by statute to issue a rule addressing 
compensation plans that encourage excessive risk in our 
financial system.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
                       FROM GARY GENSLER

Q.1. Oversight and Enforcement--How do you plan to approach the 
oversight role at the SEC?

A.1. As Chair of the CFTC, I had the honor to lead a civil law 
enforcement agency. We endeavored every day to bring the facts 
and the law together in front of courts and hold people 
accountable. I believe it is essential that our regulations be 
backed by enforcement that is tough but fair. If confirmed, in 
choosing where to focus our limited enforcement resources, I 
would prioritize those actions that can be most effective in 
protecting the integrity of our capital markets and in ensuring 
that our most vulnerable retail investors are not taken 
advantage of. In making those decisions, I would work closely 
with, and rely heavily on, the judgment of the agency's very 
capable professional examinations and enforcement staff.

Q.2. Investment Opportunities for Individuals and Investments 
Outside of Traditional Hubs--What are your views on the 
changing volume and size of IPOs? Are you concerned about 
access for individual investors and retirement savers? Does 
this shift result in declining opportunity for average 
Americans seeing the benefits of companies growing and doing 
well?

A.2. SEC rules encourage a vibrant environment where companies 
can raise money in both private and public markets, as 
appropriate for their particular needs and consistent with 
investor protections. Changes in markets, technology, and 
capital formation rules may alter the mix of public and private 
capital formation over time. If confirmed, I look forward to 
working with fellow commissioners and SEC staff, including the 
Investor Advocate and Office of the Advocate for Small Business 
Capital Formation, to continue to evaluate how to best foster 
both public and private forms of capital formation while 
protecting investors and maintaining fair, orderly and 
efficient markets.

Q.3. What impact does this have on rural America? Both on 
individuals and on the investment of dollars in the middle of 
the country?

A.3. If confirmed, I will work to advance the mission of the 
SEC to protect investors; maintain fair, orderly, and efficient 
markets; and facilitate capital formation. Working through the 
Office of the Advocate for Small Business Capital Formation, we 
can take steps to raise awareness of these options, 
particularly in those regions and for those companies that are 
at greatest need.

Q.4. LIBOR Transition--I have been hearing from businesses, 
borrowers, and other participants in the marketplace concerning 
existing contracts with LIBOR written into their terms but that 
extend beyond when LIBOR will be published, including beyond 
the Fed's extended timeline.
    Do you think the parties to these contracts would benefit 
from the certainty from Congress on these contracts moving 
forward?

A.4. As I understand it, the transition to a new benchmark rate 
away from LIBOR is being led by the Federal Reserve Board and 
New York Federal Reserve Bank in consultation with other 
financial regulators, including the SEC. Many of the financial 
institutions that are affected by the transition are regulated 
by the SEC along with other regulators, including the Federal 
Reserve. If confirmed, I look forward to working with my fellow 
regulators to assist this transition and plan to engage with 
the Federal Reserve Board and New York Federal Reserve Bank to 
see what the SEC can do to facilitate the transition broadly 
across the financial sector.
    I defer to Congress on whether new legislation should be 
enacted to support that transition, however, if confirmed, I 
would have the SEC staff provide technical assistance on any 
such draft legislation as desired.

Q.5. Remaining Dodd-Frank Rulemakings--The SEC still has a 
number of outstanding Dodd-Frank Rulemakings, some proposed and 
some that haven't made it that far.
    Do you plan to prioritize outstanding rulemakings?

A.5. If confirmed, I will work with fellow commissioners and 
SEC staff to complete all rulemakings directed by Congress. 
While serving as the Chairman of the CFTC, we were able to 
finalize our statutorily directed rulemakings related to Title 
VII in a timely and often bipartisan manner.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                       FROM GARY GENSLER

Q.1. Earlier this year, I sent a letter to Acting SEC Chair 
Alison Herren Lee regarding the recent market volatility 
related to huge swings in the price of GameStop's shares. \1\ 
In my letter, I asked the SEC for more information about the 
dramatic share price swings and whether they represented a 
``fair, orderly, and efficient'' market function. \2\ In a 
letter last month, the Commission stated that the events are 
still being analyzed, but that the SEC staff is ``diligently 
examining the causes of the recent dramatic shifts.'' \3\
---------------------------------------------------------------------------
     \1\ Office of Senator Warren, ``NEW THIS AM: Warren Calls on the 
SEC to Address Stock Market Gamesmanship Amid Volatile GameStop 
Trades,'' press release, January 29, 2021, https://
www.warren.senate.gov/newsroom/pressreleases/new-this-am-warren-calls-
on-the-sec-to-address-stock-market-gamesmanship-amid-volatile-
gamestoptrades; Letter from Senator Warren to Securities and Exchange 
Commission Acting Chair Alison Herren Lee, January 29, 2021, https://
www.warren.senate.gov/imo/media/doc/
01.29.2021%20Letter%20from%20Senator%20Warren%20to%20Acting%20Chair%20Le
e.pdf.
     \2\ Id.
     \3\ Letter from Securities and Exchange Commission Acting Chair 
Alison Herren Lee to Senator Warren, February 25, 2021.
---------------------------------------------------------------------------
    The SEC response also noted that the full implementation of 
the Consolidated Audit Trail (CAT) should be completed in 2022. 
The CAT would be a real-time tracking system to enhance 
regulators' efforts to oversee U.S. markets by collecting data 
about securities quotes and orders and allow the SEC to 
understand trading practices. Without the CAT and other tools 
to more quickly analyze trading data, the SEC was unnecessarily 
delayed in reporting on what caused the May 2010 Flash Crash to 
U.S. markets. \4\ Federal regulators took seven months to 
analyze and publicly report the causes of the Flash Crash, and 
it took an additional 5 years to analyze and publicly report 
that a London-based trader played a significant role in the 
crash. \5\
---------------------------------------------------------------------------
     \4\ Reuters, ``Factbox: After the Flash Crash, Changes to U.S. 
Markets'', Jonathan Spicer, September 1, 2011, https://www.reuters.com/
article/us-financial-regulation-algos-factbox/factbox-after-the-flash-
crash-changes-to-us-markets-idUSTRE7806QS20110901.
     \5\ Reuters, ``SEC Urges Completion of Long-Delayed Trading 
Database'', John McCrank, August 27, 2018, https://www.reuters.com/
article/us-usa-stocks-regulation-cat/sec-urges-completion-of-long-
delayed-tradingdatabase-idUSKCN1LC2FA.
---------------------------------------------------------------------------
    What are the risks to the market if the SEC does not have 
fully implemented tools to quickly, efficiently, and accurately 
track information about trades in the event of another Flash 
Crash?

A.1. The CAT, once fully up and running, will be a valuable 
tool for the SEC to help maintain fair, orderly, and efficient 
markets. The Flash Crash of 2010 and recent market turmoil 
highlight the need for accurate and timely market data. The 
absence of tools to quickly, efficiently, and accurately track 
information about trades could undermine the Commission's 
ability to assess and respond to market events in a timely 
manner.'' I share the commitment of former SEC chairs in both 
Republican and Democratic administrations to make sure the CAT 
is fully implemented. I also understand that the CAT is a 
complex project involving multiple stakeholders. If confirmed, 
I will work with my fellow Commissioners, SEC staff and market 
participants to move the development of the CAT forward while 
working to ensure the security and confidentiality of 
information collected.

Q.2. Last year, I introduced S. 2155, the Stop Wall Street 
Looting Act of 2019, to reform the private equity industry and 
end abusive leveraged buyouts. \6\ Private equity transactions 
are fueled by risky loans that are immediately securitized and 
sold. \7\ A provision in my bill would help protect the economy 
from risks stemming from excessive debt imposed on private 
equity firms' target companies. It would require arrangers of 
corporate loan securitizations to retain risk by clarifying 
that managers of collateralized debt obligations are subject to 
risk retention requirements established in the Dodd-Frank Wall 
Street Reform and Consumer Protection Act. \8\
---------------------------------------------------------------------------
     \6\ Office of Senator Warren, ``Warren, Baldwin, Brown, Pocan, 
Jayapal, Colleagues Unveil Bold Legislation to Fundamentally Reform the 
Private Equity Industry,'' July 18, 2019, https://
www.warren.senate.gov/newsroom/press-releases/warren-baldwin-brown-
pocan-jayapal-colleaguesunveil-bold-legislation-to-fundamentally-
reform-the-private-equity-industry.
     \7\ Washington Post, ``The Shadow Banks Are Back With Another Big 
Bad Credit Bubble'', Steven Pearlstein, May 31, 2019, https://
www.washingtonpost.com/business/economy/the-shadow-banks-are-back-with-
another-big-badcredit-bubble/2019/05/31/a05184de-817a-11e9-95a9-
e2c830afe24f-story.html.
     \8\ Securities and Exchange Commission, ``Asset-Backed 
Securities,'' October 23, 2014, https://www.sec.gov/spotlight/dodd-
frank/assetbackedsecurities.shtml.
---------------------------------------------------------------------------
    How, if at all, you would you mitigate risky corporate 
lending and the ability of lenders to spread irresponsible 
private equity debt across financial institutions? How would 
you ensure that regulators have the appropriate information to 
assess the exposure of financial markets to leveraged loans?

A.2. If confirmed, I look forward to working with other members 
of the Financial Stability Oversight Council on leveraged 
lending, particularly exposures in the non-bank sector where 
information is less readily available. In addition, I look 
forward to working with my fellow Commissioners and SEC staff, 
if confirmed, to examine asset-back security rules in light of 
recent market developments, including in relation to 
securitization of leveraged loans and loan portfolios.

Q.3. In September, I wrote a letter to then-Chair Clayton 
regarding troubling reports of inflated bond ratings and the 
perverse incentives within the bond rating industry and urged 
the SEC to take immediate action to protect the economy from 
risky lending propped up by conflicts of interest between bond 
issuers and rating agencies. My letter described the flows in 
the incentive structures of bond ratings firms' through the 
``issuer-pays'' model used by major firms like S&P and Moody's. 
Under the issuer-pays model, bond issuers pay the agencies for 
their assessments of the products they hope to sell, ultimately 
giving the rating firms an incentive to give better ratings, 
regardless of the risk, since bond issuers might otherwise go 
to their competitors. \9\ In Chair Clayton's November response, 
he stated that the Commission shared my concerns about 
conflicts of interest in rating agency compensation models and 
said that the Commission was awaiting recommendations or advice 
from various advisory committees. \10\ Chair Clayton's response 
also referenced some work that the SEC has done to respond to 
the conflicts of interest in the issuer-pays model. \11\ An 
August Wall Street Journal report, however, stated that 
``Inflated bond ratings were one cause of the financial crisis. 
A decade later, there is evidence they persist. In the hottest 
parts of the booming bond market, S&P and its competitors are 
giving increasingly optimistic ratings as they fight for market 
share.'' \12\
---------------------------------------------------------------------------
     \9\ Council on Foreign Relations, ``The Credit Rating 
Controversy'', CFR Staff, February 19, 2015, https://www.cfr.org/
backgrounder/credit-rating-controversy.
     \10\ Letter from Securities and Exchange Commission Chairman Jay 
Clayton to Senator Warren, November 21, 2019.
     \11\ Id.
     \12\ Wall Street Journal, ``Inflated Bond Ratings Helped Spur the 
Financial Crisis. They're Back'', Cezary Podkul and Gunjan Banerji, 
August 7, 2019, https://www.wsj.com/articles/inflated-bond-ratings-
helped-spur-the-financialcrisis-theyre-back-11565194951.
---------------------------------------------------------------------------
    In your view, have the SEC's efforts to respond to the bond 
ratings agencies' conflicts of interest successfully prevent 
them from artificially inflating bond ratings? If not, what 
would you do as chair to strengthen the SEC's efforts?

A.3. Weaknesses at credit rating agencies contributed to the 
2008 financial crisis as the ``issuer pays'' model led to 
conflicts and potentially misaligned incentives. If confirmed, 
I will work with fellow commissioners and SEC staff to examine 
the Nationally Recognized Statistical Ratings Organization 
regulatory framework implemented by the Commission pursuant to 
the Dodd-Frank Wall Street Reform and Consumer Protection Act 
of 2010.

Q.4. The most recent volume of the National Climate Assessment, 
a scientific report issued by 13 Federal agencies in November 
2018, stated that climate change may cause losses of up to 10 
percent of the U.S. economy by 2100. \13\ Additionally, a 2015 
report from The Economist Intelligence Unit wrote that, of the 
world's current stock of manageable assets, the expected losses 
due to climate change are valued at $4.2 trillion by the end of 
the century. \14\ Last year, I asked then-Chair Clayton whether 
the SEC has a mandatory, uniform standard for climate risk so 
that investors can compare companies head-to-head. \15\ He 
declined to answer my question directly, instead broadly 
stating that the SEC has a materiality standard. \16\ In an 
October letter, he also stated that ``investors must have the 
information necessary to understand the material risks posed to 
an issuer's business and financial performance.'' \17\ 
Furthermore, last summer, 40 major investors who collectively 
manage over a trillion dollars in assets joined with 
nonprofits, businesses, and former regulators in sending the 
SEC a letter arguing that the climate crisis is material and a 
systemic threat to our economy and asking the Commission to 
mandate corporate climate risk disclosure. \18\
---------------------------------------------------------------------------
     \13\ New York Times, ``U.S. Climate Report Warns of Damaged 
Environment and Shrinking Economy'', Coral Davenport and Kendra Pierre-
Louis, November, 23, 2018, https://www.nytimes.com/2018/11/23/climate/
usclimate-report.html.
     \14\ The Economist Intelligence Unit, ``The Cost of Inaction'', 
2015, p. 41, https://eiuperspectives.economist.com/sites/default/files/
The%20cost%20of%20inaction-0.pdf.
     \15\ Office of Senator Warren, ``Senator Warren to SEC Chairman 
Clayton: You Have Done Nothing To Protect the Economy From Climate 
Change Risks'', press release, November 17, 2020, https://
www.warren.senate.gov/newsroom/press-releases/senator-warren-to-sec-
chairman-clayton-you-havedone-nothing-to-protect-the-economy-from-
climate-change-risks.
     \16\ Id.
     \17\ Letter from Securities and Exchange Commission Chairman Jay 
Clayton to Senator Warren, October 13, 2020.
     \18\ New York Times, ``Climate Change Poses `Systemic Threat' to 
the Economy, Big Investors Warn'', Christopher Flavelle, July 21, 2020, 
https://www.nytimes.com/2020/07/21/climate/investors-climate-threat-
regulators.html.
---------------------------------------------------------------------------
    During your confirmation hearing, I asked you whether there 
are any reasons as to why companies should be able to hide 
their climate risks from their investors, and you responded 
that ``I think that particularly material--materiality is a 
point here--but no, they should not be able to hide their 
risks.'' \19\
---------------------------------------------------------------------------
     \19\ Office of Senator Warren, ``At Banking Hearing, SEC Nominee 
Gensler Commits to Efforts Recommended by Warren To Protect Investors 
and Make Markets More Honest and Transparent'', March 2, 2021, https://
www.warren.senate.gov/newsroom/press-releases/at-banking-hearing-sec-
nominee-gensler-commits-toefforts-recommended-by-warren-to-protect-
investors-and-make-markets-more-honest-and-transparent.
---------------------------------------------------------------------------
    Please elaborate on this point. Do you believe it would be 
useful for investors to understand public companies' 
contributions to greenhouse gas emissions and their exposure in 
the event of a government- or market-mandated transition 
towards a lower carbon economy?

A.4. If confirmed, materiality will guide my decisions as SEC 
Chair regarding to disclosure requirements under the Federal 
securities laws. The Supreme Court has held that information is 
material if there is a ``a substantial likelihood that the 
disclosure of the omitted fact would have been viewed by the 
reasonable investor as having significantly altered the `total 
mix' of information made available.'' If confirmed, I will 
follow the law with respect to policies that come before the 
Commission related to disclosure. There is significant and 
growing investor interest in climate disclosures, and many 
companies already publish information about how climate risks 
affect their business. If confirmed, I will examine existing 
frameworks for disclosure, with an eye towards minimizing any 
compliance burden for issuers while providing investors with 
the material information they need for investment decisions. 
The best course for the SEC to accomplish that goal is by 
taking an approach that listens to all stakeholders and 
following all legal obligations for stakeholder feedback under 
the Administrative Procedure Act and other laws.

Q.5. It has been reported that the SEC has opened an 
investigation into whether Boeing made materially false 
statements about its finances in relation to the devastating 
Boeing 737 Max crashes in Indonesia and Ethiopia that killed 
hundreds. The parents of one of the victims are my 
constituents. They lost their daughter, 24-year-old Samya 
Stumo, in the second crash while she was traveling in East 
Africa for lifesaving work in public health. To date, despite 
the many investigations of what went wrong, there has been no 
accountability for top management at Boeing. The Justice 
Department entered into a Deferred Prosecution Agreement with 
Boeing that placed all the blame at the feet of two low-level 
pilots, thereby shielding the senior executives from 
responsibility. I welcome the SEC investigation because it 
could provide our first opportunity to find out what high-level 
officials knew and when they knew it; and to hold them 
accountable for any wrongdoing that occurred.
    If you are confirmed, will you commit to keeping this 
committee informed of the progress of the investigation, within 
the bounds of your legal responsibilities?
    Will you follow the facts wherever they go?
    Will you commit that you will not negotiate a deal with 
Boeing that exculpates senior management, unless that is where 
the facts lead?

A.5. As Chair of the CFTC, I was honored to lead a civil law 
enforcement agency that endeavored every day to bring the facts 
and the law together in front of courts and held people 
accountable. While I am not able to prejudge any individual 
case and am bound by the law in terms of the confidentiality of 
enforcement proceedings, if confirmed, I will bring this same 
commitment to accountability to the SEC.
    Boeing may not have been forthcoming with its investors 
about the financial impact of the crashes. In 2020, the company 
disclosed, initially, $6 billion in costs, and by the end of 
2020, a total of $9.1 billion. In January 2021, Boeing said the 
total costs for 737 Max would surpass $18 billion, more than 3 
times the initial disclosure. And Boeing's management bled 
these accumulating billions from operations, not management 
compensation. If Boeing had had to come clean about that 
amount--which may still go up--its management might have been 
forced to take a haircut on executive compensation.
    On the contrary, the Boeing Board did the opposite of 
penalizing its directors or executives for the company's safety 
failures or for its material misrepresentations. For example, 
instead of firing then- CEO Dennis Muilenburg, he was allowed 
to ``retire'' and take with him an extra $38 million. As I 
understand it, between 2011 and 2019, Muilenburg received more 
than $120 million in compensation for his roles at Boeing.

Q.6. Will you commit to take appropriate action against Boeing 
executives if you find that they illegally misled investors 
about the financial impact of the crashes on the company?

A.6. While I am not able to prejudge any individual case and am 
bound by the law in terms of the confidentiality of enforcement 
proceedings, if confirmed, I will uphold the enforcement 
mission of the SEC as set forth by Congress. My enforcement 
philosophy is that it is the agency's responsibility to follow 
the facts and the law where they take you and to stamp out 
fraud and manipulation in the markets.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
              SENATOR VAN HOLLEN FROM GARY GENSLER

Q.1. Congress has provided the SEC with authority to set its 
own pay and benefits in order to attract and retain a top-notch 
workforce that could otherwise work for big Wall Street firms. 
During the Trump administration, pay adjustments at the SEC 
were relatively low, as they were throughout the Federal 
workforce. This shift had a concerning negative effect on SEC 
employee morale, as reflected in the responses of SEC employees 
to the Federal Employee Viewpoint Survey. Will you commit to 
working with the employees of the SEC and their union on the 
subject of pay and benefits to ensure that the SEC is able to 
recruit and retain the workforce needed to protect American 
investors and capital markets?

A.1. If confirmed, I will work with the Office of Human 
Resources and the SEC staff, including the SEC employee 
bargaining unit, to ensure that the agency is able to recruit 
and retain the workforce needed to fulfill the agency's mission 
within the legal and budgetary constraints set by Congress.

Q.2. Investors and financial analysts are increasingly calling 
for disclosure of key financial information on a country-by-
country basis, and there is growing worldwide momentum towards 
requiring disclosure of this information. In the European 
Union, negotiations are proceeding to require country-by-
country reporting, and this was also endorsed recently by the 
United Nations High-Level Panel on International Financial 
Accountability, Transparency and Integrity for Achieving the 
2030 Agenda. Country-by-country reporting is also among the 
voluntary standards set by the Global Reporting Initiative.
    Country-by-country reports would shine a light on the use 
of tax havens, and whether the U.S. tax code is giving 
companies an incentive to ship jobs overseas--a major concern 
of mine following the enactment of the 2017 tax law. Big 
corporations already report country-by-country financial 
information to the IRS under an international OECD framework, 
but the reports are not public. My legislation, the Disclosure 
of Tax Havens and Offshoring Act, would require SEC disclosures 
to include country-by-country financial reports that are in 
line with U.S. and international standards.
    As SEC Chairman, will you commit to working with us to 
consider the SEC's requirements as they relate to country-by-
country reporting?

A.2. If confirmed, materiality will guide my decisions as SEC 
Chair related to disclosure requirements under the Federal 
securities laws. The Supreme Court has held that information is 
material if there is a ``a substantial likelihood that the 
disclosure of the omitted fact would have been viewed by the 
reasonable investor as having significantly altered the `total 
mix' of information made available.'' If confirmed, I look 
forward to learning more about this issue and working with you 
and others in Congress and to understand what is possible 
within the authorities of the SEC.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                       FROM GARY GENSLER

Q.1. If confirmed, how engaged will you be with the activities 
of the Financial Stability Oversight Council? What unique 
perspective will active SEC engagement provide in advancing the 
FSOC's mission?

A.1. The Dodd-Frank Wall Street Reform and Consumer Protection 
Act of 2010 entrusts the Financial Stability Oversight Council 
with the mission of identifying risks to the financial 
stability of the United States; promoting market discipline; 
and responding to emerging risks to the stability of the United 
States' financial system. If confirmed, I will bring the 
perspective of the primary regulatory agency which I represent, 
the SEC, to all of the activities of the FSOC, including 
internal deliberations, risk monitoring and voting decisions. 
My career in financial markets, including my previous 
experience in the private sector and in state and Federal 
Government, along with my research from MIT, will inform my 
work on the Council.

Q.2. If confirmed, how will you approach the issue of ESG 
disclosures by public companies?
    Do you believe that ESG disclosures need to be mandatory in 
order for them to be effective?

A.2. If confirmed, materiality will guide my decisions as SEC 
Chair related to disclosure requirements under the Federal 
securities laws. The Supreme Court has held that information is 
material if there is a ``a substantial likelihood that the 
disclosure of the omitted fact would have been viewed by the 
reasonable investor as having significantly altered the `total 
mix' of information made available.'' In some instances, 
mandatory disclosures that provide for clear, consistent and 
comparable information may best inform investor decision-making 
and may reduce compliance costs for issuers. In other 
instances, individualized determinations of materiality, 
voluntary disclosures or the shareholder proposal process may 
be more effective at meeting investor and issuer needs.

Q.3. If confirmed, how will you navigate the existing EU 
framework on climate risk disclosures when considering a 
potential U.S. framework?

A.3. There are a wide range of climate risk disclosure 
frameworks that have been developed by international 
governments and private sector actors. If confirmed, I will 
examine existing frameworks for disclosure, including the EU 
framework, with an eye towards minimizing any compliance burden 
for issuers while providing investors with the material 
information they need for investment decisions. The best course 
for the SEC to accomplish that goal is by taking an approach 
that listens to stakeholders and following the legal 
obligations for stakeholder feedback that apply under the 
Administrative Procedures Act and other laws.

Q.4. The transition from LIBOR to SOFR continues to be a 
subject of interest. If confirmed, what actions will you take 
to facilitate this transition in portions of the market where 
adoption has been slow or nonexistent?

A.4. As I understand it, the transition to a new benchmark rate 
away from LIBOR is being led by the Federal Reserve Board and 
New York Federal Reserve Bank in consultation with other 
financial regulators, including the SEC. Many of the financial 
institutions that are affected by the transition are regulated 
by the SEC along with other regulators, including the Federal 
Reserve. If confirmed, I look forward to working with my fellow 
regulators to assist this transition and plan to engage with 
the Federal Reserve Board and New York Federal Reserve Bank to 
see what the SEC can do to facilitate the transition broadly 
across the financial sector.

Q.5. If confirmed, will you commit to finalizing outstanding 
Dodd-Frank Title VII regulations on market transparency, 
clearing, and trading?

A.5. If confirmed, I will work with fellow commissioners and 
SEC staff to complete all rulemakings directed by Congress. 
While serving as the Chairman of the CFTC, we were able to 
finalize our congressionally directed rulemakings related to 
Title VII in a timely and often bipartisan manner.

Q.6. If confirmed, what factors will you consider when 
evaluating a potential Bitcoin ETF?
    Under what circumstances would one be approved?

A.6. It is critical that regulators and regulations keep pace 
with changing technology, and that includes the burst of growth 
of new financial technology--including cryptocurrencies--in the 
last decade. I have spent the last several years at MIT 
studying this field, and I believe financial technology can be 
a powerful force for good-but only if we continue to harness 
the core values of the SEC in service of investors, issuers, 
and the public. Without prejudging any specific proposals that 
I may or may not consider at the Commission, if confirmed, I 
look forward to learning more about nascent products such as 
potential Bitcoin ETFs and to discussing the staff's regulatory 
decisions on these matters over the preceding few years.

Q.7. How can the SEC provide more regulatory clarity with 
respect to digital assets?

A.7. It is my understanding that the SEC's FinHub and division 
directors have provided guidance on this subject. If confirmed, 
I look forward to discussing with fellow commissioners and the 
SEC staff the full range of actions we might take to provide 
additional clarity regarding these new assets.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAPO
                       FROM GARY GENSLER

Q.1. In June 2019, the SEC adopted a package of rulemaking and 
interpretations known as the Regulation Best Interest rule, 
which struck an appropriate balance of increasing transparency 
in investors' relationships, while preserving access to advice 
and investment products.
    If confirmed, would you uphold the Regulation Best Interest 
rule, as written?

A.1. When investors turn to financial professionals for advice 
and recommendations about their investments, advice that may be 
critical to their retirement security or their ability to fund 
a child's college education, they deserve advice that serves 
their best interests. If confirmed, I will work with my 
colleagues and the Commission staff to ensure that the 
Regulation Best Interest rule, as interpreted and enforced by 
the SEC, lives up to its best interest label.

Q.2. With regard to cryptocurrency, do you believe that the 
current regulatory framework provides sufficient predictability 
and certainty for market participants?

A.2. I have spoken before of the potential of blockchain 
technology and cryptocurrencies to serve as a catalyst for 
change. To the extent that someone is offering a crypto token 
which is an investment contract or security that's under the 
SEC's remit, the SEC has a responsibility to ensure investors 
are adequately protected. Some cryptocurrency tokens have been 
deemed to be solely a commodity, as Bitcoin has been, and are 
within the purview of the CFTC. If confirmed, I would look 
forward to fostering an environment that is supportive of 
financial innovation while also ensuring that investors are 
protected, markets are fair, orderly and efficient, and capital 
formation is facilitated. As cryptocurrency technology evolves, 
it's important to stay true to our principles of investor 
protection and at the same time, be technology neutral.

Q.3. The proxy voting process was a focus of the SEC under 
Chairman Clayton, as there were valid concerns regarding the 
misuse of this process and other aspects of corporate 
governance to prioritize environmental, social or political 
agendas over the economic interests of endinvestors. Last year, 
the SEC adopted a final rule, which acknowledges the important 
role proxy advisors play in the corporate governance ecosystem, 
while instituting new policies increasing transparency and 
allowing companies to correct errors in voting recommendations.
    Do you agree it is important that institutional investors 
ensure that retail investors' interests are being reflected in 
voting decisions?
    If confirmed, would you uphold the reforms made through the 
final Proxy Advisor Rule finalized last year?

A.3. I agree with the Commission's guidance that when 
investment advisers exercise proxy voting authority on behalf 
of their clients their fiduciary duties to act with loyalty and 
care extend to their exercise of voting decisions (17 CFR Parts 
271 and 276.) If confirmed, I would work with fellow 
commissioners and SEC staff to understand the Proxy Advisor 
rules better, to see whether they addressed the potential 
conflicts of interest at the least costs for market 
participants, and determine its impact on achieving the mission 
of the agency.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                       FROM GARY GENSLER

Q.1. As you know, the SEC adopted its landmark Regulation Best 
Interest and Form CRS requirements less than two years ago. Reg 
BI put in place strong protections for investors; for example, 
extending investment advice protections to 401(k) rollover 
discussions, while seeking to preserve the broker-dealer and 
investment adviser business models. I believe it also struck 
the right balance in ensuring advice is accessible and 
affordable.
    What are your preliminary thoughts on the current set of 
rules governing investment advice?
    If confirmed as Chair, how will you ensure that the 
Commission's administration and interpretation of Regulation 
Best Interest continue to ensure that small and moderate 
balance savers enjoy both the enhanced protections of Reg BI 
and access to commission based services?

A.1. When investors turn to financial professionals for advice 
and recommendations about their investments, advice that may be 
critical to their retirement security or their ability to fund 
a child's college education, they deserve advice that serves 
their best interests. If confirmed, I will work with my 
colleagues and the Commission staff to ensure that the 
Regulation Best Interest rule, as interpreted and enforced by 
the SEC, lives up to its best interest label.
    If confirmed, I would work with our regulatory partners at 
FINRA, the states, and Department of Labor to ensure that our 
regulations live up to their best interest label and guard 
against harmful incentives that may conflict with that 
standard.

Q.2. Reg BI became effective in June 2020. Since then, the SEC 
has been actively examining firms for compliance and continuing 
to issue interpretive guidance. Given these considerations, I 
believe it makes good common and practical sense to let Reg 
BI's implementation play-out over the course of the next 
several years--rather than subjecting it to any significant 
modification or even rescission in the near term.
    If confirmed as Chair, will you commit to allowing the SEC 
to examine the full effect of Reg BI and Form CRS?

A.2. If confirmed, I will work with my colleagues and the 
Commission staff to ensure that the standard, as interpreted 
and enforced by the SEC, lives up to its best interest label.

Q.3. The Securities and Exchange Commission is a member of both 
the Financial Stability Board (FSB) and The International 
Organization of Securities Commissions (IOSCO). The FSB is 
active on many matters of financial policy given its broad 
mandate to promote international financial stability. The FSB's 
membership primarily includes central bankers that provide a 
macro-perspective; by contrast standard-setters like IOSCO, the 
global standard setter for the securities sector, provide more 
technical expertise on issues.
    In general, what do you believe is the role of 
international standard setting bodies like FSB and IOSCO?

A.3. Participation in international standard setting bodies 
provides an opportunity for domestic regulators to learn from, 
consult with and coordinate on cross border issues with their 
counterparts in other jurisdictions.

Q.4. Do you believe the Chair of the SEC has a responsibility 
to advocate for the U.S. regulatory and legal structure as part 
of the standard-setting process of the FSB and IOSCO?

A.4. Where international standards can contribute to the SEC's 
attainment of its mission to protect investors; maintain fair, 
orderly, and efficient markets; and facilitate capital 
formation, I believe it is the responsibility of the SEC Chair 
to engage proactively in conversations with the FSB and IOSCO.

Q.5. What role, if any, do you believe the FSB has in 
establishing technical standards, including disclosure 
standards, for the securities sector? Do you believe IOSCO is 
better equipped to establish standards for the securities 
sector?

A.5. Collaboration with international regulators through the 
FSB and IOSCO can contribute to the SEC's three part mission. 
International standards can help ensure investor access to 
consistent, comparable data that they can efficiently integrate 
into their investment processes. At the same time, it is 
important that any standards for market participants integrate 
the unique features of our domestic market, legal and 
regulatory infrastructure and the needs of local investors and 
issuers.

Q.6. Do you agree that the U.S. is not legally obligated to 
adopt any standard developed by the FSB, IOSCO, or any other 
international standard setting body?

A.6. Yes, standards are not binding. The SEC can agree to adopt 
a standard subject to the scope of the Commission's authority 
and the Administrative Procedure Act.

Q.7. Do you agree that if the U.S. were to follow an 
international standard that it would be your obligation as the 
chair of the Commission to ensure that the SEC first conducts a 
sound economic analysis and that the standard is appropriately 
tailored so that it is workable and effective in the U.S.?

A.7. If confirmed, I will adhere to the three part mission of 
the SEC and the requirements of the Administrative Procedure 
Act for all rules promulgated by the SEC. If confirmed, any 
rulemaking of the SEC also will take into consideration 
economic analysis.

Q.8. A lack of competition among incumbent NRSROs has been 
widely documented as contributing to the 2008 financial crisis. 
More than 10 years later, as the SEC has noted in its own 
annual report, competition is still a barrier to entry into 
this market. Some observers have supported proposals to assign 
credit ratings on a rotation to existing NRSROs. I am deeply 
concerned that this would further decrease competition in the 
ratings sector. Promoting competition among NRSROs helps ensure 
that investors are protected, and helps prevent the type of 
failures in ratings by the incumbents that led to the 2008 
crisis.
    If confirmed as Chair, will you commit to opposing 
proposals that direct ratings business to NRSROs, or that 
otherwise suppress competition?

A.8. Promoting competition in the credit ratings agencies, and 
more broadly in the capital markets, is critically important to 
the SEC's mission. If confirmed, I am committed to working with 
Congress, fellow commissioners, and the staff at the SEC to see 
how we can support and promote competition among credit ratings 
agencies.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS
                       FROM GARY GENSLER

Q.1. When I asked you about a Financial Transaction Tax during 
your confirmation hearing on March 2, 2021, you stated ``I have 
not studied it in the way that you are talking about.'' 
However, in October 7, 2015, CNBC published a story titled 
``Clinton's campaign confirmed that the proposal for tax on 
high-frequency trading was crafted with input from her campaign 
chief financial officer Gary Gensler.'' A separate story 
published in Accounting Today on July 14, 2016 quotes you as 
saying, ``[the Clinton proposal] is designed to address some of 
the concerns that she's had and many other observers have had, 
about markets flooded by high-frequency traders . . . ``
    Have you indeed studied this issue in the past as evidenced 
by the two articles mentioned above?
    Will you commit to only making policy statements on issues 
you have studied and are grounded in robust cost-benefit 
analysis?

A.1. As noted at the hearing, in my preparation, I had not 
studied current proposals for financial transaction tax. Six 
years ago, I had reviewed a 2015 campaign position related to 
possible fees that might be placed on high levels of order 
cancellations that might place a burden on the market. If 
confirmed, any rulemaking of the SEC will take into 
consideration economic analysis and will comply with all 
related requirements in the law.

Q.2. When I asked you about a Financial Transaction Tax during 
your confirmation hearing on March 2, 2021, your answer was 
largely on the collection of Section 31 fees collected by the 
SEC to fund its operations. These fees are designed to recover 
the costs incurred by the government, including the SEC, for 
supervising and regulating the securities markets and 
securities professionals. These fees are not for funding 
unrelated programs like has been called for by various 
legislative proposals. Are you concerned that an FTT could be 
used to fund activities that are entirely unrelated to the 
efficient functioning of our capital markets?

A.2. Tax policy, and the use of proceeds thereof, is within the 
purview of the United States Congress and not within the remit 
of the SEC. If confirmed, I will honor the SEC's obligations to 
assess and collect Section 31 fees to fund its operations in 
accordance with the law.

Q.3. It is imperative that the SEC encourage, not hinder, 
diverse avenues for capital formation that facilitate growth in 
our capital markets. As the economy continues to recover and 
grow coming out of the COVID-19 pandemic, how do you see the 
role of the SEC in enabling the vigorous formation of capital?

A.3. SEC rules encourage a vibrant environment where companies 
can raise money in both private and public markets, as 
appropriate for their particular needs and consistent with 
investor protections. Changes in markets, technology, and 
capital formation rules may alter the mix of public and private 
capital formation over time. If confirmed, I look forward to 
working with fellow commissioners and SEC staff, including the 
Investor Advocate and Office of the Advocate for Small Business 
Capital Formation, to continue to evaluate how to best foster 
both public and private forms of capital formation while 
protecting investors and maintaining fair, orderly and 
efficient markets.

Q.4. In a report issued this January, the U.S. Chamber's Center 
for Capital Markets Competitiveness issued recommendations for 
promoting innovation in blockchain and digital assets. Do you 
agree that more can be done to help to provide clear guideposts 
and regulatory clarity for industry participants regarding what 
the law requires of them?

A.4. It is critical that regulators and regulations keep pace 
with changing technology, and that includes the burst of growth 
of new financial technology--including blockchain technology 
and digital assets--in the last decade. I have spent the last 
several years at MIT studying this field, and I believe 
financial technology can be a powerful force for good--but only 
if we continue to harness the core values of the SEC in service 
of investors, issuers, and the public. If confirmed, I look 
forward to working with the CFTC, along with other Federal 
regulators and Congress, to facilitate innovation in the 
digital asset markets, consistent with established public 
policy frameworks.

Q.5. In a recent report, DOJ cited at least 7 Federal 
regulatory bodies having overlapping jurisdictional authority 
over digital assets (as well as applicable state authorities). 
Do you believe a framework for digital assets that more clearly 
demarcates the jurisdictional boundaries of applicable 
regulatory regimes--taking into account the inherent 
characteristics of the different digital assets and the 
transactions and activities they are used for--would be helpful 
in the U.S.?

A.5. As mentioned in response to Question 4 above, if 
confirmed, I look forward to working with the CFTC, along with 
other Federal regulators and Congress, to facilitate innovation 
in the digital asset markets, consistent with established 
public policy frameworks.

Q.6. The Registration for Index Linked Annuities Act calls upon 
the SEC to establish an appropriate registration process for 
Registered Indexed Linked Annuities (or RILAs) and improve 
access to this innovative retirement savings product. This bill 
would require that a new form be designed to specifically 
register RILAs rather than continue to require the use of forms 
designed primarily for equity offerings, requiring the 
disclosure of extensive information that is not relevant to 
prospective annuity purchasers. Would you commit to have your 
staff take a look at what's been proposed the Registered Index 
Linked Annuities Act to see if the actions called for in the 
legislation can be implemented by the Commission?

A.6. If confirmed, I will look at your legislation to require 
the SEC to devise a new form for annuity issuers to use when 
filing registered index-linked annuities and work with SEC 
staff to see what actions might be taken under existing 
authorities to streamline compliance while continuing to 
protect consumers. I understand that the information needed for 
equity purchasers may be different than for annuity purchasers 
given the differing profiles and risks of each of the products.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR KENNEDY
                       FROM GARY GENSLER

Q.1. Many companies across the nation already disclose 
information for investors and stakeholders in their corporate 
social responsibility (CSR) reports. Additionally, companies 
utilize a variety of accepted frameworks to report their 
disclosure obligations, including the now well-established 
Sustainability Accounting Standards Board and the emergent Task 
Force on Climate-Related Financial Disclosure, for example.
    Can you assure me that you will take into account existing 
frameworks as the SEC considers the imposition of additional 
disclosure reporting requirements so as to avoid duplication, 
prevent unnecessary expenditures, and reporting fatigue?
    Can you describe what you believe would be the best course 
at the SEC to accomplish that?

A.1. If confirmed, I will examine all existing frameworks for 
disclosure with an eye towards minimizing the compliance costs 
for issuers while providing investors with the material 
information they need to make investment decisions. The best 
course for the SEC to accomplish that goal is by taking an 
approach that listens to stakeholders and following the legal 
obligations for stakeholder feedback that apply under the 
Administrative Procedures Act and other laws.

Q.2. I have been very concerned with the SEC's actions 
regarding the Consolidated Audit Trail (CAT). Specifically, I 
have focused my efforts on the CAT Customer Database, the 
largest government database of its kind that will, when fully 
operational in 2022, capture all customer and order information 
for equity securities and listed options, costing $75 million 
annually to run.
    This target-rich database will provide more than 3,000 
users from the SROs and the SEC with unfettered access to the 
CAT customer database, and one can only imagine what foreign 
actors will do once this thing begins to capture tens of 
millions of records every day and will maintain data on 100 
million retail and institutional accounts.
    In fact, the hacking of the Solarwinds proprietary network 
serves as a very recent and sobering example of exactly what we 
know will happen when the Federal Government is at the helm. 
This hack is believed to originate in Russia and allowing 
hackers to spy on U.S. cybersecurity firms and the Department 
of Homeland Security undetected for months.
    It would seem to me that the easiest solution here that 
protects my constituents in Louisiana and consumers across the 
country would be to instead receive the information directly 
from the securities firms when needed and in an expeditious 
timeframe. The securities industry has proposed this type of 
expedited system that would allow the data to stay within 
broker-dealers but would be available upon 24 hours-notice.
    Why is that not a better, safer approach? Are you prepared 
to oversee this database and guarantee it will never be 
breached?

A.2. Data breaches are a real concern. We saw that when the 
SolarWinds case came to light and I understand that data at a 
self-regulatory organization is a target for hackers. I 
understand that the SEC under Chairman Clayton adopted rules to 
restrict the personally identifiable information in the 
Consolidated Audit Trail, namely restricting the dates of birth 
and redaction of Social Security numbers, individual taxpayer's 
identification numbers, and account numbers. If confirmed, I'd 
work with the SEC commissioners and staff to examine remaining 
issues, particularly the rule proposed on a unanimous basis 
last summer that pertains to data security.

Q.3. Last year, Congress unanimously passed my ``Holding 
Foreign Companies Accountable Act'', which delists companies 
off the stock exchange if they don't comply with audits by the 
Public Company Accounting Oversight Board (PCAOB). These audits 
were created to prevent another ENRON and preserve the 
integrity of our capital markets system. The SEC has 90 days to 
promulgate rules for this legislation which passed back in 
December.

A.3. Investor protection is very important to me. The more 
information the public has, the better their decision-making 
process is.

Q.4. Can you think of any good reason why U.S. investors should 
be exposed to fraudulent companies in China or companies that 
are arms of the Chinese Communist Party and wish to do harm to 
the United States?
    Chinese stocks also end up in index funds, and some index 
providers have even been pressured by the Chinese government to 
include them. Will you commit to examining the conflicts of 
interest inherent in the index business that can lead to U.S. 
investors being exposed to fraudulent companies, and will you 
pressure the exchanges to do more to keep our markets from 
importing China's fraud?

A.4. U.S. markets should be free from fraud, including fraud 
originating from abroad or from foreign State-owned 
enterprises. If confirmed, I will work with the Divisions of 
Corporation Finance, Investment Management and Enforcement, 
along with the Office of Chief Accountant to ensure that U.S. 
investors are not exposed to fraudulent companies, including 
those from abroad. I also would look forward to working with 
Congress and the PCAOB on the timely and full implementation of 
the Holding Foreign Companies Accountable Act.

Q.5. It has now been more than a decade since the collapse of 
Stanford International Bank Limited (together with its 
affiliates, ``SIB'') and R. Allen Stanford's arrest for 
orchestrating the second-largest Ponzi scheme in United States 
history. As you know, this $7 billion Ponzi scheme was built on 
the backs of ordinary, working-class Americans in states such 
as Florida, Louisiana, and Texas. The vast majority of these 
individuals have suffered extraordinary pain as their life 
savings vanished and they reached retirement age in poverty.
    As you may know, the evidence strongly indicates that TD 
Bank aided and abetted Stanford's banking outside the United 
States. By providing banking services to Allen Stanford without 
so much as questioning a single transaction in the face of 
Stanford's suspicious activity, TD Bank helped Stanford defraud 
thousands of unsuspecting victims.
    TD Bank ignored numerous inescapable signs of fraudulent 
activity: large round sums leaving Stanford's TD Bank accounts; 
actual investment returns that could not support the 
unreasonably high CD returns SIB was offering; consistent wire 
transfers to accounts maintained by entities other than SIB; 
SIB's limited number of Canadian customers; SIB's correspondent 
banking services with another North American banking 
institution; SIB's location in Antiqua, one of the highest risk 
jurisdictions in the world known for money laundering; and 
Stanford's declared bankruptcy and designation as a Politically 
Exposed Person.
    Since the Stanford fraud was exposed, TD Bank has used 
every legal maneuver and stall tactic to deny victim 
recoveries. Finally, after 12 years of pain and suffering, a 
lawsuit in Canada is currently in the trial phase; however, it 
is clear that TD Bank is not serious about accepting 
responsibility or bringing an end to this longstanding 
nightmare. Even if TD Bank loses the Canadian lawsuit, we 
expect them to exhaust the appeals process as Stanford victims 
continue to struggle. Their conduct has been truly egregious. 
As SEC chair, you can play a significant role in helping to 
facilitate an end of these victims receive their long-awaited 
recoveries.
    The SEC also oversees the receiver appointed in this 
matter, Ralph S. Janvey. In addition to delivering abysmal 
results for long-suffering victims (less than 5 cents on the 
dollar), Mr. Janvey and his legal team at Baker Botts LLP 
(Baker Botts) have objected to organized victims intervening in 
litigation against SIB's correspondent banking partners, 
including TD Bank and Societe Generale Private Banking 
(SocGen). We were alarmed to learn that the receiver would 
object to our constituents retaining their own counsel and 
seeking to participate in litigation against major banks--
including TD Bank and SocGen--that appear to have aided and 
abetted the Stanford empire.
    If confirmed, will you commit to using the tremendous 
influence and power of the SEC to help expedite the generation 
of meaningful recoveries for victims?

A.5. I am familiar with what happened in the Stanford case and 
my heart goes out to all of the victims who lost substantial 
shares of their money due to the behavior of Stanford and 
others in his criminal enterprise. I know you have worked 
diligently to ensure that the receiver charged with resolving 
the estate is treating victims responsibly and being a good 
steward of resources. If confirmed, I look forward to working 
with you on this, including on how to recover any funds outside 
of the U.S. in foreign bank accounts that have yet to be 
recovered so far.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR LUMMIS
                       FROM GARY GENSLER

Q.1. Many companies disclose information for investors and 
stakeholders in corporate social responsibility reports. 
Additionally, companies utilize a variety of accepted 
frameworks to report disclosure obligations including the 
Sustainability Accounting Standards Board and the Task Force on 
Climate-Related Financial Disclosure.
    Can you commit that you will take into account existing 
frameworks as the SEC considers the imposition of additional 
disclosure reporting requirements, to prevent unnecessary 
expenditures and duplicative reports?
    Can you describe the concrete actions you will take at the 
SEC to ensure this occurs?

A.1. If confirmed, I will examine existing frameworks for 
disclosure with an eye towards minimizing compliance costs for 
issuers while providing investors with the material information 
they need to make investment decisions. The best course for the 
SEC to accomplish that goal is by taking an approach that 
listens to stakeholders and following the legal obligations for 
stakeholder feedback that apply under the Administrative 
Procedure Act and other laws.

Q.2. The Commission and staff have stated on numerous occasions 
that modernization of the Custody Rule is being studied at 
various levels. Can you provide an update on the status of this 
study, and approximate dates when it began and a projected 
estimate of completion?

A.2. If confirmed, I will work with the Commissioners and staff 
to quickly take responsibility for the rulemaking calendar. 
Once I have greater insight into all of the ongoing work being 
undertaken at the Commission, I look forward to working closely 
with Congress and responding to information requests regarding 
the substance and timeline of the SEC's work.

Q.3. The Commission took enforcement action against Great 
Plains Trust Company, a Kansas chartered non-depository trust 
company, in September 2020. As a State-chartered trust company, 
the Commission is the secondary regulator, and the Kansas 
Office of the State Bank Commissioner is the primary regulator. 
In the banking regulatory space, state and Federal regulators 
generally always take joint supervisory action, both as a sign 
of comity in our State Federal system and the practical fact 
that State regulators are the chartering authority and the 
Federal regulator provides deposit insurance or supervises 
membership in the Federal Reserve System. Will you commit to 
always give State regulators confidential notice of pending 
enforcement actions, respecting their role as the primary 
regulator/chartering authority, and take joint enforcement 
actions with State regulators whenever possible?

A.3. When I chaired the CFTC, our Division of Enforcement 
worked cooperatively with Federal and State regulators on 
enforcement matters, including by sharing confidential 
information as permitted by Federal and State laws and as 
warranted by the facts and circumstances. I respect the 
independent and complementary interests served by the various 
Federal and State regulators, including banking regulators, and 
believe that enforcement can work best when regulators partner 
as appropriate. If confirmed, I will work with the SEC staff to 
consider joint enforcement actions with State regulators as 
appropriate.

Q.4. State and federally chartered banks are listed in the 
Investment Advisers Act and Custody Rule as being eligible 
``qualified custodians.'' Both are subject to the same rigorous 
bank examination standards. Since Congress listed both in the 
Advisers Act, can you commit to always ensuring parity and 
equal treatment of national and State banks under our 
securities laws, absent direction from Congress?

A.4. I understand that the staff of the Division of Investment 
Management issued a statement in November 2020 to ``encourage 
interested parties to engage with the staff directly on the 
application of the Custody Rule to digital assets, including 
with respect to the definition of `qualified custodian' under 
the rule.'' This followed the Wyoming Division of Banking's 
letter indicating that a Wyoming-chartered public trust company 
is permitted to provide custodial services for digital and 
traditional assets under Wyoming law. If confirmed, I will look 
closely at the comments submitted in response to the Division's 
questions and will work with Federal and State banking 
regulators to better understand this issue. I believe that 
providing access to qualified custodians that can be trusted to 
safeguard customer assets is an important goal.

Q.5. As CFTC Chairman, you crafted and implemented post-
financial crisis reforms related to the derivatives market. 
These rules have been in place for years and appear to work 
well. For example, it is my understanding that the market held 
up well in the face of last year's COVID-related disruptions. 
At the same time, I understand that the SEC is still in the 
process of finalizing its regime. Will you be able to leverage 
your previous work and converge the timing and substance of the 
SEC rules with existing CFTC rules?

A.5. If confirmed, I will work with fellow Commissioners and 
SEC staff to complete all rulemakings directed by Congress. 
While serving as the Chairman of the CFTC, we were able to 
finalize our congressionally directed rulemakings related to 
Title VII in a timely and often bipartisan manner.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR MORAN
                       FROM GARY GENSLER

Q.1. The Federal Trade Commission (FTC) has proposed to modify 
premerger notification requirements under the Hart-Scott-Rodino 
Act (HSR) to create an exemption for de minimis acquisitions of 
voting securities. The proposal includes some concerning 
limitations on the availability of the exemption, as well as an 
expansion of the definition of ``person'' in Section 
801.1.1(a)(1) to include ``associates.'' These changes could 
new complications for the managements of investment funds that 
are registered with the Securities and Exchange Commission 
(SEC).
    Investment funds are already subject to strong regulation 
by the SEC that includes disclosure requirements similar to 
those sought under the proposed HSR amendments. In fact, such 
regulation includes regular reporting through Form 13F reports 
(as well as schedule 13D and 13G filings) by investment 
managers, which provides transparency into equity ownership by 
investment managers across all funds over which a manager 
exercises investment discretion. The amendments as proposed by 
the FTC would fundamentally alter fund management with overly 
burdensome new reporting requirements that would extend far 
beyond reporting and impose immense financial costs on 
investors. Moreover, as a result of the FTC's proposed 
aggregation provision, subsequent delays in finalizing 
investment transactions would harm investors who would have 
otherwise benefitted from more timely acquisitions or 
rebalancing of their accounts.
    As Chairman, do you plan to protect the SEC's independence 
and regulation of investment funds and products?
    Do you agree that the SEC is the primary regulator of 
investment funds?
    Do you have any concerns for how the FTC's pending 
rulemaking would affect investment funds?
    Will you commit to engaging with the FTC to advise the 
Agency on how the proposed amendments to HSR could negatively 
impact retail investors?

A.1. If confirmed, I will work to advance the mission of the 
SEC, as an independent agency, to protect investors; maintain 
fair, orderly, and efficient markets; and facilitate capital 
formation. If confirmed, I look forward to learning from market 
participants, you and your staff, and FTC leadership about 
issues of interest to both agencies.

Q.2. Something that seems to be getting lost in the recent 
narrative about payment for order flow is that investors not 
only are getting commission free trades, but they are also 
getting better execution quality because the trades are being 
executed by wholesalers that provide price improvement. The 
wholesalers have a duty of best execution and are subject to 
comprehensive disclosure requirements about the quality of 
their executions--duties they are obligated to fulfill 
regardless of whether they pay for order flow or not. Do you 
agree that retail investors benefit from a competitive trading 
environment in which wholesalers are incentivized to get the 
best price for every trade?

A.2. Markets--and technology--are constantly changing. Payment 
for order flow, along with other aspects of U.S. equity market 
structure, raises a number of policy questions, including 
whether and how it enables best execution for investors; its 
role in growing concentration in market making; and its effects 
on fair, orderly and efficient markets. If confirmed, I would 
work with fellow Commissioners and SEC staff along with hearing 
from market participants to examine market structure issues 
holistically as these issues are highly interrelated.

Q.3. The GameStop episode has spurred significant debate over 
shortening the settlement cycle from T+2 to T+1, or even T+0.
    What are your views on whether the settlement cycle should 
be shortened and what the right solution is?
    While it may be a convenient soundbite to call for a 
shorter settlement cycle, there will certainly be significant 
costs associated with an acceleration, and those costs and 
benefits may differ by type of participant. Market participants 
will have to invest in new technologies and compliance costs 
will be significant. How do you view the cost/benefit analysis 
of moving to a shorter cycle?

A.3. There are several parties, from DTCC to the SEC's Investor 
Advisory Committee, that have recommended shortening the 
settlement cycle in order to reduce risk and costs in the 
system. This will be an important area for the Commission to 
examine and, if confirmed, I would plan to explore the 
possibility of shortening settlement cycles.
    There could be significant risk reduction and cost benefits 
to potentially shortening the settlement cycle, but as with 
many policy choices, there would be some potential tradeoffs. 
If confirmed, I would discuss the matter with fellow 
commissioners, SEC staff, and relevant stakeholders along with 
considering appropriate economic analysis on costs and 
benefits.

Q.4. Over the past several years, the SEC has made great 
strides in modernizing the infrastructure of our national 
market system, particularly with respect to the provision of 
market data and access to the markets. For example, the SEC 
streamlined and introduced governance enhancements to dated 
national market system plans governing the dissemination of 
market data, and expanded the nature and scope of data that the 
exchanges are required to make available to all investors.
    Will you commit to continuing to prioritize market 
structure enhancements aimed at reducing the barriers to access 
to markets and market data if you are confirmed as Chairman?

A.4. Market structure issues are complex and highly 
interrelated. Markets--and technology--also are constantly 
changing. The overall U.S. equity market is a critical national 
asset that provides a vital mechanism for capital formation for 
firms and individuals; investment opportunities for Main 
Street; and economic growth. If confirmed, I will work with 
fellow commissioners, SEC staff and hear from market 
participants to examine market structure issues holistically in 
furtherance of the SEC's three part mission and ensure that the 
U.S. capital markets remain the best in the world.

Q.5. While I agree that investor protection is one of the most 
critical aspects of the SEC's mission, I worry about the use of 
the enforcement and examinations process to shape the 
securities laws outside of the rule making process. Will you 
commit today that you will respect the integrity of the 
administrative law framework and refrain from using 
investigations and examinations to establish de facto 
regulations?

A.5. I understand the unique role of guidance and regulation 
and the obligations that apply under the Administrative 
Procedure Act, the Congressional Review Act and other 
applicable laws. Providing the public and interested 
stakeholders with the opportunity for notice and comment as 
well as the other due process protections that apply is 
essential for good policymaking. Enforcement actions also 
should and must be brought when there is a violation of law.

Q.6. There has been a lot of discussion about the SEC playing 
an important role on climate and ESG issues in the Biden 
administration. Given the tools available to the SEC, it seems 
that enhanced issuer disclosure requirements are some of the 
lowest hanging fruit for reforms in this area.
    Can you provide an overview of your climate and ESG 
priorities in other areas? For example, do you foresee 
prioritizing any ESG initiatives related to the trading 
ecosystem or market structure?

A.6. The Commission under Acting Chair Lee has announced a 
number of changes to how it deals with ESG in recent weeks. If 
confirmed, I will examine existing frameworks for disclosure 
with an eye towards minimizing compliance costs for issuers 
while providing investors with the material information they 
need to make investment decisions. If confirmed, I look forward 
to engaging with fellow Commissioners and the SEC staff to 
learn what has already been completed, what additional actions 
are under consideration, and whether any rulemakings are being 
considered.

Q.7. The U.S. capital markets are constantly growing and 
evolving, and it is now more critical than ever for regulators 
like the SEC to work collaboratively with market participants 
to get the expertise needed to regulate smartly, and to 
understand the incentives, costs, and benefits of participating 
in the markets so that the best interests of investors are 
served. At a large agency like the SEC, much of this 
collaborative work is carried out by the staff, and I am sure 
you agree that it is of critical importance that the staff have 
an open door policy in terms of interacting with market 
participants in carrying out the business of the agency.
    Will you commit to prioritizing staff engagement with the 
industry participants and investors during your tenure?

A.7. Yes, I will prioritize active engagement with stakeholders 
with an interest in the mission of the SEC.

Q.8. Earlier this year, for the first time ever, trading volume 
on off-exchange venues surpassed trading on exchanges. The 
proliferation in alternative trading venues is the byproduct of 
technological advances in our market's infrastructure that has 
resulted in better price discovery and superior execution 
quality for investors. During your tenure at Chairman of the 
CFTC, you were a vocal supporter of directing more trading to 
regulated platforms with transparency, including SEFs and 
Exchanges. The equity market has a number of differences from 
futures, including immediate post trade transparency through 
trade reporting, requirements that off exchange trades comply 
with the order protection rule of Regulation NMS, post trade 
transparency thru public FINRA reporting. This has resulted in 
a market structure where there is high execution quality, and 
investors have choices, within these important rules, as to how 
to execute.
    Please elaborate on your views relating to on-exchange vs. 
off-exchange in the equities markets. And will you commit to 
supporting innovation in all trading venues to the extent that 
they facilitate better execution quality for investors?

A.8. If confirmed, I will look to find ways to support 
innovation in trading venues that leads to better execution 
quality for investors. At the CFTC, we worked to increase the 
transparency in the previously unregulated swaps market. In the 
equities markets, we already have existing market exchanges and 
off-exchange trading venues. If confirmed, I look forward to 
engaging with fellow commissioners, the SEC staff and market 
participants to see if there are ways that equity market 
trading can be improved.

Q.9. The consortium charged with running the CAT recently 
sought approval from the SEC to shift liability for harm caused 
by data breaches or other cyber incidents to market 
participants like broker-dealers who are required to report 
data to the CAT but otherwise have no control over the data 
once it is reported. I am sure you agree that this creates a 
perverse set of incentives, where the controller of the data 
has no ``skin in the game'' from a liability perspective and 
therefore less incentive to protect the sensitive data it 
controls.
    Will you commit to studying this proposal very carefully 
and to ensure that liability is assigned to the entity that 
controls the reported data?

A.9. If confirmed, I look forward to studying this proposal 
carefully and to engaging with the consortium charged with 
running the CAT.

Q.10. The Consolidation Audit Trail (CAT) involves the 
collection of the personal and financial information of every 
single American investor (PII). This information would be 
stored in a centralized database in that will be an easy, high-
value target for Russian and Chinese hackers to infiltrate our 
markets and steal the identity of innocent Americans. There is 
minimal justification for the SEC or anyone else to collect 
this sensitive information as the CAT can be just as effective 
without storing everyone's home address and social security 
number.
    Will you commit to removing the requirement that retail 
investor PII be collected as the SEC moves forward with 
implementing the CAT?

A.10. I understand that the SEC under Chairman Clayton adopted 
rules to restrict the personally identifiable information in 
the Consolidated Audit Trail, namely restricting the date of 
birth and redaction of Social Security numbers, individual tax 
identification numbers, and account numbers. If confirmed, I'd 
work with the SEC commissioners and staff to examine remaining 
issues, particularly the rule proposed on a unanimous basis 
last summer that pertains to data security.

Q.11. Over the past few years, there have been a number of 
instances where the major Exchange groups have chosen to take 
the Commission to Court to challenge various rulemakings. In 
most of those situations, market participants have been 
supportive of the SEC rulemaking. What is your view on how to 
balance the role of the Commission to engage in rulemaking to 
improve market structure with the recent litigious actions of 
for profit exchanges?

A.11. While not commenting on any current or pending litigation 
that involves the SEC, I am a strong believer in the importance 
of engaging with industry participants and other key 
stakeholders during the regulatory process. It is important 
that the views of key market participants be taken into account 
in key policy decisions.

Q.12. Would you agree that maintaining private market 
investments in the economy is important to facilitating the 
post-COVID economic rebound?

A.12. Yes.

Q.13. Would you agree that businesses in public markets and 
businesses in private markets are, and should continue to be 
subject to differentiated regulatory and reporting structures, 
due to a variety of factors including types of investors that 
are permitted to invest in these businesses?

A.13. Yes.

Q.14. Would you agree that the SEC could not propose treating 
public companies and private companies as if they are the same 
thing without legislation specifically authorizing the SEC to 
undertake such a radical change in law?

A.14. If confirmed, I would seek the advice and counsel of the 
SEC's attorneys, including in the Office of General Counsel, on 
the treatment of public and private companies under the 
securities laws. I would follow the requirements of the SEC's 
authorizing statutes regarding this, as with all matters.

Q.15. The U.S. capital markets are the finest in the world. 
American investors and firms also benefit from cross border 
access to global markets.
    How are you viewing the cross border landscape today 
compared to your time serving as Chairman of the CFTC?
    Will you be willing to work with counterparts in other 
jurisdictions to preserve cross border access to financial 
markets?

A.15. When I was Chair of the CFTC from May 2009 to January 
2014, the U.S. and the world were still in the initial stages 
of responding to the financial crisis. The United States was at 
the leading edge of establishing a new legal framework to 
regulate these previously dark markets. Today, many countries 
have made progress toward building a financial regulatory 
regime, often modeled off of the progress made in the United 
States.
    If confirmed, I would be eager to work with counterparts in 
other jurisdictions to support appropriate cross-border access 
to financial markets as required by U.S. law.

Q.16. In 2012 during your tenure as CFTC Chair, you were one of 
the early proponents for replacing LIBOR with a more robust 
benchmark anchored in actual and transparent market 
transactions. This transition process is well underway, with 
regulators around the world stating that market participants 
need to be prepared for the day in which LIBOR is no longer 
published or available to be used by market participants. More 
robust reference rates have been developed, launched and are 
now in use. In the derivatives markets, for example, nearly 70 
percent of the notional outstanding of uncleared swaps have 
adopted contractual language for switching to these reference 
rates.
    Could you describe what your approach would be with SEC-
regulated financial institutions which have not yet made the 
transition?

A.16. As I understand it, the transition to a new benchmark 
rate away from LIBOR is being led by the Federal Reserve Board 
and New York Federal Reserve Bank in consultation with other 
financial regulators, including the SEC. Many of the financial 
institutions that are affected by the transition are regulated 
by the SEC along with other regulators, including the Federal 
Reserve.
    If confirmed, I look forward to working with my fellow 
regulators to assist this transition and plan to engage with 
the Federal Reserve Board and New York Federal Reserve Bank to 
see what the SEC can do to facilitate the transition broadly 
across the financial sector.

Q.17. I am concerned that the SEC's Enforcement Division is 
basing enforcement actions on previous settlements and staff 
guidance (which do not create legal precedent) as opposed to 
undertaking a transparent rulemaking process. In your view, 
when the SEC determines there is a widespread industry practice 
that could be a violation of, for example, the Investment 
Adviser Act, how should it decide whether to engage in 
enforcement action, the issuance of guidance, or a rulemaking?

A.17. I understand the Commission's statutory obligations for 
rulemaking under the Administrative Procedure Act. Guidance and 
no-action letters also can play an important role in getting 
timely information out to market participants that provides 
clarity and reduces compliance costs. Which of these tools to 
use depends on context-specific questions regarding a 
particular issue or matter.

Q.18. Regarding digital assets native to various blockchain 
technologies, there appears to be some market uncertainty about 
the application of the U.S. Securities Laws here generally, and 
to individual digital assets in particular. Some of this 
confusion relates to the method in which capital is originally 
raised to develop blockchain protocols, applications and the 
digital assets themselves when compared to the eventual utility 
of these digital assets once related protocols or applications 
are developed and launched. Multiple members of the Commission 
have commented on this potential digital asset dichotomy of 
representing a security at one point in time and later no 
longer falling within the jurisdiction of the Securities Laws. 
Also, concerns about the Commission's regulatory stance and its 
concomitant negative effect on the role of U.S. business in 
international digital asset innovation and prominence has 
become so acute that the U.S. Chamber of Commerce recently 
called for the SEC to provide a clear pathway to non-security 
status for nascent digital assets.
    Would you describe generally your plan to bring regulatory 
clarity to the application of the U.S. Securities Laws to 
digital assets?

A.18. I have spoken before of the potential of blockchain 
technology and cryptocurrencies to serve as a catalyst for 
change. To the extent that someone is offering a crypto token 
which is an investment contract or security that's under the 
SEC's remit, the SEC has a responsibility to ensure investors 
are adequately protected. The Supreme Court has defined such 
investment contracts to include arrangements in which ``a 
person invests his money in a common enterprise and is led to 
expect profits solely from the efforts of the promoter or a 
third party.'' If confirmed, I will follow the law regarding 
whether a cryptocurrency is a security. Some cryptocurrency 
tokens have been deemed to be solely a commodity, as Bitcoin 
has been, and are within the purview of the CFTC. As 
cryptocurrency technology evolves, it's important to stay true 
to our principles of investor protection and at the same time, 
be technology neutral.

Q.19. The CFTC has traditionally held antifraud and 
antimanipulation enforcement authority over markets for 
transactions that are actual purchases of a commodity, also 
referred to as ``spot markets.'' The CFTC has broadly asserted 
this authority over digital asset markets generally.
    Do you foresee that status quo continuing with regard to 
cryptocurrency spot markets?
    Will you explain your vision for how regulation of these 
markets may evolve and what regulatory innovations may be 
necessary to differentiate digital asset commodity markets from 
digital asset security markets to support that evolution?

A.19. It is critical that regulators and regulations keep pace 
with changing technology, and that includes the burst of growth 
of new financial technology--including cryptocurrencies--in the 
last decade. I have spent the last several years at MIT 
studying this field, and I believe financial technology can be 
a powerful force for good-but only if we continue to harness 
the core values of the SEC in service of investors, issuers, 
and the public. If confirmed, I look forward to working with 
the CFTC, along with other Federal regulators and Congress, to 
facilitate innovation in the digital asset markets, consistent 
with established public policy frameworks.

Q.20. The first exchange rule filing to list and trade a 
bitcoin ETP was submitted by Cboe (then Bats) for SEC review in 
June 2016 and was disapproved in March 2017 on the basis that 
there was not a ``significant, regulated market'' underlying 
the proposed ETP. The SEC has disapproved a number of 
additional proposals since 2017 that have tried to address the 
``significant, regulated market'' concerns in various ways, 
most recently in February 2020. In the past year since the last 
disapproval, the price of bitcoin has increased approximately 
five-fold and the regulated bitcoin futures market on Chicago 
Mercantile Exchange has grown significantly. Meanwhile 
investors have pushed assets into lightly regulated OTC bitcoin 
funds, the largest of which has grown from approximately $2.5 
billion to approximately $35 billion in assets despite the 
significant premium volatility in these products (regularly 
ranging from 5 percent to 40 percent) causing risk above and 
beyond the volatility of bitcoin. Approval of a bitcoin ETP 
would essentially eliminate any premium (and thus the premium 
volatility) and provide investors access to bitcoin exposure 
through a transparent, regulated vehicle.
    I understand a new proposal was submitted to the SEC this 
week to allow for a bitcoin exchange traded fund (ETF). Will 
you generally support bringing these types of funds to market 
so that investors can get bitcoin exposure in a familiar 
wrapper which trades in a well-regulated marketplace?

A.20. Without prejudging any specific proposals that I may or 
may not consider at the Commission, if confirmed, I look 
forward to learning more about nascent products such as these 
and to discussing the staff's regulatory decisions on these 
matters over the preceding few years.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAMER
                       FROM GARY GENSLER

Q.1. Many publicly traded companies have been besieged by 
hostile activist actions at shareholder meetings and in 
response to these abusive actions last fall the SEC finalized 
much needed modernizations and amendments to section 14a-8 of 
the Exchange Act Rule. These amendments will prevent 
environmental fringe groups from commandeering shareholder 
meetings to pass resolutions aimed at pushing a political 
agenda. It's a win for our energy producers who have been the 
victims of such attacks. Do you plan to support efforts to roll 
back these common sense reforms during your term on the SEC?

A.1. Shareholders are the owners of the companies in which they 
invest. In advancing its 14a-8 proposal last year, the 
Commission heard from investors concerned about their ability 
to engage in shareholder democracy as well as issuers concerned 
about the consequences for capital formation. If confirmed, I 
will discuss the issue with Commissioners, SEC staff and other 
stakeholders to evaluate how the SEC should approach this 
issue.

Q.2. Many companies across the nation already disclose 
information for investors and stakeholders in their corporate 
social responsibility (CSR) reports. Additionally, companies 
utilize a variety of accepted frameworks to report their 
disclosure obligations including the now well-established 
Sustainability Accounting Standards Board and the emergent Task 
Force on Climate-Related Financial Disclosure, for example.
    Can you assure me that you will take into account existing 
frameworks as the SEC considers the imposition of addition 
disclosure reporting requirements so as to avoid duplication, 
prevent unnecessary expenditures and reporting fatigue?
    Can you describe what you believe would be the best course 
at the SEC to accomplish that?

A.2. If confirmed, I will examine existing frameworks for 
disclosure, including those you mention, with an eye towards 
minimizing any compliance burden for issuers while providing 
investors with the material information they need for 
investment decisions. The best course for the SEC to accomplish 
that goal is by taking an approach that listens to stakeholders 
and following the legal obligations for stakeholder feedback 
that apply under the Administrative Procedures Act and other 
laws.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR DAINES
                       FROM GARY GENSLER

Q.1. During your confirmation hearing on March 2, 2021, you 
stated ``I think that it does bring efficiency to many pension 
to have proxy advisers. It's a service that helps pension funds 
and investors through the proxy season.'' According to the 2020 
Proxy Season Survey, conducted by the U.S. Chamber of Commerce, 
Only 44 percent of the companies responding believe that proxy 
advisory firms carefully research and consider all relevant 
aspects of a particular issue on which it provides advice, 
higher than in both 2019 and 2018 (39 percent both years).
    Would you have concerns if pension funds, or other 
institutional investors, relied on advice that is not based on 
careful research?
    Could pension funds, or other institutional investors, 
theoretically be sacrificing returns on their investments if 
relying on advice that is not based on careful research?
    Would pension funds, or other institutional investors, 
potentially be in breach of their fiduciary responsibilities if 
they relied on advice that is not based on careful research?
    How would you approach the question of ``efficiency'' when 
weighing the costs and benefits of outsourcing research to 
proxy advisory firms when considering a rulemaking or guidance 
for proxy advisory firms?

A.1. Proxy advisory research is one tool used by investment 
advisers in making voting decisions on behalf of clients. 
Investment managers often supplement research from proxy firms 
with their own in-house research and analysis. If confirmed, 
working with fellow commissioners and SEC staff, we would need 
to be careful that the research provided by proxy advisory 
firms is not subject to conflicts of interest, as that may 
undermine the quality of research used by shareholders in the 
exercise of their voting rights. Further, we also would want to 
be mindful not to impose undo costs on fiduciaries. Finally, I 
believe that economic analysis is an important consideration in 
crafting regulations and that that analysis should include both 
the costs and benefits to the regulated entities and on 
investors.

Q.2. A foundational principle of U.S. securities law is the 
materiality standard, which helps protect investors by 
filtering out irrelevant information. Deviation from the 
principle of materiality is costly to public companies and does 
not serve the public interest. It is for this reason that I was 
troubled by your exchange with Ranking Member Toomey on the 
concept of materiality during the hearing on Tuesday, March 2, 
2021.
    Using the hypothetical situation posed by Ranking Member 
Toomey, could you elaborate on when, with regard to a publicly 
traded company spending a financially insignificant amount of 
money on electricity, it would be material whether or not that 
electricity came from renewable sources?

A.2. The Supreme Court has held that information is material if 
there is a substantial likelihood that a reasonable investor 
would view that information as having a significant impact on 
the ``total mix'' of information disclosed. If confirmed, the 
law will guide my consideration of policies that come before 
the Commission related to disclosure. As the Supreme Court has 
determined, there are not simple monetary thresholds to 
determine materiality, which is a nuanced and case specific 
standard.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                       FROM ROHIT CHOPRA

Q.1. Where have you excelled in past positions in hiring and 
promoting people of color? Where is there room for improvement?

A.1. Racial inequality is reinforced and exacerbated by 
workplace racism in both the public and private sectors. From 
black-box algorithms that fail to show employment ads to 
minority candidates to hiring practices that undervalue degrees 
from historically Black colleges and universities to promotion 
policies that give managers the discretion to discriminate, 
there is still much work to do to ensure everyone has equal 
access to opportunity.
    While I have been fortunate to work with, hire, and 
advocate for many exceptional people of color, I believe that 
each of us must take more personal responsibility for 
transforming workplace cultures into ones that address 
discriminatory practices, particularly in hiring and promotion.

Q.2. In August 2011, President Obama issued an Executive Order 
establishing a coordinated, Governmentwide initiative to 
promote diversity and inclusion in the Federal workforce. The 
executive order reads, in part, that ``Attaining a diverse, 
qualified workforce is one of the cornerstones of the merit-
based civil service . . . . To realize more fully the goal of 
using the talents of all segments of society, the Federal 
Government must continue to challenge itself to enhance its 
ability to recruit, hire, promote, and retain a more diverse 
workforce. Further, the Federal Government must create a 
culture that encourages collaboration, flexibility, and 
fairness to enable individuals to participate to their full 
potential.'' The order required each agency to establish an 
agency-specific diversity, equity, and inclusion strategic plan 
with specific objectives.

A.2. I am committed to the goals of Executive Order 13583 and, 
if confirmed, would work to further these goals.

Q.3. Please describe your commitment to diverse hiring at the 
Consumer Financial Protection Bureau (CFPB). Will you review 
and update the CFPB's diversity, equity, and inclusion 
strategic plan to ensure it contains specific objectives?

A.3. The United States Government should strive to be as 
diverse as the people we serve. If confirmed, I would work with 
CFPB staff to review this plan and make appropriate updates so 
that it is concrete and actionable.

Q.4. Will you commit to establishing a system for reporting 
regularly on the CFPB's progress in implementing an agency-
specific diversity, equity, and inclusion strategic plan and in 
meeting the objectives under the plan?

A.4. Yes.

Q.5. Will you commit to transparency on workplace policies, 
salaries, and benefits? What is your plan for implementing 
these policies?

A.5. Yes. If confirmed, I would work with CFPB staff on this 
issue.

Q.6. What are some short- and long-term strategies for 
addressing disparities in the consumer financial products and 
services markets and financial literacy?

A.6. It is critical that our financial system works for all 
Americans. In the short-term, particularly during the pandemic, 
it is critical that consumers can access credit and be free 
from unlawful discrimination. Over the long-term, it is 
critical that the CFPB and other regulators monitor markets 
carefully to get ahead of emerging threats, particularly those 
that harm the most vulnerable consumers.

Q.7. Have you previously implemented and required diversity, 
equity, and inclusion training for all employees and implicit 
bias training for managers within your purview?
    Will you commit to implementing and requiring diversity, 
equity, and inclusion training for all employees within your 
purview? What is your plan for implementing these trainings?

A.7. In many of my past employment experiences, I have 
participated in or implemented certain enterprisewide training 
opportunities within my business unit. If confirmed, I would 
work with CFPB staff to assess any existing trainings and 
ensure any training opportunities are designed and implemented 
with the goal of promoting a safe work environment for all 
employees.

Q.8. Will you commit to implementing and requiring implicit 
bias training for managers within your purview? What is your 
plan for implementing these trainings?

A.8. If confirmed, I would seek to understand any training for 
managers and gather information on its effectiveness. I am 
committed to making the appropriate changes to these programs 
and making them mandatory, consistent with law and regulation.

Q.9. Please describe how you view the role of CFPB Director in 
appropriately serving BIPOC? How do you view the CFPB's role in 
furthering racial equity?

A.9. The CFPB Director must ensure the actions of the Bureau 
meaningfully promote the financial well-being of historically 
underserved and disadvantaged communities.

Q.10. Please list at least 3 specific areas of focus/priorities 
for advancing racial equity, diversity, and inclusion at the 
CFPB. What specific measures will you use to evaluate success 
in these areas, and over what period of time?

A.10. If confirmed, I would work with CFPB staff to identify 
the ways to advance these goals. Three likely areas of focus 
include: (a) addressing homeowner distress in the mortgage 
market stemming from the pandemic that disproportionately 
impacts communities of color, (b) ensuring adequate oversight 
of institutional compliance with the Equal Credit Opportunity 
Act and other appropriate Federal consumer financial laws, and 
(c) ensuring that the CFPB has appropriate systems and 
processes in place to better understand how business practices 
might disproportionately harm communities of color.

Q.11. Please describe how you plan to work with and engage the 
consumer finance sector to serve BIPOC and dismantle systemic 
racism's impact in those sectors? How, specifically, will you 
hold the industry accountable on these issues? How will you 
accelerate private sector efforts to achieve more inclusive 
leadership?

A.11. The most important way that the CFPB can seek to address 
these issues in the consumer finance sector is to hold 
accountable any entities violating Federal consumer financial 
laws. If confirmed, I would support efforts to carefully assess 
how the use of machine learning and algorithmic decision-making 
can reinforce biases, rather than reduce them. With respect to 
any private sector efforts to achieve more inclusive 
leadership, I would work closely with the CFPB's Office of 
Minority and Women Inclusion on the standards developed 
pursuant to section 342(b)(2)(C) of the Dodd-Frank Act.

Q.12. How do you plan on incorporating the views and work of 
the Office of Minority and Women Inclusion and the Office of 
Fair Lending across the CFPB?

A.12. If confirmed as CFPB Director, I expect that the Office 
of Minority and Women Inclusion and the Office of Fair Lending 
& Equal Opportunity will play significant roles in the work of 
the agency.
    For example, I anticipate the Office of Fair Lending & 
Equal Opportunity will be involved in identifying how all of 
the CFPB's tools can advance the goal of equal opportunity, 
both including and beyond the Equal Credit Opportunity Act and 
the Home Mortgage Disclosure Act.

Q.13. The CFPB has outside advisory councils and task forces 
comprised of industry leaders, academics, nonprofits, and other 
stakeholders. They serve as volunteers but have significant 
influence being appointed by and working closely with you. 
Should your agency be judged by its success in populating these 
groups with more diverse advisors on these councils and task 
forces, and if so, over what period of time?

A.13. It is critical that the CFPB hear from a diverse set of 
stakeholders, and if confirmed I would work to ensure diverse 
representation.

Q.14. What specific measures will you use to evaluate the 
CFPB's success in understanding and addressing the needs of 
BIPOC? Will you regularly report to Congress on the progress 
being made on these measures?

A.14. If confirmed, I am committed to rigorous market 
monitoring. For example, if the CFPB uncovers evidence that 
certain groups are being excluded from housing opportunities 
based on faulty tenant screening reports, it is critical we use 
every tool in our toolbox to halt unlawful conduct. I will 
commit to providing Congress information regarding our 
progress.

Q.15. An agency's budget reflects its values and goals. How do 
you plan to allocate and sufficiently resource internal and 
external efforts to advance DEI as part of the agency's annual 
budget process? How will you ensure sufficient financial 
support for the agency-specific diversity, equity, and 
inclusion strategic plan to ensure you are able to meet the 
objectives established under that plan in a reasonable time 
period?

A.15. I am committed to doing everything in my power to ensure 
that the market for financial services is fair, accessible to 
all, and nondiscriminatory. If confirmed, I would work with 
CFPB staff in the budget process to ensure that the CFPB's 
Office of Fair Lending & Equal Opportunity, Office of Minority 
and Women Inclusion, and Office of Civil Rights each has 
sufficient resources to carry out their important missions.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                       FROM ROHIT CHOPRA

Q.1. Access to Small Dollar Credit--Small dollar loans are not 
sold on a secondary market, and they pose no threat to 
financial stability. The regulation of small dollar loans 
essentially boils down to whether consumers can be trusted to 
make their own decisions about what credit they need and what 
they are willing to pay for it. Do you believe that consumers 
are more capable than regulators of understanding their own 
needs and deciding what is best for them?

A.1. It is not the job of regulators to make decisions for 
consumers. The Dodd-Frank Act requires that the agency monitor 
and oversee markets, so that consumers can make choices in a 
competitive environment.

Q.2. In 2017, the CFPB under former Director Richard Cordray 
issued a rule on small dollar loans that would have virtually 
eliminated the small dollar loan industry. In 2019, the CFPB 
revoked this rule. It noted that the 2017 rule would have wiped 
out 89-93 percent of all covered loans. Many consumers have no 
other option when there is a sudden expense that must be paid. 
The demand for these products will not disappear, even if the 
products do. Do you acknowledge that the 2017 rule on small 
dollar lending would have the effect of eliminating the vast 
majority of small dollar loans?

A.2. Although I have not personally reviewed this data, I would 
work with CFPB staff on this important issue if confirmed. I am 
also aware that this rule is currently subject to active 
litigation.

Q.3. Do you think that the CFPB should take choices away from 
consumers and make it harder to access options for small dollar 
credit, including payday, title, and installment loans? Do you 
agree that doing so would leave consumers worse off?

A.3. I believe consumers benefit from having a wide range of 
choices in a market free of unlawful practices.

Q.4. Will you commit to leave the 2019 rule on small dollar 
lending in place? If not, what factors will affect your 
consideration?

A.4. I do not want to prejudge any specific agency actions, 
but, if confirmed, I will carefully consider the impact on 
consumers and access to credit with regards to any regulatory 
action by the CFPB. I am also aware that this rule is currently 
subject to active litigation.

Q.5. Congressional Review Act (CRA)--The CFPB issued a rule 
under former CFPB Director Cordray that prohibited predispute 
arbitration agreements. However, the CFPB's own study on the 
issue showed substantial evidence that such agreements benefit 
consumers. In the 158 arbitration cases analyzed, the average 
award was $5,400, compared to an average award of just $32 in 
class action cases. \1\ In Federal class action cases that 
settled, the CFPB found that trial lawyers received $424 
million--or approximately 24 percent of the total cash payments 
companies made to settle the claims. Knowing this, Congress 
enacted into law a CRA resolution rescinding the rule. Absent 
new legislation, the issue of predispute arbitration agreements 
is closed. I am concerned that the CFPB will try to ban a 
subset of predispute arbitration clauses and evade the clear 
directive from Congress. Will you commit that the CFPB will not 
attempt to issue a rule that prohibits any type or form of 
predispute arbitration agreements?
---------------------------------------------------------------------------
     \1\ https://files.consumerfinance.gov/f/201503-cfpb-arbitration-
study-report-to-congress-2015.pdf

A.5. Under the Congressional Review Act, 5 U.S.C. 801(b)(2), I 
understand that the CFPB cannot reissue the arbitration rule in 
``substantially the same form,'' and cannot issue a new rule 
that is ``substantially the same.'' If confirmed, I will ensure 
---------------------------------------------------------------------------
that the CFPB follows the law.

Q.6. Fair Debt Collection Practices Act (FDCPA)--Congress gave 
the CFPB authority to regulate third-party debt collectors 
under the FDCPA. In 2020, you issued a statement in a Federal 
Trade Commission (FTC) case (In the Matter of Midwest Recovery 
Systems) in which you suggested a significant expansion of the 
CFPB's regulatory authority in a manner that would directly 
contravene congressional intent and create substantial market 
uncertainty. Specifically, you suggested that the CFPB should 
subject first-party creditors (i.e., creditors collecting on 
debts owed to them) to its debt collection rules. Of course, as 
the CFPB itself recognizes, the FDCPA does not cover the 
collection activities of first-party creditors. This reflects a 
decision by Congress regarding the appropriate scope of debt-
collection restrictions. While Congress has the power to 
revisit that decision, the CPFB does not. On what basis do you 
believe the CFPB has the authority to issue a rule (whether 
framed as an FDCPA, unfair, deceptive, or abusive acts or 
practices (UDAAP), or other rule) that would circumvent the 
clear limitations Congress embedded in the legislative 
framework governing debt collection?

A.6. My statement in Midwest Recovery Systems did not concern 
the scope of the FDCPA, but rather the sale of counterfeit debt 
and related problems. The CFPB has challenged problematic 
practices by first-party creditors in a number of enforcement 
matters. For example, in 2015, the CFPB, 47 States, and the 
District of Columbia charged JPMorgan Chase with unlawfully 
selling bad credit card debt and illegally robosigning court 
documents.

Q.7. In addition, the Small Business Administration's Office of 
Advocacy has warned that ``[u]sing the Bureau's UDAAP authority 
creates uncertainty and legal risk for first party creditors.'' 
\2\ There are significant business model differences between 
first- and third-party creditors, which the CFPB has 
recognized, as well as different regulations applicable to such 
creditors. Consumers have ongoing relationships with first-
party creditors, and collecting unpaid debts is usually only an 
ancillary function of their business. In light of these 
important differences between first- and third-party creditors, 
why do you believe such an expansion of the CFPB's regulations 
would be warranted?
---------------------------------------------------------------------------
     \2\ https://cdn.advocacy.sba.gov/wp-content/uploads/2019/09/
19153425/Debt-Collection-Comment-Letter-Sept-2019-Final-pdf1.pdf./

A.7. I am not prejudging any regulatory action. If confirmed, I 
would explore these concerns and seek to understand any impact 
---------------------------------------------------------------------------
on small businesses.

Q.8. Innovation--In 2019, the CFPB finalized three policies to 
promote innovation and reduce regulatory uncertainty: the No-
Action Letter Policy, the Compliance Assistance Sandbox Policy, 
and the Trial Disclosure Program Policy. These policies 
collectively facilitate compliance and allow regulated entities 
to bring new products and services to consumers more quickly. 
What are your views on these policies? Do you intend to retain 
them if confirmed as CFPB Director?

A.8. I am a strong believer in promoting competition. In my 
work at the Federal Trade Commission, I have repeatedly 
expressed concerns about the difficulties that many new 
businesses face when it comes to competing against dominant 
players.
    A competitive and innovative financial sector is critical 
for our economy and our global competitiveness. If confirmed, I 
am committed to working with CFPB staff to identify ways that 
the Bureau can further the efforts of promoting a competitive 
marketplace that incentivizes consumer-friendly innovation.

Q.9. Last year, the CFPB took another positive step toward 
providing clarity and reducing regulatory uncertainty by 
finalizing a new policy on advisory opinions. Under this new 
framework, institutions seeking to comply with regulatory 
requirements can submit a request to the CFPB, which will issue 
opinions on such requests. The CFPB has issued three advisory 
opinions under this policy regarding private education loans, 
earned wage access programs, and special purpose credit 
programs. What are your views on these opinions? Do you intend 
to retain them if confirmed?

A.9. Advisory opinions can be a useful tool in the Bureau's 
toolkit to develop legal interpretations. I do not have access 
to all of the underlying data and analysis used to develop 
these advisory opinions. If confirmed, I would work with CFPB 
staff on any future advisory opinions.

Q.10. Will you commit to continuing to offer advisory opinions 
and no-action letters?

A.10. While I do not want to prejudge any particular regulatory 
action, if confirmed, I would work with CFPB staff on ways to 
use all of the agency's tools to advance the Bureau's mission 
to protect consumers and promote competition.

Q.11. Are there other ways that you believe the CFPB can 
encourage financial innovation?

A.11. I believe we can spur innovation by ensuring markets are 
competitive, and there are many ways to do so. For example, 
Congress enacted section 1033 of the Dodd-Frank Act regarding 
consumer rights to access information, and I am interested in 
ways that implementation of this section can lead to more 
competitive markets. If confirmed, I would work with CFPB staff 
to identify all of the ways that the Bureau can further the 
efforts of promoting a competitive marketplace that 
incentivizes consumer-friendly innovation.

Q.12. CFPB officials have recognized that artificial 
intelligence (AI) ``has the potential to expand credit access 
by enabling lenders to evaluate the creditworthiness of some of 
the millions of consumers who are unscorable using traditional 
underwriting techniques.'' \3\ Do you agree with this 
assessment? If confirmed, will you encourage the use of AI in 
credit underwriting?
---------------------------------------------------------------------------
     \3\ https://www.consumerfinance.gov/about-us/blog/innovation-
spotlight-providing-adverse-action-notices-when-using-ai-ml-models/

A.12. Automated decision-making is reshaping business processes 
across sectors of the economy. During my time as a 
Commissioner, the FTC hosted a hearing on Competition and 
Consumer Protection Issues of Algorithms, Artificial 
Intelligence, and Predictive Analytics that included a number 
of perspectives. While artificial intelligence offers promise, 
it also raises important questions about the transparency of 
decision-making and the accuracy of algorithmic outcomes. If 
---------------------------------------------------------------------------
confirmed, I am committed to carefully examining this issue.

Q.13. Government-Sponsored Enterprise (GSE) Patch--CFPB issued 
a new Qualified Mortgage Rule in 2020 that, after a July 1, 
2021, compliance date, would have replaced the existing General 
QM definition that is based on a 43 percent debt-to-income 
(DTI) ratio requirement and detailed income and debt 
verification requirements with a new General QM definition that 
is based on price spread-based thresholds, and ended the ``GSE 
patch.'' But, this month, the CFPB Acting Director issued a 
proposed rule to extend the GSE patch by extending the July 1, 
2021 mandatory compliance date of the new rule to October 1, 
2022. The GSE patch, as you know, exempts mortgages that meet 
the Fannie and Freddie underwriting standards certain General 
QM requirements (the 43 percent DTI limit and the detailed 
verification requirements) while the companies are under 
government conservatorship, but not after the conservatorship 
ends. The practical effect of the GSE patch is to confer yet 
another regulatory advantage on GSE-supported mortgage 
intermediation that enables the GSEs to crowd out private 
capital and continue their growth. I am concerned that the CFPB 
will extend the GSE patch indefinitely. If confirmed, will you 
let the GSE patch expire as originally scheduled in the 2020 
rule?
    If not, will you at least commit not to extend the GSE 
patch beyond the date contemplated in the proposed rule?

A.13. This announcement was issued by the current leadership of 
the Bureau, and I understand that the Bureau published a notice 
on March 3, 2021, describing its proposal in more detail.
    I do not wish to prejudge any regulatory action, and I 
understand that Congress and a number of agencies are carefully 
considering the future of the GSEs. The CFPB's role, as 
authorized in Dodd-Frank, is to ensure that consumers can 
access mortgages on affordable and understandable terms. 
However, I understand it is critical for the CFPB to work 
closely with the Federal Housing Finance Agency and others to 
understand the market.
    During the confirmation process, I have had the opportunity 
to hear the views of many Senators regarding this topic. I 
appreciated these discussions, and, if confirmed, would listen 
to all perspectives to determine what, if any, changes should 
be proposed.

Q.14. Regulation by Enforcement--The government should set 
clear rules of the road before holding anyone responsible for 
breaking them. This means conducting notice and comment 
rulemaking that establish clear rules in advance. 
Unfortunately, former CFPB Director Cordray preferred to 
regulate by enforcement, a practice he engaged in extensively 
during your time at the CFPB. Perhaps the most egregious 
example is when Director Cordray filed a complaint against 
mortgage company PHH that completely reinterpreted well-settled 
law. In the case of PHH v. CFPB, the D.C. Circuit unanimously 
agreed that the CFPB violated the Due Process Clause of the 
U.S. Constitution because it did not provide fair notice in 
advance of what conduct was prohibited. Do you agree with the 
D.C. Circuit that this action was unfair and unconstitutional?

A.14. While I do not have access to the underlying facts and 
evidence in this matter, I understand that retroactive changes 
to legal interpretations can raise significant fair notice 
concerns. If confirmed, I will follow the law.

Q.15. Do you commit to not have the CFPB resume regulation by 
enforcement if you are confirmed?

A.15. If confirmed, I commit that enforcement actions will be 
grounded in the individual facts and circumstances of each case 
and will respect the rule of law.

Q.16. The Dodd-Frank Act gave the CFPB a new authority to 
prevent ``abusive'' practices, a term that was only loosely 
explained in the statute. It is far from clear exactly what 
actions a financial institution could take that would cause the 
CFPB to file a lawsuit announcing that those actions had been 
``abusive.'' Law professor Todd Zywicki has written: `` 
`Abusiveness' . . . is a novel term with limited predecessors. 
The CFPB, scholars, and commenters have struggled to define the 
term `abusive' in a manner that effectuates Congress' language 
and intent in a predictable and consumer welfare-enhancing 
manner.'' \4\ Will you commit not to bring any new enforcement 
actions charging that a company was ``abusive'' until the CFPB 
has conducted notice-and-comment rulemaking to establish with 
significantly greater clarity what is prohibited by that term?
---------------------------------------------------------------------------
     \4\ https://files.consumerfinance.gov/f/documents/cfpb-zywicki-
written-statement-symposium-abusive.pdf

A.16. In the Dodd-Frank Act, Congress prescribed the 
circumstances under which the CFPB can enforce the prohibition 
on abusive acts or practices, and I commit to following the 
law. State regulators can also enforce the prohibition. 
Although I do not want to prejudge any particular enforcement 
action, I will carefully analyze the facts and law before 
---------------------------------------------------------------------------
authorizing any claims.

Q.17. Government-Run Credit Reporting--President Biden has 
endorsed the idea of creating a new Government-run credit 
reporting agency within the CFPB as an alternative to the 
private credit reporting agencies. He further endorsed making 
this government-run agency mandatory for all Federal lending 
programs, including mortgage loans and student loans. Congress 
has never contemplated CFPB acting as a credit reporting 
agency, and such an expansion would far exceed the CFPB's 
current statutory authority. The Dodd-Frank Act gives the CFPB 
authority to enforce 18 enumerated consumer protection laws, 
and to regulate, supervise, and enforce ``consumer financial 
protection law''--it does not authorize the CFPB to offer 
consumer products. Do you agree that the CFPB does not have the 
authority to establish a credit reporting agency without 
further legislation?

A.17. I am not aware of any authority to establish a credit 
reporting agency without further legislation.

Q.18. Do you believe that the government should expand the 
CPFB's powers and role to include competing with private 
enterprise by offering a credit reporting product?

A.18. I have not reviewed any detailed information regarding 
this proposal. This is a matter for Congress, and, if 
confirmed, I would make staff available to provide technical 
assistance on any proposals.

Q.19. Small Business Data Collection--Section 1071 of the Dodd-
Frank Act directs the CFPB to adopt regulations governing the 
collection of certain small business lending data. In September 
2020, the CFPB released an outline of proposals under 
consideration and alternatives considered. What is your view of 
this proposal?
    I am concerned about the potential burdens of a significant 
new collection of information from small businesses. How will 
you seek to fulfill the purposes of section 1071 while 
minimizing compliance burden on small businesses and the 
financial institutions that serve them?

A.19. Across the country, small businesses are facing 
extinction, and we must do everything we can to ensure they can 
access credit on fair and competitive terms. I do not want to 
prejudge any particular proposals, but if confirmed, I am 
committed to ensuring that the CFPB implements section 1071 of 
the Dodd-Frank Act. If confirmed, I would review the outline 
and consult with CFPB staff, and would have ongoing dialogue 
with Members of the Committee on ways to best implement this 
requirement.

Q.20. Some stakeholders have suggested that one way to make 
this collection more efficient would be for the CFPB to 
establish a database to which small businesses could submit 
information. Will you consider this alternative as you seek to 
develop a proposed rule to implement section 1071?

A.20. Yes. If confirmed, I will look forward to working with 
your office and with CFPB staff to assess ways to streamline 
data collection.

Q.21. Section 1033 Rulemaking--In October 2020, the CFPB 
published an advance notice of proposed rulemaking (ANPR) 
pursuant to section 1033 of the Dodd-Frank Act, which provides 
for consumer access to financial records subject to rules 
prescribed by the CFPB. The ANPR notes that stakeholders have 
raised concerns about the current state of the consumer-
authorized data access ecosystem, including that not all 
consumers are able to authorize access to their data in a 
manner commensurate with the access rights described by section 
1033. Do you share these concerns?
    What is your view of the current state of consumer access 
to financial records? What do you consider the most important 
considerations relevant to this topic?

A.21. Yes, I share these concerns. I believe that consumers 
should have control over their data and over how their data is 
used. I am also sensitive to the security and privacy concerns 
that many stakeholders have regarding this issue. I do not 
believe we have to choose between consumer choice and security 
and privacy. I believe a functioning market enables competitors 
to provide products to consumers safely and transparently.

Q.22. Do you anticipate that you will advance a notice of 
proposed rulemaking pursuant to section 1033? If so, how would 
you prioritize this issue relative to other rulemaking 
priorities?

A.22. I understand that the comment period recently closed on 
the Advanced Notice of Proposed Rulemaking regarding section 
1033. If I am confirmed, I would like to carefully understand 
the analysis conducted to date by CFPB staff. I will work with 
CFPB staff to consider all the comments carefully, and to chart 
a path forward. I believe this effort is very important, given 
the critical role of consumer data, and, if confirmed, will 
update Congress on the CFPB's progress.

Q.23. How will other countries' experience with similar 
regulations inform the CFPB's work in this area?

A.23. It is important that the United States has vibrant and 
competitive financial markets, and I believe our policies 
should recognize the unique features of the American system. At 
the same time, I believe there are lessons that we can draw 
from the experiences of other countries, as well as from the 
states. As an FTC Commissioner, I am in contact with my 
counterparts both in the states and around the globe, and I 
look forward to remaining in contact to share experiences and 
best practices if confirmed.

Q.24. CFPB Public Statements and Deliberations--Under former 
Director Cordray, the CFPB was widely criticized for its use of 
midnight embargoed press releases announcing rules. Such 
embargoes were viewed as a way to avoid engaging with 
stakeholders when releasing important information to the 
public. Will you commit not to return to this practice?
    How will you ensure transparency in the CFPB's 
communications to the public?

A.24. I commit to making transparency an important goal, and if 
confirmed, I will carefully review the CFPB's policies and 
procedures related to press announcements.

Q.25. As you are aware from your experience as an FTC 
Commissioner, agencies with bipartisan boards conduct meetings 
in open session during which a diversity of views--including 
dissenting opinions--are publicly discussed. How will you 
ensure that the CFPB considers a wide range of stakeholder 
views as it develops policy and how will you ensure that such 
views are discussed publicly?

A.25. If confirmed, I will welcome input from all stakeholders, 
including those who may disagree. I especially support multiple 
channels for input, including field hearings held outside of 
Washington, where the agency can hear directly from 
stakeholders in a public setting. The CFPB must also adhere to 
the procedures pursuant to the Administrative Procedure Act to 
solicit public feedback on proposals, where all stakeholders 
can view public comments.
    Public input can help drive sound decision-making, and if 
confirmed, I look forward to engaging with the people we serve 
in new and innovative ways.

Q.26. Enforcement Actions and Regulations--Mr. Chopra, in 
examining your public statements over the years while at the 
CFPB and the FTC, you have routinely advocated for harsher 
penalties against private companies that you believe were 
engaged in wrongdoing. In fact, as an FTC Commissioner, you 
have dissented from numerous cases on the grounds that the 
FTC's actions were not harsh enough against the private entity. 
However, it is unclear when, if ever, you would consider an 
enforcement or other regulatory action against a private 
company to be too burdensome or harsh toward that private 
entity. As an FTC Commissioner, have you ever dissented in a 
case or voted against a rule because you viewed it as too 
burdensome or harsh against a private company? Please list any 
cases or rules and the reasons for your view.

A.26. During my time at the FTC, I have raised concerns about 
the Commission's practice of harshly punishing small actors, 
while holding larger firms to a different standard. For 
example, I have noted that in the FTC's enforcement of the 
Children's Online Privacy Protection Act, the Commission will 
charge individuals and seek harsh penalties for small 
companies, but will go easy on larger firms.
    In some cases, staff have put forth proposed enforcement 
actions, and I have supported closing the investigation when I 
did not believe an action was appropriate. I have also agreed, 
dependent on the facts, to drop claims and individual 
defendants.

Q.27. You were involved in setting up the CFPB and served there 
in a senior capacity for several years during the Obama 
administration. Has the CFPB undertaken any enforcement actions 
or issued any rules that you believe were too burdensome or 
harsh against a private company? Please list any cases and the 
reasons for your view.

A.27. My primary responsibilities did not involve enforcement 
or rulemaking, so I was not privy to the underlying facts in 
the large majority of matters.

Q.28. Conflicts of Interest--In an effort to ``root out 
corruption and restore faith and trust in our Government,'' you 
argue in your 2018 ``Unstacking the Deck'' policy paper that 
``[c]onflicts of interest for senior Government officials 
should be made public, including all ethics advice received 
from agency ethics officials that the officeholder is relying 
upon, as well as any recusals and waivers.'' \5\ If confirmed, 
will you commit to making publicly available all conflicts of 
interests involving yourself within two weeks of the conflict 
being identified by an agency ethics official, including all 
ethics advice received from agency ethics officials that you 
are relying upon, as well as any recusals and waivers?
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05/Unstacked.pdf

A.28. I understand the importance of transparency and seeking 
counsel from the CFPB's Designated Agency Ethics Official on 
issues related to financial conflicts of interest. If 
confirmed, I would work with CFPB ethics staff to explore this 
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issue further, consistent with existing law and regulation.

Q.29. Government Transparency--In an effort to ``root out 
corruption and restore faith and trust in our Government,'' you 
argue in your 2018 ``Unstacking the Deck'' policy paper for 
increased transparency in the Federal Government, including 
with respect to the Freedom of Information Act (FOIA). If 
confirmed, in what specific ways, if any, do you plan to be 
more transparent than is currently required by FOIA and other 
government transparency laws?
    In the same paper, you argue that ``[o]n a routine basis, 
agencies should make certain information available [to the 
public], such as travel expense documentation and executive 
calendars, to deter the misuse of funds and the fair allocation 
of stakeholder consultation.'' Will you commit that, if 
confirmed, you will make CFPB travel expense documentation and 
executive calendars available to the public on a routine basis?

A.29. If confirmed, I would like to continue the CFPB's 
practice of publishing executive calendars, and I would like to 
explore proactively making other information available. In 
addition, I would work with CFPB staff to identify ways to 
further the goal of transparency, consistent with the Bureau's 
privacy and confidentiality obligations, as well as any other 
appropriate law and regulation.

Q.30. What other information, if any, will you make available 
to the public on a routine basis if confirmed to lead the CFPB?

A.30. If confirmed, I would like to consult with CFPB staff and 
stakeholders to identify opportunities to make additional data 
sets and information available to the public, such as those 
identified as part of Governmentwide transparency initiatives, 
consistent with the Bureau's privacy and confidentiality 
obligations, as well as any other appropriate law and 
regulation.

Q.31. Congressional Oversight--In your ``Unstacking the Deck'' 
policy paper, you indicate that ``Congress has long played a 
critical role in oversight of the executive branch'' and that 
Congress's ``ability to shed light on improper conduct [by 
executive branch officials] is important.'' Will you commit 
that, if confirmed, you will timely respond to and fully comply 
with all congressional information requests, including but not 
limited to requests for records?

A.31. I believe that Congressional oversight is important. If 
confirmed, I would work with CFPB staff to be responsive to 
duly authorized requests from this Committee, consistent with 
the law and with past practice by previous Directors.

Q.32. You suggest in your ``Unstacking the Deck'' policy paper 
that agencies may be overusing, if not abusing, FOIA's 
exemptions to withhold documents from the public. FOIA's (b)(5) 
exemption permits agencies to withhold deliberative documents 
from the public. Congress has a constitutional role in 
conducting oversight of agencies, and is not subject to FOIA or 
its exemptions. In light of the views you have expressed, will 
you commit not to withhold deliberative documents requested by 
a congressional committee Chairman or Ranking Member?

A.32. Agencies should be responsive to the public and Congress. 
If confirmed, I would work with CFPB staff to be responsive to 
duly authorized requests from this Committee, consistent with 
the law and with past practice by previous Directors.

Q.33. Do you believe that the CFPB may assert any privileges or 
other legal justifications to withhold information (whether 
records or oral testimony) from Congress? If so, please 
describe all such privileges or other legal justifications. 
Please answer ``yes'' or ``no.''
    If you answered ``yes'' to Question 3, please list every 
such privilege or other legal justification and provide the 
legal basis for why you believe the CFPB may use such privilege 
or legal justification to withhold information from Congress.
    In an effort to be open and transparent with Congress and 
the public, will you commit not to assert any such privilege or 
legal justification against Congress that you listed above? If 
not, why not? If so, please identify all such privileges or 
legal justifications that you will commit to not assert against 
Congress.
    Will you commit that, if confirmed, you will make yourself 
and any other CFPB employee expeditiously available to provide 
oral testimony (including but not limited to briefings, 
hearings, and transcribed interviews) to a Congressional 
committee on any matter within the committee's jurisdiction 
upon the request of either the Chairman or Ranking Member? 
Please answer ``yes'' or ``no.'' If your answer is ``no,'' 
please explain why.

A.33. Agencies should be responsive to the public and Congress, 
and I believe that Congressional oversight is important. If 
confirmed, I would consult the agency's legal counsel so that 
the CFPB can be responsive to duly authorized requests from 
this Committee, consistent with the law and with past practice 
by previous Directors.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER
                       FROM ROHIT CHOPRA

Q.1. Public Service Student Loan Forgiveness--I have been 
frustrated by the problems in this program and the lack of 
information.
    How will you ensure proper oversight in the areas of the 
CFPB's jurisdiction?

A.1. I share your frustration with problems in this program, 
which was designed to help teachers, first responders, and 
other public servants. It is critical to ensure loan servicers 
have policies and procedures in place to prevent these problems 
before they harm borrowers, and it is important for the CFPB to 
work closely with the Department of Education on these issues. 
The CFPB currently supervises nonbank larger participants in 
the student loan servicing market, and ensuring their 
compliance with consumer financial protection laws would be a 
priority if I am confirmed.

Q.2. Innovations--In recent years the Consumer Financial 
Protection Bureau has used a combination of No Action Letter 
policy, the Compliance Assistance Sandbox, and the Advisory 
Opinion Program to encourage innovation initiatives. We've also 
seen each of the Federal prudential regulators launch and/or 
expand their innovation initiatives to encourage new innovative 
financial services providers to engage directly with regulators 
around new product and service offerings.
    What role do you envision for your Office of Innovation--
particularly in terms of its ability to provide guidance and 
regulatory certainty to regulated entities regarding innovative 
product offerings through the Bureau's No Action Letter policy?
    How will you ensure adequate protections for consumers and 
recourse through these initiatives?

A.2. I am a strong believer in promoting competition. In my 
work at the Federal Trade Commission, I have repeatedly 
expressed concerns about the difficulties that many new 
businesses face when it comes to competing against dominant 
players.
    A competitive and innovative financial sector is critical 
for our economy and our global competitiveness. If confirmed, I 
would work with CFPB staff to identify all of the ways that the 
Bureau can further the efforts of promoting a competitive 
marketplace that incentivizes consumer-friendly innovation.

Q.3. New Services for Workers--Sixty-three percent of adults 
live paycheck to paycheck in this country and are stuck in a 
cycle of expensive overdraft fees, payday loans and late bill 
fees, to cover every day essential expenses while waiting for 
their paycheck to arrive from their employer.
    In recent years, there has been an emergence of ``earned 
wage access'' services that aim to help individuals access 
their pay in real-time and reduce reliance on the costly 
alternatives that can perpetuate the debt cycle.
    What do you view the role of the CFPB as these 
technological innovations emerge?

A.3. I strongly support competitive markets that give consumers 
more market power and choices. As firms introduce new financial 
products and services, it will be critical that the Bureau 
ensures they comply with the law. If confirmed, I would work 
with CFPB staff to better understand Earned Wage Access 
products and other aspects of this market.
    In addition, I support efforts to give consumers more 
control over their money by modernizing our payments networks. 
Consumers should be able to access their money as soon as it is 
deposited and control when that money is debited in real time.

Q.4. Housing--As you and I have discussed, in places like 
Montana we have unique challenges. For one, our housing market 
is hot, with people coming to the state for a variety of 
reasons. That said, we also have a lot of long-time rural 
homeowners and aspiring homeowners who do not find a standard 
mold or profile for income and asset verification. The GSEs, 
USDA, and FHA help, but it's not enough.
    What can be done to help ensure that a private market can 
exist for non-traditional borrowers in states like Montana?
    Can the bureau commit to working with lenders AND investors 
in these mortgages to help increase safe home ownership access?

A.4. It is critical that Americans living in rural communities 
have access to safe, affordable, and nondiscriminatory 
financial products and services. Too often, these communities 
are overlooked by major financial institutions. If confirmed, I 
fully commit to working with lenders, investors, and other 
stakeholders to promote an inclusive financial system. In 
addition, at the FTC I have engaged farmers, ranchers, and 
other agricultural producers, and I would like to continue that 
engagement at the CFPB if confirmed. This will help the Bureau 
assess where the market is not meeting the needs of rural 
communities. Across the board, I would ensure, if I am 
confirmed, that the CFPB always takes into account the impact 
of its rules on consumers in rural areas.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                       FROM ROHIT CHOPRA

Q.1. Section 1073 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act required the CFPB to establish 
disclosure requirements on remittance transfers. Over the past 
several years, multiple rules on remittances have been 
finalized. Please describe how you will approach remittances 
and seek to eliminate hidden costs and fees for consumers and 
increase transparency in the remittance market.

A.1. When Americans send money using remittance transfers, it 
is important that they clearly understand the costs and fees 
associated with these transfers. If confirmed, I would work 
with CFPB staff to understand changes in the remittance 
transfer market, particularly in light of COVID-19.
    In addition, I understand that virtual currencies might 
replace certain types of remittance transfer products. If 
confirmed, I believe it will be important for the CFPB to work 
with other regulators to understand any shifts in the 
marketplace and consumer behavior.

Q.2. Acting Director Uejio has indicated that ``some companies 
have been lax in meeting their obligation to respond to 
complaints,'' and that ``consumer advocates have found 
disparities in some companies' responses to Black, Brown, and 
Indigenous communities.'' Please describe the importance of the 
complaint database and how you intend to use it to carry out 
the functions of the Bureau.

A.2. The consumer complaint system that the CFPB administers 
pursuant to the Dodd-Frank Act is a central part of the 
Bureau's work. Not only is it a gateway for consumers to seek 
help when faced with serious problems, it also allows the 
agency to spot trends within certain institutions and across 
entire markets.
    The CFPB's consumer complaint system can and should inform 
the work of all the agency's functions. In addition, industry 
participants and compliance professionals have noted that the 
complaint dataset is an important source of information to 
understand consumer experience and address issues before they 
become systemic. If confirmed, I would work to ensure that the 
consumer complaint system is robust and responsive.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
              SENATOR VAN HOLLEN FROM ROHIT CHOPRA

Q.1. CFPB employees have raised important concerns about pay 
disparities at the agency, including pay gaps that disadvantage 
Black and Hispanic workers. Will you commit to working with 
CFPB employees and their union to examine and address these 
issues of pay equity?

A.1. Yes. If confirmed, I would work with CFPB employees and 
their union to examine these issues.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                       FROM ROHIT CHOPRA

Q.1. If confirmed, will you move forward with a rulemaking 
pursuant to Section 1033 of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act?

A.1. While Section 1033 does not impose a specific deadline, as 
a general matter, I believe it is important for the CFPB to 
prioritize the consideration of implementing provisions of the 
CFPB's authorizing statute. I also support the broader goal of 
giving consumers greater control of their data. If confirmed, I 
would consult with CFPB staff and review progress to date on 
this initiative.

Q.2. In what ways do you believe FinTech can uniquely increase 
access to credit for consumers? If confirmed, how will you lead 
the Bureau in a way that protects consumers from predatory 
practices without stifling innovative technologies?

A.2. I believe that consumers reap major benefits when markets 
are competitive and companies are competing to deliver the 
best, most consumer-friendly products and services. If 
confirmed, I would seek to identify ways to promote competition 
and innovation, while also ensuring that laws passed by 
Congress are followed. This would involve close engagement with 
innovators, regulators, and other stakeholders to ensure we can 
reap these benefits.

Q.3. The current payments provisions of the CFPB's Small Dollar 
Rule apply the same standards to debit cards as ACH 
transactions. Do you think this approach makes sense for debit 
cards, given that unlike ACH transactions, no fee is assessed 
when funds are not available? If you think this approach does 
not make sense, would you consider addressing this challenge if 
confirmed?

A.3. This matter is currently subject to litigation, but I am 
aware of the petition for rulemaking on this topic and of the 
Bureau's response, including the discussion of fees. If 
confirmed, I would work with CFPB staff to consider whether 
further action is appropriate.

Q.4. If confirmed, how will you ensure that changes made to the 
QM Rule and other Bureau actions are done in a way that 
preserve access to manufactured housing for Arizona families? 
Will you commit to making changes if warranted?

A.4. Millions of Americans live in manufactured homes, and it 
is critical that the CFPB take their interests into account 
when it comes to rulemaking and other policy initiatives in the 
housing sector. If confirmed, I would work with CFPB staff and 
your office to ensure this market is well served.

Q.5. Former Director Cordray established an Office of 
Innovation, which administers the No Action Letter, Trial 
Disclosure, and Compliance Assistance Sandbox programs. If 
confirmed, will you maintain support for these programs?

A.5. I am a strong believer in promoting competition. In my 
work at the Federal Trade Commission, I have repeatedly 
expressed concerns about the difficulties that many new 
businesses face when it comes to competing against dominant 
players, particularly when it comes to large technology 
platforms.
    A competitive and innovative financial sector is critical 
for our economy and our global competitiveness. If confirmed, I 
would work with CFPB staff to identify all of the ways that the 
Bureau can further the efforts of promoting a competitive 
marketplace that incentivizes consumer-friendly innovation.

Q.6. If confirmed, how will you approach the issue of 
cybersecurity, particularly for non-banks? What is the CFPB's 
role on this issue?

A.6. The Equifax data breach is a clear reminder that nonbank 
financial institutions hold extremely sensitive data that must 
be protected. If confirmed, I would closely coordinate with 
other agencies to determine the best way to promote adequate 
security practices, consistent with existing law and 
regulation.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAPO
                       FROM ROHIT CHOPRA

Q.1. The CFPB finalized a rule prohibiting the use of 
predispute arbitration agreements that prevent consumers from 
participating in class action lawsuits in July 2017. Critics of 
the rule noted that the CFPB relied on erroneous assumptions to 
justify rulemaking. For example, the CFPB's study ignored the 
pragmatic benefits of arbitration and exaggerated the purported 
benefits of class action lawsuits.
    In October 2017, I worked with my Senate colleagues to 
repeal the finalized rule. In accordance with the CRA passed to 
overturn the rule, a new rule may not be issued in 
``substantially the same form,'' as the disapproved rule unless 
specifically authorized by a subsequent law.
    Do you believe the Bureau maintains the authority to issue 
a new rule on arbitration clauses despite the CRA enacted in 
November 2017?

A.1. Under the Congressional Review Act, 5 U.S.C. 801(b)(2), I 
understand that the CFPB cannot reissue the arbitration rule in 
``substantially the same form,'' and cannot issue a new rule 
that is ``substantially the same.'' If confirmed, I would 
ensure that the CFPB follows the law.

Q.2. What specific steps would you take to increase 
transparency and accountability at the CFPB?

A.2. I believe all government agencies must constantly evaluate 
ways to be more transparent about their actions and decision-
making. In particular, I want to explore additional ways to 
solicit input from the public and stakeholders.
    In addition, section 1016 of the Dodd-Frank Act requires 
the CFPB to file regular reports to Congress on a host of its 
activities. I am committed to complying fully with this 
requirement if confirmed. I would also work with CFPB staff to 
identify opportunities to make additional information available 
through these and other reports.
    Most importantly, I believe that the CFPB must engage with 
Congress, and I am committed to identifying ways to deepen that 
engagement. In addition to testifying before this Committee, I 
also hope to directly communicate with Members of the Committee 
to discuss priorities, concerns, and areas of common ground.

Q.3. Large data breaches, such as the recent Solarwinds hack, 
have underscored the vulnerabilities in our technological 
infrastructure. If confirmed to the CFPB, how would you ensure 
protection of data protected by the Bureau?

A.3. I am committed to privacy and data protection. The CFPB 
was set up to be a data-driven regulator. I support that 
approach and recognize that we need to protect consumer privacy 
in the process. CFPB data collection must operate in compliance 
with a wide variety of Federal data privacy standards, such as 
the Privacy Act of 1974. Additionally, section 1022 of the 
Dodd-Frank Act limits the Bureau's ability to collect 
personally identifiable financial information from financial 
institutions subject to the Bureau's jurisdiction, and in 
particular it prohibits the Bureau from using its market 
monitoring and rules assessment authorities to obtain records 
from those financial institutions for purposes of gathering or 
analyzing the personally identifiable financial information of 
consumers. The Federal Information Security Modernization Act 
of 2014 also requires an annual, independent evaluation of the 
Bureau's information security program.
    If confirmed, I would follow these requirements and explore 
other best practices to protect information obtained by the 
Bureau.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                       FROM ROHIT CHOPRA

Q.1. I appreciated our discussion during the hearing about the 
importance of providing clear and well-articulated rules of the 
road regulated entities. Well-defined regulations are 
important, but it is also vital that the CFPB approaches 
rulemaking process in a way that carefully considers input form 
market participants and relevant regulatory agencies. The 
Bureau was created to specifically focus on consumers, it does 
not preclude the other Federal banking regulators from issuing 
regulations that benefit consumers.
    To that end, will you commit to work with the other Federal 
regulators to ensure that CFPB regulations are in conformance 
with the existing regulatory structure?

A.1. I agree that regulators should provide clear rules of the 
road and consider input from a broad range of stakeholders. I 
also agree that it critical for regulators to maintain open 
lines of communication, and I commit to working closely with 
both state and Federal regulators if confirmed.

Q.2. As a member of both the Banking and HELP Committees, I am 
interested in a public comment you made saying ``There is a lot 
more to do in student lending''. If confirmed, in what ways do 
you plan to direct the focus of Bureau staff to protect 
consumers seeking and obtaining Federal student loans?
    If confirmed, in what ways do you plan to direct the focus 
of Bureau staff to protect consumers seeking and obtaining 
Federal student loans?

A.2. Many students and their families find borrowing for 
college to be complex and confusing. In the past, the Bureau 
has launched a Know Before You Owe effort in partnership with 
the Department of Education to help families navigate their 
options and reduce the amount of debt they take on. If 
confirmed, I am committed to ensuring that the CFPB works 
closely with the Department of Education to help improve the 
borrower decision-making process.

Q.3. The CFPB very recently issued an official statement 
declaring an intent to delay the implementation periods of the 
QM regulations issued in December 2020 in order to give the 
incoming Director the opportunity to review and possibly amend 
those rules. These regulations were initiated because the GSE 
Patch--that provides for safe lending to over half of the 
mortgage market--is lapsing. There is considerable anxiety that 
shelving these rules will cause a market shock.
    I understand that the December final rules being postponed 
have very broad support from industry, consumer, and civil 
rights advocates because they will allow lenders to expand 
mortgage credit while maintaining strong consumer protections.
    Can you explain the rationale for postponing these rules, 
as well as changes you intend to undertake in a future 
rulemaking if confirmed?

A.3. This announcement was issued by the current leadership of 
the Bureau, and I understand that the Bureau published a notice 
on March 3, 2021, describing its proposal in more detail.
    I do not wish to prejudge any regulatory action, and I 
understand that Congress and a number of agencies are carefully 
considering the future of the GSEs. The CFPB's role, as 
authorized in Dodd-Frank, is to ensure that consumers can 
access mortgages on affordable and understandable terms. 
However, I understand it is critical for the CFPB to work with 
the Federal Housing Finance Agency and others to understand the 
market.
    During the confirmation process, I have had the opportunity 
to hear the views of many Senators on this topic. I appreciated 
these discussions, and, if confirmed, would listen to a broad 
diversity of perspectives to determine what, if any, changes 
should be proposed.

Q.4. Manufactured housing is the most affordable homeownership 
option for American families. However, the smaller dollar size 
of some manufactured home loans and the lack of a secondary 
mortgage market for personal property home loans creates the 
need for agencies to use care in writing regulations that 
impact this market. For example, using pricing as a criteria 
disadvantages smaller loans--like those of manufactured homes--
so sufficient threshold adjustments must be made to preserve 
the availability of affordable loans for manufactured home 
buyers and borrowers. The CFPB's QM notice from December 
recognized that smaller loans require these different 
thresholds.
    As you consider changes to the QM rule and look at other 
CFPB regulations, can you assure me that you will remain 
mindful of the impact of agency actions on the availability of 
financing for manufactured homes, and that you will ensure 
adjustments are made when needed to preserve liquidity for this 
important home ownership option?

A.4. Millions of Americans live in manufactured homes, and it 
is critical that the CFPB take their interests into account 
when it comes to rulemaking and other policy initiatives in the 
housing sector. If confirmed, I would work with CFPB staff and 
your office to ensure this market is well served.

Q.5. As you know, one of the statutory mandates of the CFPB is 
to ensure that ``markets for consumer financial products and 
services operate transparently and efficiently to facilitate 
access and innovation.'' In support of this objective, Former 
Director Cordray established an Office of Innovation, which 
administers the No Action Letter (NAL), Trial Disclosure, and 
Compliance Assistance Sandbox programs. These programs are 
important to tools to reduce barriers to innovation.
    If confirmed, do you intend to maintain and support these 
programs?

A.5. I am a strong believer in promoting competition. In my 
work at the Federal Trade Commission, I have repeatedly 
expressed concerns about the difficulties that many new 
businesses face when it comes to competing against dominant 
players.
    A competitive and innovative financial sector is critical 
for our economy and our global competitiveness. If confirmed, I 
would work with CFPB staff to identify ways that the Bureau can 
further the efforts of promoting a competitive marketplace that 
incentivizes consumer-friendly innovation.

Q.6. Last year, President Biden voiced support for a 
progressive proposal to create a public credit bureau run by 
the CFPB. Promoters of this radical idea purport that only the 
Federal Government is equipped to solve systemic challenges of 
financial inclusion.
    I am hugely skeptical of these arguments. Not only have I 
have rarely seen the Federal Government do something better 
than private industry, this would also be a massive expansion 
of government into the lives of private citizens, akin only to 
what we see in countries like China.
    Sound and prudent lending decisions must be based on an 
individual's actual credit risk and their ability to repay, 
which are derived from a credit report's objective cataloging 
of a person's historical financial behavior. A Government-run 
credit bureau will not magically make consumers better credit 
risks.
    Do you agree that a State-run public credit bureau would be 
a huge risk to the safety and soundness of the consumer lending 
markets?

A.6. I have not reviewed any detailed information regarding 
this proposal. This is a matter for Congress, and, if 
confirmed, I would make CFPB staff available to provide 
technical assistance on any proposals.

Q.7. One of the key tenets of the government-run bureau, is 
that it would require so-called ``alternative data'' 
reporting--rental, telco and utility information--to bring more 
people into the credit mainstream. This is confusing, since 
credit bureaus currently accept alternative data and have been 
proponents of bipartisan legislation that I've repeatedly 
introduced to encourage more alternative data furnishing. Tens 
of millions of credit invisible Americans have already gained 
greater access to credit through the use of alternative data, 
and companies are investing more every year to bring more 
people into the credit mainstream.
    Can you explain to me how a Government-run bureau 
established to collect the very same data that private industry 
already gathers is not the definition of a solution in search 
of a problem?

A.7. I believe the CFPB's role is to monitor consumer reporting 
markets and ensure compliance with the Fair Credit Reporting 
Act and other applicable laws. If Congress wishes to amend 
these laws, I am committed to making CFPB staff available to 
provide technical assistance.

Q.8. Do you agree that a better solution is for policymakers to 
incentivize more alternative data furnishing, rather than try 
to displace a well-functioning industry?

A.8. I understand that the CFPB has published research on 
``credit invisibles'' that discusses the issue of alternative 
data furnishing. If confirmed, I would work with CFPB staff and 
stakeholders to advance the goal of financial inclusion.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS
                       FROM ROHIT CHOPRA

Q.1. In 2017, the CFPB filed a lawsuit against 15 
securitization trusts--the National Collegiate Student Loan 
Trusts--seeking to penalize the Trusts, and thereby the 
underlying investors, for alleged wrongdoing of the loan 
servicer(s). All market participants, including investors, need 
to trust that well-meaning government actors and regulators 
will not abrogate their contractual rights and hold them 
responsible for unrelated third parties' alleged acts. If 
market participants cannot trust that transaction documents 
won't be altered, it calls into question the validity of those 
contracts and, consequently, the market itself. This 
uncertainty will result in a reduction in the availability of 
and/or an increase in the cost of credit for individuals and 
businesses across the country. In your opinion, do the CFPB's 
actions threaten the continued healthy functioning of the 
securitization market or annul investors' contractual rights 
for the alleged acts of unrelated third parties?

A.1. I believe that well-functioning capital markets are 
critical to our country's prosperity and competitiveness. It is 
always important for agencies to understand the impact of their 
actions on our capital markets. This matter is in active 
litigation. If confirmed, I would work with CFPB staff to learn 
more about the status of the litigation and engage with your 
office on these concerns.

Q.2. The CFPB is currently in litigation with The National 
Collegiate Master Student Loan Trust and I'm concerned this 
case may have far-reaching consequences for markets and 
consumers. From a policy perspective, the Bureau's positions 
have real consequences for the securitization market and the 
substantial credit it provides to consumers. As just one 
example, under the Bureau's vicarious liability theory, GSE-
sponsored securitization trusts--i.e., the owners of the 
majority of residential mortgage debt in the country--would be 
liable for violations of Federal consumer financial law 
committed by the servicers with whom they contract. That is a 
radical upending of the expectations of key players in the 
largest market for consumer financial services in the country. 
Does the CFPB plan to reconsider this case?

A.2. This matter is in active litigation. If confirmed, I would 
work with CFPB staff to learn more about the status of the 
litigation and engage with your office on these concerns.

Q.3. Last year I wrote to former Director Kraninger about the 
CFPB v. NCSLT matter. I'm concerned the uncertainty this case 
injects into the market that will likely result in 
securitization investors requiring higher risk premiums or 
reducing their participation in the securitization market, 
which in turn can result in higher interest rates for student 
borrowers. The net effect of this would be higher borrowing 
costs and lower credit availability for the very consumers and 
businesses across the U.S. the Bureau is seeking to protect. 
Has the Bureau decided how to move forward with this case?

A.3. This matter is in active litigation. If confirmed, I would 
work with CFPB staff to learn more about the status of the 
litigation and engage with your office on these concerns.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR KENNEDY
                       FROM ROHIT CHOPRA

Q.1. The CFPB finalized a rule prohibiting the use of 
predispute arbitration agreements that prevent consumers from 
participating in class action lawsuits in July 2017. Critics of 
the rule noted that the CFPB relied on erroneous assumptions to 
justify rulemaking. For example, the CFPB's study ignored the 
pragmatic benefits of arbitration and exaggerated the purported 
benefits of class action lawsuits.
    In October 2017, I worked with my Senate colleagues to 
repeal the finalized rule. In accordance with the CRA passed to 
overturn the rule, a new rule may not be issued in 
``substantially the same form,'' as the disapproved rule unless 
specifically authorized by a subsequent law.
    Do you believe the Bureau maintains the authority to issue 
a new rule on arbitration clauses despite the CRA enacted in 
November 2017?

A.1. Under the Congressional Review Act, 5 U.S.C. 801(b)(2), I 
understand that the CFPB cannot reissue the arbitration rule in 
``substantially the same form,'' and cannot issue a new rule 
that is ``substantially the same.'' If confirmed, I would 
ensure that the CFPB follows the law.

Q.2. What specific steps would you take to increase 
transparency and accountability at the CFPB?

A.2. I believe all government agencies must constantly evaluate 
ways to be more transparent about their actions and decision-
making. In particular, I want to explore additional ways to 
solicit input from the public and stakeholders.
    In addition, section 1016 of the Dodd-Frank Act requires 
the CFPB to file regular reports to Congress on a host of its 
activities. I am committed to complying fully with this 
requirement if confirmed. I would also work with CFPB staff to 
identify opportunities to make additional information available 
through these and other reports.
    Most importantly, I believe that the CFPB must engage with 
Congress, and I am committed to identifying ways to deepen that 
engagement. In addition to testifying before this Committee, I 
also hope to directly communicate with Members of the Committee 
to discuss priorities, concerns, and areas of common ground.

Q.3. Large data breaches, such as the recent Solarwinds hack, 
have underscored the vulnerabilities in our technological 
infrastructure. If confirmed to the CFPB, how would you ensure 
protection of data protected by the Bureau?

A.3. I am committed to privacy and data protection. The CFPB 
was set up to be a data-driven regulator. I support that 
approach and recognize that we need to protect consumer privacy 
in the process. CFPB data collection must operate in compliance 
with a wide variety of Federal data privacy standards, such as 
the Privacy Act of 1974. Additionally, section 1022 of the 
Dodd-Frank Act limits the Bureau's ability to collect 
personally identifiable financial information from financial 
institutions subject to the Bureau's jurisdiction, and in 
particular it prohibits the Bureau from using its market 
monitoring and rules assessment authorities to obtain records 
from those financial institutions for purposes of gathering or 
analyzing the personally identifiable financial information of 
consumers. The Federal Information Security Modernization Act 
of 2014 also requires an annual, independent evaluation of the 
Bureau's information security program.
    If confirmed, I would follow these requirements and explore 
other best practices to protect information obtained by the 
Bureau.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR MORAN
                       FROM ROHIT CHOPRA

Q.1. Congressional policies regarding Indian tribes support 
prioritizing Indian tribal sovereignty demands and Federal 
policies which promote tribal self-determination and self-
reliance.
    The structure of the CFPB places an enormous amount of 
power and responsibility in one person. In the past, that power 
has been used against tribal governments to create a roller 
coaster effect and has done little to advance the principles of 
self-determination and self-reliance. Information received by 
my office indicates that little meaningful consultation has 
been done since the inception of the Bureau between tribes and 
the CFPB under either Democratic or Republican appointees. 
Under all Directors to date, tribes often were provided with 
very little notice of meetings in D.C. which resulted in check-
the-box consultations that were rarely meaningful and costly to 
tribal stakeholders regarding time and travel.
    Congress was very clear in the Consumer Protection Act that 
Congress' clear intent was for tribal and State governments and 
laws to be placed at parity. The CFPA makes this abundantly 
clear by including federally recognized Indian tribes in the 
definition of ``State.''
    The CFPB has entered into MOUs with the Conference of State 
Banking Supervisors and other state units on the intricacies of 
coregulation, cooperation, and training. The CFPB's Department 
of Innovation has freely included States into the American 
Consumer Financial Innovation Network. Disappointingly, to date 
only one MOU exists with a tribal government and no tribal 
governments have been allowed to join the American Consumer 
Financial Innovation Network despite Congress' clear intent 
that tribes be treated by the Bureau with the same dignity and 
respect afforded the 50 State Governments, the District of 
Columbia, and U.S. territories. Further, the CFPB has yet to 
employ any experts with Indian law expertise and cultural 
understanding within the Bureau.
    Will you commit to rectifying this exclusion during your 
tenure if confirmed?

A.1. I am committed to ensuring that the views and interests of 
tribal communities are reflected in CFPB policymaking, and if 
confirmed, I would work with CFPB staff to ensure that tribes 
can have their voices heard around key decisions. I also 
welcome suggestions from your office on how to continuously 
improve this engagement.

Q.2. The Bureau has not been clear on the use of prohibited 
bases in pre-application marketing. Social media platforms 
present a unique challenge for creditors who want to leverage 
new and effective communication and social networking channels 
increasingly used by consumers. Would you support the Bureau 
clarifying ECOA's coverage of pre-application marketing, so 
that lenders may proactively seek out consumers who might 
otherwise not know about their products and services?

A.2. Social media has become a key part of American life and 
American commerce, but it can also facilitate practices that 
exclude and discriminate. I am committed to vigorous 
enforcement of ECOA regardless of the medium, and I agree that 
the Bureau must work with stakeholders and partner agencies to 
set clear expectations around compliance. If confirmed, I would 
work with CFPB staff to learn more about the issue of pre-
application marketing.

Q.3. The Consumer Financial Protection Act prohibits 
``abusive'' practices, but does not define that term, in 
contrast to its definition of ``unfair'' practices. How does an 
abusive practice differ from an ``unfair'' one in your mind? 
Can a practice that does not meet the 3-part standard for 
unfairness be ``abusive,'' i.e., is an ``abusive'' act less 
harmful than an unfair one?

A.3. The Dodd-Frank Act is clear that the CFPB can enforce the 
prohibition on abusive acts or practices only if they meet 
criteria laid out in the statute. These criteria are distinct 
from the statutory standard for unfairness. Whether particular 
conduct qualifies as abusive or unfair will depend on the 
facts. State regulators can also enforce this prohibition.

Q.4. What will be the Bureau's consumer protection priorities 
for student loan borrowers?

A.4. If confirmed, my primary focus would be ensuring that 
entities subject to Federal consumer financial laws comply with 
their legal obligations. I believe that the market for student 
loans should be transparent and competitive, so that consumers 
can make informed choices about taking on debt. I also believe 
that consumers should be treated fairly by servicers as they 
make payments on their loans, including with respect to any 
loan modification options available.

Q.5. What can the Bureau do to protect students from loan 
servicing problems or errors before they occur, rather than 
after they have happened? Additionally, do you plan to focus on 
the nonbank actors in the private student loan market that are 
not subject to the same consumer protection standards (safety, 
supervision, and compliance) as regulated financial 
institutions?

A.5. It is critical to ensure loan servicers have policies and 
procedures in place to prevent these errors before they harm 
borrowers. The CFPB currently supervises nonbank larger 
participants in the student loan servicing market, and ensuring 
their compliance with consumer protection laws would be a 
priority if I am confirmed.

Q.6. For a growing number of students, a college education is 
not a 4 year process, but takes 5 or more years, increasing the 
cost substantially. What can the CFPB do to educate families 
about this problem, either in coordination with colleges or on 
its own?

A.6. Many students and their families find borrowing for 
college to be complex and confusing. In the past, the CFPB has 
launched a Know Before You Owe effort in partnership with the 
Department of Education to help families navigate their options 
and reduce the amount of debt they take on. If confirmed, I am 
committed to ensuring that the CFPB works closely with the 
Department of Education and other stakeholders to help improve 
the borrower decision-making process.

Q.7. Since 2012, the CFPB has been collecting from banks 
detailed account-level data on credit card customers and other 
borrowers.
    How is this information used by the Bureau and how are 
consumers being protected from the misuse/breach of this data?
    Are you aware of any CFPB actions, such as rulemakings or 
enforcement actions, that could not have been made without the 
use of This information, for example if the Bureau relied 
instead on other sources of the information, or on periodic 
rather than monthly data submissions?
    Will you consider ways to reduce the volume of account 
level data you collect?

A.7. The CFPB was set up to be a regulator that monitors 
markets and bases its policymaking on data and evidence. I 
support that approach and recognize we need to protect consumer 
privacy in the process. CFPB data collection must operate in 
compliance with a wide variety of Federal data privacy 
standards, such as the Privacy Act of 1974. Additionally, 
section 1022 of the Dodd-Frank Act limits the Bureau's ability 
to collect personally identifiable financial information from 
financial institutions subject to the Bureau's jurisdiction. In 
particular, it prohibits the Bureau from using its market 
monitoring and rules assessment authorities to obtain records 
from those financial institutions for purposes of gathering or 
analyzing the personally identifiable financial information of 
consumers. The Federal Information Security Modernization Act 
of 2014 also requires an annual, independent evaluation of the 
Bureau's information security program.
    If confirmed, I would follow these requirements and explore 
other ways to protect information obtained by the Bureau.

Q.8. The Consumer Financial Protection Act obligates the CFPB 
to coordinate its examinations of financial institutions with 
bank regulators, yet banks continue to undergo compliance 
examinations from as many as four different regulators, and 
experience unproductive duplication and unnecessary costs.
    Will you work to enhance coordination perhaps by relying on 
the work of bank regulators?
    Are there other ways that the excessive and duplicative 
burdens on both banks and regulators could be reduced?

A.8. As an FTC Commissioner, I have developed working 
relationships with banking supervisors throughout the United 
States, and I believe coordination across agencies is not only 
required by the Dodd-Frank Act but prudent as a matter of 
course. If confirmed, I would continue to work closely with 
other regulators as appropriate, including other Federal 
agencies on the FFIEC, to identify procedures that may be 
duplicative.

Q.9. Over the last several years, short-term, small dollar 
products structured as ``Earned Wage Access'' products have 
provided a tools for workers to access cost effective and quick 
financial assistance based off their earned, but not yet paid, 
wages. State lawmakers have increased their engagement in the 
debate around the appropriate structure of these products. Last 
year, the CFPB weighed in and issued an advisory opinion on 
these products.
    Given that 40 percent of Americans can't meet a $400 
emergency expense (according to the Federal Reserve), what is 
your general view of consumer credit accessibility?
    Do you think it's beneficial to preserve a safe and 
regulated marketplace for small consumer loans to meet the 
needs of consumers with less-than-perfect credit?
    As you approach issues around short-term, small dollar 
credit, and more specifically, earned wage access products, 
what are your views on the appropriate regulatory framework and 
what are your plans with respect to the CFPB's 2020 Advisory 
Opinion on the topic?
    As our Nation's consumers reel from the COVID-19 pandemic, 
responsible access to credit is more important now than ever, 
especially for low-income communities. What will you do under 
your Directorship to ensure consumers still have access to 
credit?

A.9. Access to consumer credit is critical. I believe the CFPB 
should support a competitive and responsible small-dollar 
lending market in which businesses compete to provide consumers 
with affordable credit. If confirmed, I would work with CFPB 
staff to consider all aspects of this market. I would also work 
with CFPB staff to better understand Earned Wage Access 
products and other aspects of this market.
    In addition, I support efforts to give consumers more 
control over their money by modernizing our payments networks. 
Consumers should be able to access their money as soon as it is 
deposited and control when that money is debited in real time.

Q.10. When the CFPB was established, Congress intended it to be 
insulated from the politics of the day and Presidential whims. 
Now--because of the U.S. Supreme Court's Seila Law decision--
the Director is removable for any reason and serves at the 
pleasure of the President. In fact, we are now considering your 
nomination because the previous Director resigned--at the 
request of the President--just 2 years into a 5-year term.
    Do you think this instability is good for regulated 
entities or consumers?
    Do you agree the CFPB should be led by a Commission, or 
should the Bureau's leadership continue to see-saw between 
political parties and regulatory philosophies?

A.10. I agree that consistency and predictability are important 
both to consumers and regulated entities. As to the structure 
of the CFPB, that is a matter for Congress to decide.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAMER
                       FROM ROHIT CHOPRA

Q.1. The CFPB has at times been accused of issuing press 
statements with sensationalized and misleading headlines. What 
will you do to ensure accurate fact-based communication?

A.1. Statements by government agencies should be clear, 
accurate, and aimed at informing the public. If confirmed, I 
will work to ensure that the CFPB's statements meet these 
important goals.

Q.2. The Dodd-Frank Act mandated the collection of small 
business loan applications under Section 1071. The CFPB is 
currently working on that rule, which would require a 
significant and new collection of information. One way to make 
this collection faster and more efficient would be to have the 
CFPB set up a database that small business owners could submit 
the data to. They would then be provided with a number which 
they could give to a lender each time they applied for a loan. 
This would make it easier on both small business owners and 
lenders. Would the CFPB be open to such a database?

A.2. Across the country, small businesses are facing 
extinction, and we must do everything we can to ensure they can 
access credit on fair and competitive terms. If confirmed, I 
look forward to working with your office and with CFPB staff to 
assess this proposal.

Q.3. Many consumer lenders subject to the CFPB's jurisdiction 
are licensed by or operating under State laws governing 
consumer finance--a comprehensive statutory and regulatory 
regime dating to the 19th century and predating virtually all 
Federal banking laws.
    What is your view of the validity and efficacy of State 
regulation of consumer credit?

A.3. I believe states play a crucial role in safeguarding our 
financial system against risks to consumers and our economy. 
Without commenting on any specific regulation, I believe 
Government policymaking must be grounded in market realities, 
and I look forward to working with my State counterparts on 
these shared goals if confirmed.

Q.4. Will you as, a matter of course, pledge to consult State 
regulators before undertaking meaningful policy changes that 
override the intent and findings of State legislatures or 
regulatory agencies?

A.4. As an FTC Commissioner, I am in regular contact with State 
attorneys general and financial regulators, and I commit to 
continuing that practice if confirmed.

Q.5. Based on the very real possibility that a regulation may 
have the unintended consequence of eliminating products that 
benefit consumers, do you recognize an obligation as Director 
of the CFPB to exercise restraint in promulgating a rulemaking? 
Given this impact, what steps will you undertake to:
    Consider the costs and benefits to consumers and affected 
financial services industries;
    Consult with other regulators, including State regulators;
    Provide an opportunity for affected persons to comment on 
and object to the rulemaking; and
    Evaluate the effect of the rulemaking on the availability 
of credit and financial inclusion to working American families?

A.5. It is critical that regulatory actions be grounded in 
data. If confirmed, I would ensure that the costs and benefits 
of rules--including their impact on the availability of 
credit--are considered, consistent with the Dodd-Frank Act's 
requirements. In addition, I am committed to consulting with 
other regulators, including State regulators, and to providing 
stakeholders an opportunity to weigh in.

Q.6. In today's world, every business is subject to a myriad of 
regulations, whether Federal, State, or local. While designed 
to protect consumers, all regulations have attendant costs and 
burdens. These burdens often prevent businesses from investing 
in employees, expanding workforces, opening new locations, 
enhancing infrastructure, and innovating for the benefit of 
consumers and businesses. It can also result in unintended 
consequences for consumers, including increased fees and 
constrained choice. If confirmed, will you commit to adhering 
to a robust cost-benefit analysis of proposed regulations? What 
in your view constitutes a cost-benefit analysis as part of a 
rulemaking process?

A.6. I believe it is important for policymakers to take account 
of the potential benefits and costs to consumers and businesses 
of any rule, including the potential impact on access to 
credit. Any analysis should be rigorous, robust, and grounded 
in data.

Q.7. How will the CFPB evaluate State-level provisions before 
proposing new rules that may conflict with or preempt existing 
state laws, or add unduly onerous requirements?
    Can you ever envision adopting--or at least studying--a 
model based on a state approach, rather than creating a new, 
untested regulatory framework?
    Similarly, how will the CFPB coordinate with State 
officials on the Bureau's assessments of financial institutions 
and related enforcement actions to ensure the greatest possible 
efficiency of the Bureau's supervision programs?

A.7. States play a vital role in protecting consumers in 
financial markets, and Federal regulators must consider how 
their efforts align with those of states. Examining existing 
State models can be useful. If confirmed, I would coordinate 
closely with my State counterparts, who are on the front lines 
of detecting and combatting risks to our financial system.

Q.8. The COVID-19 pandemic has had a disproportionate and 
devastating impact on small businesses. As a result, it will be 
imperative that your rulemaking processes be especially 
sensitive to the burden that increased regulations impose on 
these backbones of the American economy. Will you commit to us 
that you will bring an appropriate level of attention to the 
needs of small businesses and implement measures to ensure that 
regulations do not destroy this critical element of our 
economy?
    What do you view to be the requirements for the CFPB with 
regards to considering the impact of its rulemakings on small 
business? What will be the role of the SBREFA process in 
rulemakings moving forward, and how will that differ from what 
has or hasn't been done in the past by the bureau?

A.8. Small businesses are facing extinction, and I commit to 
keeping their interests front of mind if confirmed. Regulations 
should be focused on combatting the biggest harms, ensuring a 
level playing field, and promoting competition and innovation, 
including by new entrants. While I am not familiar with all of 
the details of previous approaches used internally in CFPB 
rulemaking, I would ensure that CFPB regulations take the 
interests of small businesses into account and comply with 
SBREFA.

Q.9. The Bureau has a stated goal of transparency and the 
avoidance of lobbying and other ex parte influences. If 
confirmed, how would you ensure the CFPB does not fall victim 
to regulatory capture, whether by consumer advocacy groups or 
industry, mindful that both sides have their own motivations 
and interests in the rulemaking process?
    How much involvement and input do you view consumer groups 
will have in the CFPB's rulemaking process moving forward? Will 
they be able to provide draft language and edits, as they 
apparently have done in the past? Will industry be allowed 
equal involvement and input?
    Under your leadership, will the Bureau commit to making 
public all meeting notes and email communications to and from 
third parties relating to rulemaking development?

A.9. It is critical that regulators hear from a diverse set of 
stakeholders, and if confirmed, I am committed to maintaining 
open lines of communication with all stakeholders. All 
stakeholders should be able to weigh in with their views, and 
the CFPB must make the ultimate determination based on the best 
available evidence. I am also committed to full compliance with 
transparency requirements, including the CFPB's ex parte 
communication policy.

Q.10. Differences of opinion exist within the halls of Congress 
and at other regulators where opinions are shared in a public 
setting. This public forum does not exist at the CFPB. What 
will you do to protect the dissenting opinions of those who 
disagree and how will their opinions be heard?

A.10. If confirmed, I would welcome input from all 
stakeholders, including those who may disagree. I especially 
support multiple channels for input, including field hearings 
held outside of Washington, where the agency can hear directly 
from stakeholders in a public setting. The CFPB must also 
adhere to the procedures pursuant to the Administrative 
Procedure Act to solicit public feedback on proposals, where 
all stakeholders can view public comments.
    Public input can help drive sound decision-making, and I 
look forward to engaging with the public in new and innovative 
ways.

Q.11. Midnight embargoed press releases announcing rules were 
not constructive or seen as a helpful way to engage 
stakeholders when releasing important information. It was the 
opinion of many as an unnecessary political tactic that 
garnered mistrust. Will you pledge to bring more transparency 
to the rulemaking process and not release rules or other major 
announcements in the dead of night?

A.11. I commit to making transparency an important goal, and if 
confirmed, I will carefully review the CFPB's policies and 
procedures related to press announcements.

Q.12. Past Directors have stated the CFPB is a data driven 
organization which uses facts as the basis for rulemakings, 
supervisory proceedings, and enforcement actions. What will you 
do under your tenure to ensure Bureau actions are well-founded 
in facts and data?

A.12. I share the view that the CFPB's decision-making should 
be grounded by data and rigorous analysis. It is important that 
the CFPB undertake an interdisciplinary approach in analyzing 
data, and I would solicit the views of all of the agency's 
staff if confirmed.

Q.13. Will you commit to releasing all the facts and data that 
are used to support your decisions during the rulemaking and 
enforcement process?

A.13. Transparency is critical. I believe the public should 
understand the basis for government actions. If confirmed, I 
would work with CFPB staff to understand how we can ensure, 
consistent with the law, that the CFPB is being transparent.
              Additional Material Supplied for the Record
          LETTERS SUBMITTED IN SUPPORT OF NOMINEE GARY GENSLER
          
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