[Senate Hearing 117-668]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-668


  NEW ERA FOR CONSUMER PROTECTION: THE CONSUMER FINANCIAL PROTECTION 
                 BUREAU'S SEMIANNUAL REPORT TO CONGRESS

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

                                HEARING

                               BEFORE THE

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

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

  CONSUMER FINANCIAL PROTECTION BUREAU'S SEMIANNUAL REPORT TO CONGRESS
                              __________
 
                            OCTOBER 28, 2021
                              __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                                
                 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                         


                Available at: https: //www.govinfo.gov/

                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
52-232 PDF                WASHINGTON : 2023 

            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

                          Sneha Pandya, Fellow

                 Dan Sullivan, Republican Chief Counsel

          Hallee Morgan, Republican Professional Staff Member

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                       THURSDAY, OCTOBER 28, 2021

                                                                   Page

Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    33

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     3
        Prepared statement.......................................    34

                                WITNESS

Rohit Chopra, Director, Consumer Financial Protection Bureau.....     5
    Prepared statement...........................................    35
    Responses to written questions of:
        Senator Toomey...........................................    37
        Senator Reed.............................................    43
        Senator Van Hollen.......................................    45
        Senator Sinema...........................................    47

              Additional Material Supplied for the Record

CBA letter.......................................................    49
NAFCU letter.....................................................    55
IPA letter.......................................................    60

                                 (iii)

 
  NEW ERA FOR CONSUMER PROTECTION: THE CONSUMER FINANCIAL PROTECTION 
                 BUREAU'S SEMIANNUAL REPORT TO CONGRESS

                              ----------                              


                       THURSDAY, OCTOBER 28, 2021

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., via Webex and in room 538, 
Dirksen Senate Office Building, Hon. Sherrod Brown, Chairman of 
the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Senate Committee on Banking, Housing, 
and Urban Affairs will come to order. Today we are pursuing, as 
we have in the past, the hybrid format. Our witnesses are in 
person but Members have the option to appear either in person 
or virtually. As Mr. Chopra probably knows, many Members will 
be here. Many of them have checked in remote and will be here, 
most of them, I think, in person.
    A couple of reminders. When you start speaking there will 
be a slight delay before being displayed on the screen. I think 
every Senator knows how this works. The speaking order will be 
as usual, by seniority of the Members who have checked in by 
now, before the gavel came down, either in person or virtually, 
and then by seniority of Members arriving later, alternating 
between Democrats and Republicans.
    Welcome, Director. As the newly confirmed Director you are 
stepping into a vital role for the American people. It is your 
job as Director of the Consumer Financial Protection Bureau to 
stand up for the literally hundreds of millions of Americans 
who do not have a corporate lobbyist, who do not have a Super 
PAC. You work for all the people who do not have a high-priced 
attorney fighting for them if a company opens a fake account in 
their name, or overcharges them on their credit card, or there 
are mistakes in their credit history.
    You are stepping into this role at a time when so many 
people feel like they do not have a voice in our economy, or 
anyone on their side in Government. You are that person for so 
many. Your job is to prove them wrong, to be on the side of 
everyone who has been preyed on and looked down on by corporate 
America, to empower them to get their hard-earned money back. 
Your history and the history of this agency both tell me you 
are up to the challenge.
    Millions of families still deal with the effects of the 
pandemic. Over the past year-and-a-half, scammers have done 
what they do best--prey on people in a crisis. People 
masquerading as Government workers conned families out of 
money, promising them early access to a COVID vaccine or 
student loan debt relief, even funeral expense benefits. It is 
why, after the '08 crisis, we created the CFPB, to stand up to 
the powerful companies that will use a crisis to cheat every 
extra cent they can out of people.
    Unfortunately, for 4 years, the CFPB was held back by an 
Administration that tried to tear down the Bureau from within. 
Now, after an election where Americans decisively rejected that 
corporate kowtowing, the Biden administration has ushered in a 
new era of consumer protection.
    Under the leadership of Acting Director Dave Uejio, and now 
under your leadership, the CFPB has gone back to work, looking 
into financial companies, and getting people their money back.
    This year, the Bureau has worked to protect the rights of 
renters and homeowners, and has connected them with resources 
to get rental assistance or housing counseling. It created new 
requirements for mortgage servicers, to make sure homeowners 
can keep their homes and get back on track with their payments.
    CFPB helps people with student loans as loan payment 
moratoria end.
    And I applaud your decision to join DOJ and the Office of 
the Comptroller of the Currency to enforce our fair housing and 
fair lending laws, as we work to undo the legacy, the awful 
long legacy, from Black codes to Jim Crow to redlining, and 
beyond.
    Of course, we know corporations and big banks and loan 
sharks are not giving up. And as big tech companies encroach 
into the consumer finance and housings markets, new threats 
emerge every day. Look at what is happening to the tenant 
screening industry. Renters are often forced to pay out of 
their own pocket for tenant screening reports that can be 
riddled with errors and block them from renting, and again, no 
explanation.
    I have asked the Bureau to conduct a review of the tenant 
screening industry to protect renters, and look forward to 
learning how we can better crack down on these companies.
    Bias in algorithms, and other predatory targeting, risks 
reinstating Jim Crow in a new, high-tech form. New revelations 
about Facebook's promotion of the most extreme and divisive 
content, including vaccine lies, is just the latest reminder 
that we cannot trust these big tech algorithms. The last thing 
we need is them moving into the payments system and other 
financial markets critical to families' financial futures.
    The Bureau's recent efforts to investigate big tech 
companies' invasion of the financial system and their abusive 
data privacy practices are so important. We must continue them.
    No matter the industry, the CFPB is all about empowering 
people. It is about giving people a tool to stand up to the big 
banks and the financial corporations and the big tech companies 
that have far too much power in this country. I know those 
corporate interests and their allies in this building simply do 
not like that. Director Chopra, you were--and you remember 
this--confirmed unanimously by voice vote--by voice vote--to be 
an FTC commissioner--no dissention from that--yet not one of my 
Republican colleagues, not one, in this Committee and of the 50 
on the Senate floor, even those who have occasionally stood up, 
not one of them wanted you take this job. They do not want this 
job to exist. It is not about you. You should not take it 
personally.
    Anyone who goes after corporate interests, you all attack. 
Every time we have one of these hearings, we hear the same 
made-up complaints about accountability.
    You know how accountable this agency is. You know how many 
times one of his predecessors, my Ohio friend, Rich Cordray, 
how many times he came before this Committee, and the dozens of 
times he came in front of your colleagues in the House.
    This agency has returned billions of dollars to consumers. 
What you do not like--what you do not like--is that they go 
after your contributors and the big banks. But if you want to 
attack the Consumer Protection Bureau, say what this is really 
about. Do not make up this fake stuff about accountability.
    Director, I do not expect you to be cowed. I expect to see 
vigorous enforcement of consumer protection laws, consistent 
monitoring of fintech companies, and crackdowns on big 
corporations which routinely and repeatedly violate orders 
issued by the Bureau during your tenure.
    Director Chopra, I look forward to hearing about the agenda 
you are setting for consumer protection at this very, very 
important agency.
    Ranking Member Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman. Welcome, Director 
Chopra.
    We are going to talk about accountability, and rather than 
impugning the motives of my Democratic colleagues who might 
disagree with me, we will stick with the facts in the case.
    During the Obama administration, the CFPB was routinely a 
lawless, antibusiness, unaccountable agency. Through 
restrictive policies, it limited consumer choice, drove up the 
cost of credit, and needlessly harassed employers. 
Unfortunately, the Biden administration has rushed to return 
the CFPB to its bad old ways.
    In less than 10 months, the Biden CFPB has disregarded its 
jurisdictional limits, rescinded policies that provided 
regulatory clarity, returned to regulating by enforcement 
actions rather than by rules, reportedly pushed out career 
civil servants for political reasons, and certainly refused to 
comply with legitimate congressional oversight requests.
    Let us consider the Biden CFPB's return to regulation by 
enforcement. This is a completely unfair practice that occurs 
when agencies fail to set clear rules of the road before 
bringing enforcement actions for violation of these undefined 
rules.
    A classic example is with the Dodd-Frank Act. Dodd-Frank 
prohibited providers of consumer financial products from 
engaging in, quote, ``abusive,'' unquote, acts or practices. 
But the law's definition of this new term is so vague it is not 
at all clear what it prohibits.
    During the CFPB's entire existence, it has never bothered 
to issue a rule to clarify this definition. But that did not 
stop the Obama CFPB from bringing enforcement actions accusing 
businesses of abusive conduct and pressuring them into 
settling.
    The Trump CFPB issued a sensible policy to curb this 
practice. The Biden CFPB, however, quickly rescinded this 
policy and took no steps to provide regulatory clarity. 
Instead, in just his second week on the job, Director Chopra 
brought and settled an enforcement action against a company for 
abusive conduct even though the CFPB has never defined that 
term. Worse yet, CFPB relied on a novel theory of abusive 
conduct. CFPB alleged an, quote, ``abuse of market dominance,'' 
end quote, which is a foreign concept taken from European 
antitrust legal theories, not American consumer laws.
    The Biden CFPB has also repeatedly exceeded the bounds of 
its statutory authority by acting outside of its jurisdiction. 
Take for example the CFPB's overreach into housing rentals and 
landlord-tenant law in an effort to advance the Biden 
administration's unlawful CDC eviction moratorium.
    In May, the CFPB and the FTC, where Mr. Chopra was serving 
as a commissioner, jointly sent threatening letters to large 
landlords about the moratorium. The problem is housing rentals 
and landlord-tenant law are completely outside of the CFPB's 
jurisdiction. By statute, the CFPB's jurisdiction is limited to 
overseeing, quote, ``consumer financial products and 
services,'' end quote, which do not include housing rentals, 
and enforcing certain enumerated consumer laws, none of which 
govern landlord-tenant relationships.
    In its notice to landlords, the CFPB even seemed to 
begrudgingly acknowledge its lack of jurisdiction, but that did 
not stop the CFPB from threatening them with potential legal 
action. The letters stated, quote, ``Neither the FTC nor the 
CFPB has determined whether you or your company is violating 
the law . . . the FTC or CFPB may still take action based on 
law violations,'' end quote.
    It is deeply troubling that the CFPB made these threats 
when it had no legal authority to follow through on them 
because housing rentals and landlord-tenant law are outside of 
its jurisdiction.
    The Biden CFPB has also refused to comply with legitimate 
congressional oversight requests. According to press reports, 
the Biden CFPB has taken unusual and possibly unlawful actions 
to push out career civil servants in order to replace them with 
political loyalists.
    In June, I sent the CFPB a letter seeking documents about 
these allegations. For 5 months, the CFPB has sought to evade 
this legitimate oversight request. In June, the CFPB claimed it 
needed more time to respond. Then, in July, instead of 
providing records, the CFPB claimed that the Privacy Act 
prevented it from producing any of the requested records.
    After my staff challenged this claim, the CFPB finally 
produced some heavily redacted records this month, just this 
month. Despite the heavy redactions, at least one document 
referred to, and I quote, ``Voluntary Separation Compensation 
Agreement,'' end quote, which sounds like reports that CFPB 
civil servants were offered some kind of extraordinary 
separation incentives to leave their posts. Now from the 
redactions to delay tactics, it really makes you wonder: What 
does the CFPB have to hide?
    In fact, I could ask the same question about you, Director 
Chopra. In June, while your nomination was still pending, I 
sent you a letter about the reports of troubling personnel 
actions at the CFPB. My letter asked simple questions about 
whether you were involved in, or aware of, these actions. You 
refused to answer these questions or to respond at all. As a 
result, in July, every Republican Member of this Committee, 
exactly half the Members of this Committee, sent you a letter 
calling on you to answer these simple questions. And still you 
refused to provide any answer whatsoever. That is simply 
unacceptable.
    Let me close by saying this. You have been CFPB Director 
for less than a month. There is actually still time for you to 
reverse course. A couple of good places to start would be to 
end the CFPB's unfair practice of regulation by enforcement, 
you could respect the CFPB's jurisdictional limits and stop 
stonewalling legitimate congressional oversight requests. I 
hope you will make these changes, but I am not holding my 
breath.
    Chairman Brown. Thank you, Senator Toomey.
    I will introduce today's witness. Rohit Chopra is Director 
of the Consumer Financial Protection Bureau. He previously 
served as an FTC commissioner. After passage of Dodd-Frank, 
Director Chopra joined CFPB as Assistant Director, then was 
appointed the CFPB's student loan ombudsman. He subsequently 
served as a special advisor at the Department of Education.
    Director, please proceed.

    STATEMENT OF ROHIT CHOPRA, DIRECTOR, CONSUMER FINANCIAL 
                       PROTECTION BUREAU

    Mr. Chopra. Chairman Brown, Ranking Member Toomey, and 
Members of the Committee, thank you for holding this hearing 
today.
    2021 is far different than 2020. The economy is reopening 
and growing again, labor demand is strong, and employers have 
added millions of new jobs. Household spending has rapidly 
increased and demand for housing is robust.
    While these macro indicators are promising, the recovery 
has been uneven. In many individual communities conditions 
remain fragile. Many families continue to struggle with their 
mortgage and rent payments, many small businesses are facing 
severe challenges to make ends meet, and many neighborhoods, 
especially those that have been historically disadvantaged, 
have not felt much of a recovery.
    American families now owe $15 trillion as of the end of the 
second quarter of this year, roughly $800 billion more than at 
the end of 2019, before the pandemic. Over the course of a 
year, though, mortgage origination hit historic highs, at $4.6 
trillion.
    The CARES Act has kept delinquency rates on mortgages and 
student loans at low levels. However, many of the borrower 
forbearance programs have expired, so we lack a complete 
picture about distress. Many family farmers continue to 
confront very severe challenges. Medical debt in collections 
continues to grow as a concern for many households.
    Congress has tasked the CFPB with monitoring market 
conditions to spot risks and meet other statutory objectives. 
Most importantly, the CFPB is carefully monitoring the mortgage 
market, including foreclosures, and it is critical that 
families do not experience unnecessary hardship or illegal 
foreclosures or other disruptions that could impede the 
recovery. We are keen on understanding how homeowners from 
different segments of the population are faring, including 
military connected families, older Americans, first-time 
homeowners, communities of color, and family farmers.
    Technological progress holds the potential for real 
benefits to households and the economy, particularly with 
respect to real-time consumer payments. In recent years, big 
tech companies have sought to gain greater control over the 
flow of money in our economy. Last week, the CFPB issued orders 
to firms such as Facebook, Google, Apple, and Amazon to shed 
light on their payment system practices. The orders seek 
information on how firms harvest, track, and monetize data 
about our spending habits.
    We are also seeking to understand the specific criteria 
that firms use to approve or to kick off participants. We will 
also be studying some of the practices of Chinese tech giants, 
including WeChat and Alipay. This effort will also inform other 
initiatives to ensure that our evolving payments landscape is 
in alignment with our national interest.
    More broadly, the CFPB intends to use its tools to promote 
an equitable and inclusive recovery, and given the existing 
economic conditions in these tools I expect to have a few areas 
of focus.
    First, we must find ways to create more competition in 
these markets. This is a key objective of the Dodd-Frank Act. 
For example, I am concerned that many Americans could be paying 
lower rates on their mortgages and credit cards and earning 
higher rates on their savings. We plan to listen carefully to 
local financial institutions and nascent competitors on the 
obstacles they face when seeking to challenge incumbents, 
including in big tech.
    Second, the CFPB will sharpen its focus on repeat 
offenders, repeat offenders that violate agency and court 
orders harm families and law-abiding businesses alike.
    Third, we must work to restore relationship banking in this 
era of big data. Too many households and businesses have no 
place to turn to when they need help, especially when they face 
errors and problems in their financial lives. The inability to 
cut through red tape and get help in one's financial life can 
be a major obstacle when seeking a job or when applying for 
credit. Preserving relationship banking is critical to our 
Nation's resilience and recovery, particularly in these times 
of stress.
    Thank you again for the opportunity to appear before you, 
and I look forward to your question.
    Chairman Brown. Thank you, Director. Last week I wrote you, 
requesting the CFPB review the tenant screening industry. Over 
the last 6 months, our Committee has looked into this and found 
a significant number of these tenant screening reports 
contained inaccurate information, in some cases including 
eviction filings that did not lead to an eviction. Companies 
people have never heard of that may not even have accurate data 
are stopping people from renting all over the country. These 
reports put low-income renters at a distinct disadvantage and 
Black renters and Brown renters and female renters oftentimes.
    What risks do inaccurate screen reports pose to consumers? 
What steps are you considering?
    Mr. Chopra. So tenant and employment background screening 
have proliferated throughout our country and false matching and 
false information can severely impede someone's ability to get 
an apartment, to get a job. In a time of economic dislocation 
we need people to be able to apply for jobs, to be able to move 
where those jobs are available. When inaccurate screening 
companies block those people from opportunities, that is a 
severe problem, and may, in many cases, violate the Fair Credit 
Reporting Act, where the CFPB has enforcement and rulemaking 
jurisdiction.
    It is certainly an area that I want to work on with you and 
other agencies who share jurisdiction, because this is a place 
where we need to make sure people are not being locked out of 
housing because of illegal practices.
    Chairman Brown. Thank you. We know that since our 
colleague, Senator Romney's father was Secretary of HUD under 
President Nixon that we are not really closing the gap between 
home ownership White families and Black and Brown families. 
What are you doing to prevent further loss of home ownership 
and the generational wealth for families of color?
    Mr. Chopra. So the most immediate priority is to pay close 
attention to what is happening in mortgage servicing and 
foreclosures. I think we saw, a decade ago, what it was like 
when so many of those servicers engaged in practices that led 
to wrongful foreclosures or wrongful servicing, and that led to 
trillions of dollars of wealth, you know, disappearing in the 
broader crisis, and that widened many of the gaps.
    So we have to make sure that those servicing practices do 
not appear again, and we also need to look broadly at our 
markets to make sure that we are stamping out illegal 
discrimination, that we are looking for places to broaden 
participation rather than foreclose based on the color of their 
skin.
    Chairman Brown. Thank you. Director, too-big-to-fail banks 
and corporations are a threat to working families and our 
entire economy. We have seen decades of evidence for that. 
Wells Fargo, for example, is a too-big-to-manage institution. 
It has broken the law over and over. They have been in front of 
this Committee when Chairman Crapo sat in this seat.
    Wells Fargo, with $1.9 trillion in assets has been 
prohibited by financial watchdogs from growing any larger. How 
has this asset cap prevented Wells Fargo from hurting even more 
consumers, and what other tools might you, as a member of FSOC, 
use to protect Americans and the financial system from repeat 
offenders?
    Mr. Chopra. So with respect to the asset cap, I obviously 
want to take a closer look. I do not have the best answers for 
you now. But one of the places that is going to be a priority 
for me is order violations and repeat offenders. I think we see 
kind of a two-tiered system where Federal agencies go hard on 
small businesses--when they violate an order they get totally 
shut down--larger firms, they sometimes violate those orders or 
engage in repeat offenses over and over again, and there is a 
complete lack of parity in how justice is administered there.
    We need to make sure that we are being even-handed across 
the board, that we are focusing our efforts on these repeat 
violations, and using the full panoply of remedies, both from 
the prudential banking regulators, the CFPB, and others, to 
make sure that there are real consequences for repeatedly 
violating the law.
    Chairman Brown. Thank you, and what you said about the big 
offenders versus the smaller guys and what happens to them, 
it's really important that you emphasized that. Thank you.
    Just a couple more comments. As whistleblowers and 
reporters have shown, tech companies like Facebook and Google 
and Amazon clearly do not care about anything or anyone other 
than their own profits. I think Americans almost unanimously 
understand that.
    Last week I raised concerns about Facebook's efforts to get 
their hands on Americans' hard-earned paychecks with digital 
wallets, and they are pushing users to send and receive 
payments with a Facebook-controlled stablecoin. We know that 
Facebook has failed to contain the damage their products cause. 
They clearly cannot be trusted with America's paychecks.
    Director, we expect you and this Committee to share the 
results of the CFPB's investigation. We expect you will work to 
prevent big tech companies from wreaking havoc on the financial 
system the way they have in every other industry they get 
involved in. That is our expectation, and I hope that is your 
commitment.
    Mr. Chopra. With respect to the orders we issued, the law 
provides us some ability to make summaries of those results 
available to the public and to you, and we will keep you 
updated on that.
    Chairman Brown. Thank you. Senator Toomey.
    Senator Toomey. As I mentioned in my opening statement, the 
Biden CFPB has reportedly taken unusual and possibly unlawful 
actions to push out career civil servants in order to replace 
them with political loyalists. Mr. Chopra, on June 17th, I sent 
you a letter asking simple questions about whether you were 
involved in or aware of this. This a copy of that letter. You 
did not reply.
    On July 13th, about a month later, every Republican on this 
Committee, so exactly half the Members of this Committee, sent 
you another letter calling upon you to answer these questions. 
This is that letter. You never sent us an answer. In fact, you 
never responded to us at all. Why did you not answer these 
questions?
    Mr. Chopra. So, Senator, thanks for the question. I 
observed all of the protocols that are customary with respect 
to the confirmation process. I appeared before a hearing. I 
answered a large number of questions for the record. And then I 
also agreed to appear before any duly constituted committee of 
the Senate.
    At the time I was not CFPB Director, of course. I was an 
FTC commissioner. Where committees that oversaw me in that 
capacity asked me questions, and in some cases did so in public 
fora, I completely answered. I also answered that I did not 
direct or was not involved in those----
    Senator Toomey. So you did not acknowledge them. You did 
not answer the question as to whether you were involved. You 
did not answer anything about these questions. You were a 
nominee for a post that is under the jurisdiction of this 
Committee. You have been in this job for 3 weeks or so, I 
think, and you still have not answer the questions.
    Is it your view that you just decide which questions from 
oversight committees of Congress you are going to answer and 
which ones you are not?
    Mr. Chopra. So, Senator, as I said, I observed all of the 
protocols that have been involved in confirmation hearings. I 
did so on----
    Senator Toomey. You did not answer a written question from 
the Committee of jurisdiction over your nomination. I am not 
aware of any protocol that says do not answer the questions 
when half the members of a committee ask you a question. I do 
not believe that that is the protocol, in fact.
    Mr. Chopra. So----
    Senator Toomey. Let me ask you this. Should Republicans 
generally expect that we will get answers to questions in the 
future, or will you decide, no, maybe there is a protocol 
somewhere that says I am not going to answer them?
    Mr. Chopra. So, Senator, I have appeared before Congress 
many, many times, answered hundreds, maybe even thousands of 
questions from members. I take congressional oversight 
extremely seriously. I previously came from an agency that 
completely ignored Congress all the time, and you have my 
commitment that we will work with the Committee to respond and 
be transparent, on requests from the Committee, wherever we 
can.
    You know----
    Senator Toomey. Wherever we can. No. If Members of the 
Committee ask you a question, you have an obligation to provide 
a response. Senator Brown alluded to a letter he sent you. Are 
you going to respond to his letter, or will you ignore that one 
too?
    Mr. Chopra. We will be responsive to requests from this 
Committee that are observing all the customary protocols, 
including with respect to Senator Brown's letter. I----
    Senator Toomey. Well, this little hedge that you keep 
introducing about observing and consistent with protocols 
sounds like you are looking for a way out, as you apparently 
were since you never responded to a very simple, 
straightforward question when it was posed twice, first by me, 
second by every single Republican on the Committee.
    And, by the way, the CFPB was extremely reticent to provide 
any answers when we asked for the documents that would back up 
their contention that there was nothing untoward here. They 
sent us redacted information such that the entire body of the 
communications, which, according to the subject line, had to do 
with ``voluntary separation compensation agreements,'' the 
entire body of it is missing, which certainly makes it look as 
though there is something to hide. Your refusal to answer the 
question raises the question of what it is that you have to 
hide.
    Mr. Chopra. Well, I have nothing to hide, Senator, and I 
have been----
    Senator Toomey. Then why did you not put it in writing?
    Mr. Chopra. ----I have been briefed on some of those 
issues, and they do involve personnel issues. In the Executive 
branch, we are required to adhere to a number of laws and 
regulations with respect to----
    Senator Toomey. OK. OK. But look, I am not going to let you 
hide behind that. You could have redacted communications that 
redact the name and redact the identity. I am not asking for 
confidential information about individual identifiable people. 
We are looking for the substance of the practice. And, in fact, 
what we got from the CFPB is the exact opposite. The names are 
all there. It is the entire content of the message that was 
left out.
    I still do not understand why, if there is nothing untoward 
happening here, you could not have submitted a simple letter to 
us respond to our requests.
    Mr. Chopra. Well, with respect to the separation incentives 
policy, as I understand this policy was put into place by 
Director Kraninger, and I am trying to find out exactly what 
happened, and then we will figure out, work with any inquiry 
from the inspector general. I know that has been requested. I 
have directed staff to be responsive to that. But we cannot 
divulge things that are protected by law when it comes to 
employee practices.
    Senator Toomey. You know that is not what we are asking 
you, and you could have given a written--you could have even 
provided that in a written answer, but you chose not to. This 
raises serious questions about what kind of transparency we can 
expect from this agency.
    Chairman Brown. Thank you. The Director certainly does not 
need me to defend him, but he has been in the job for 3 weeks. 
The former Acting Director wrote back and said they do not push 
out career employees, and my understanding is the IG is looking 
into this. So we will find answers.
    Senator Menendez is recognized for 5 minutes.
    Senator Menendez. Thank you, Mr. Chairman. I do hope that 
the agency will be more responsive because I got nothing under 
Director Kraninger for all the years she was there, and nobody 
seemed to complain. So I certainly hope that under your 
leadership there will be greater responses.
    Director, in recent months two of the largest services that 
manage Federal student loans on behalf of the Department of 
Education announced that they would be exiting their contracts. 
Importantly, PHEAA, one of the firms that will exit servicing, 
is also in charge of managing the Public Service Loan 
Forgiveness Program.
    Did the last student loan servicing transfer done on this 
scale harm student loan borrowers?
    Mr. Chopra. I have some experience that suggests that major 
servicing transfers can really be problematic when records have 
errors or when systems are not appropriately tested. I am 
worried about big transfers. We have seen it happen in mortgage 
too.
    So we will be looking carefully at that and working with 
the Education Department, working with the other regulators, to 
make sure that to the extent there are large transfers it is 
done so with fidelity. The last thing we need is for hundreds 
of thousands or millions of borrowers to have incorrect bills 
and incorrect accounts.
    Senator Menendez. Let me bring to your attention why I 
raise this. The last time there was a student loan servicing 
transfer on this scale, where loans were transferred from the 
company ACS in the 2010s, it both caused and revealed millions 
of errors that continue to harm student loan borrowers, 
particularly those trying to access promise relief through the 
Public Service Loan Forgiveness. A recent investigation 
uncovered 5 million new errors related to the transfer from 
ACS, including instances of missing borrower payment histories, 
incorrect payment accounts, and other widespread errors.
    The difference between that and now is that they have a 
watchdog on their side. So I want to know from you, what is the 
Bureau doing to prepare for this transfer?
    Mr. Chopra. So you may know that we have a rule in place 
that allows us to supervise large student loan servicers, so I 
intend to make sure that we are engaging in adequate oversight 
of those entities, that we are supervising them for our laws as 
well as their preparedness for some of these. I do think it is 
going to require us to have close cooperation with the 
Education Department. The law requires us to have an MOU in 
place, and I am examining whether to refresh that.
    Senator Menendez. All right. I hope that you do, in order 
to make sure we do not have millions of errors in this 
transfer. It is not just errors. It is consequences to the 
consumer.
    Let me turn to another question. As the economy continues 
to recover from the COVID-19 pandemic businesses are still 
seeking financial lifelines. Stepping up to fill these 
financing needs are alternative financing companies, promising 
easy approvals with little to no documentation requirements and 
funding within 24 hours. However, some of these financing 
companies are not transparent in their loan terms, and small 
businesses can end up taking on debt they do not understand and 
cannot afford. Without cost transparency, businesses cannot 
distinguish financial lifelines from land mines.
    Do current small business financing disclosures provide 
small business owners with the information they need to 
understand the cost of the credit product and make an informed 
decision about whether it fits their needs?
    Mr. Chopra. Certainly not always. It is not covered by the 
same protections that exist for household borrowers, and as you 
know, many small business owners, especially very small 
enterprises, they use a mix of personal credit and small 
business credit, and so they cannot even make fair comparisons. 
Some States, like California and New York, have begun to 
introduce it, but it is a problem for many entrepreneurs.
    Senator Menendez. Well it is clear from the Fed studies 
that small business owners do not have the information that 
they need to make informed decisions. So would providing small 
business owners with uniform term disclosures allow them to 
make more informed financial decisions?
    Mr. Chopra. I think, generally speaking, yes, having the 
ability to compare and be able to see, you know, costs clearly, 
generally is beneficial. There are a number of practices, 
though, in the small business lending arena that are actually 
banned when it comes to consumer lending, so-called confessions 
of judgment, where borrowers automatically pleads guilty when 
they are sued. There are other practices like these where small 
business owners are not protected.
    Senator Menendez. Well, this is why Congresswoman 
Velazquez, who is the Chair of the Small Business Committee in 
the House, and I are working on a bill to extend TILA to small 
business loans. Sunlight is the best disinfectant, and it is 
time to bring some sunlight to small business credit as well.
    I will follow up for the record about what the Bureau is 
doing to protect borrowers from ensuring there is ample 
supervision of the student loan servicing companies, both in 
the context of the PSL relief and beyond. There is a history 
here that needs some significant oversight, and we look forward 
to hearing your responses on that.
    Thank you very much.
    Chairman Brown. Thank you, Senator Menendez. Senator Tester 
from Montana is recognized for 5 minutes.
    Senator Tester. Thank you, Mr. Chairman. Thank you, Ranking 
Member Toomey. Just in reference to Senator Toomey's comments, 
I think if the accusations about replacing career folks with 
politicos are correct, I do not think that is responsible and I 
think you do need to get back to the Committee.
    But I also need to say replacing people with politicos in 
this Administration, after what we just went through the last 4 
years is totally ridiculous. I watched a President go after the 
head of the Fed, trying to politicize the Fed. I do not know 
that I have heard one person stand up and say that is 
appropriate, on the Republican side of the aisle. If you did, 
thank you for doing that, because quite frankly, everything the 
last Administration did was about politics, all the time. And I 
speak to that as being somebody who is perceived as a moderate, 
who the President politicized everything that came down the 
pipe. OK?
    Director Chopra, before I get to my questions today I want 
to say congratulations. I was proud to vote for your 
confirmation, though I will be honest with you, I was a little 
bit sad to see you leave the FTC, because I thought you did a 
great job for American consumers at that Commission.
    An issue that has been important to me since long before I 
arrived in the U.S. Senate is accurate labeling of products 
that are made in the USA. Unfortunately, there is a lot of work 
to do in this space, but I have few folks in Government that 
understand the importance of this more than you do, and we have 
even fewer now that you are here, to move that ball forward. I 
have no doubt that you will take this commitment to 
transparency to the CFPB and continue to do great work for 
America's consumers.
    I am not sure that I can ask you a question about the 
importance of labeling beef with country of origin, and I do 
not think it would be necessarily appropriate today, although I 
have no doubt you could answer that question. But I do look 
forward to working with you in your new role.
    I can tell you that in a State where we have seven 
reservations, and they do play in the financial world, I would 
hope that you would open up dialog with our Native American 
Tribes to make sure what you are doing is fair and appropriate, 
for them and for the consumer.
    I would say the same thing for our banks, moving forward, 
and I would tell you that the CFPB, in the past, has taken a 
number of actions on companies that have harmed our 
servicemembers, our veterans, and particularly in the mortgage 
market. I appreciate the work the Bureau has done to protect 
those who have protected us, but there is always more to be 
done to stay ahead of the bad actors.
    So Director Chopra, I know the CFPB has a number of efforts 
in place to look out for our servicemembers and our veterans. 
Will you walk us through what that is going to look like under 
your leadership?
    Mr. Chopra. Yes. We are going to refresh that quite a bit. 
I want to make sure that our servicemember, veteran, and 
military-connected families' work is a part of how we look at 
so many of our products but also how we enforce the law. I had 
a chance to discuss this a bit with the Attorney General and 
the Justice Department. We need to make sure we are cooperating 
on the Military Lending Act enforcement. We need to make sure 
that we are continuing our work on the Servicemember Civil 
Relief Act with them.
    There are many laws that protect these families, and I will 
tell you, we saw, a decade ago, that many of them, including 
people who were deployed, in theater, had their homes taken 
from them. We have seen people who have signed up for a car 
loan and gone to basic training and had their car repossessed 
illegally. There is clearly something wrong with certain actors 
who treat the military, and we will work, using our tools but 
also with our partner agencies, to stamp that out.
    We also need to make sure that the DoD, when it is doing 
its status of the force and is doing its own analysis, that we 
are understanding where there are issues when it comes to 
credit reporting. Many of those inaccurate credit reporting 
issues lead to the loss of a security clearance. All of this 
costs taxpayers more and it costs those families more.
    Senator Tester. Thank you for that answer. I have long been 
a supporter of public student loan forgiveness programs. I 
think it is critically important and we need to keep our 
commitment to those folks. I made it clear to the previous 
director and the former President Trump's Department of 
Education that their administration of this program was 
unacceptable.
    As you know, the Department of Education was blocking the 
CFPB's access to the necessary information to adequately 
oversee and examine servicers and the program. How is it 
working or not working currently?
    Mr. Chopra. So to be truthful, I think this program has 
been botched over multiple Administrations, and it needs to be 
fixed. I understand the Education Department is taking some 
steps to remedy those past failures. The way in which it was 
administered I think did not meet the standards of the law, and 
to the extent that companies have lied or broken the law with 
respect to those borrowers they need to be held accountable for 
that.
    Senator Tester. Sounds good. Thank you very much. Thank 
you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Tester. Senator Cortez 
Masto from Nevada is recognized from her office.
    Senator Cortez Masto. Thank you. Thank you, Mr. Chairman. 
Director Chopra, welcome. Great to see you here. I am so glad 
that you are at the helm of the Consumer Financial Protection 
Bureau, and although you have only been there a couple of weeks 
it is truly important to have leadership that sees its job as 
protecting people from unfair, abusive, and deceptive practices 
in financial products.
    Under the former President's nominee, let me ask you this. 
This is a concern of mine and I talked to her constantly about 
this but never got results. But unfortunately, under the 
previous nominee, so many firms were fined only a dollar, only 
a dollar, with no redress provided to people who lost money. 
How will you work with your enforcement staff to ensure that 
people who were victims of any type of unfair, abusive, or 
deceptive practice are compensated for their losses?
    Mr. Chopra. It is a great question. So obviously the 
statute authorizes the Bureau to seek redress, damages, civil 
penalties, and there are factors in which those civil penalties 
are assessed, and all of it is reviewable by a court.
    Of course, I think with respect to redress, we want to make 
sure that where a defendant is judgment-proof or has already 
spent all the money, it is important that we assess a civil 
penalty, because only those matters where a civil penalty is 
assessed can those victims access our Victims Relief Fund. So 
we will make sure that we are applying the civil penalty 
factors in fidelity with the law.
    But to be honest, Senator, there may be cases where we have 
to assess a $1 penalty, to make sure that a judgment-proof 
defendant, we can get redress for those victims. But generally 
speaking, I think the penalties need to be a strong deterrent. 
That is what Congress has made clear. And for wealthy firms, $1 
penalty for egregious behavior would be inappropriate.
    Senator Cortez Masto. Thank you. I appreciate your 
comments. Let me talk a little bit about data privacy. Last 
week, the CFPB issued a series of orders to collect information 
on the business practices of large technology companies 
operating payment systems in the United States. One concern I 
have is what data that the platforms are collecting from their 
payment products and how is it being shared and used in other 
applications?
    I know you know this. Consumers expect that their data will 
be used to make the system work better rather than sold to 
multiple third parties or used for ad targeting in another part 
of the online ecosystem. So how will the orders address this 
issue?
    Mr. Chopra. So, you know, I think it has been over 20 years 
since Senator Shelby, on this Committee, talked about the 
problems of financial surveillance and spying. You know, we 
have laws in place to protect against invasions of financial 
privacy: the Gramm-Leach-Bliley Act, which the CFPB 
administers, the privacy sections. There are some real open 
questions about how the tech companies are harvesting this 
data, what are they using it for, how are they monetizing it. 
We need to figure out what is going on, because this is not 
something that most financial institutions and the banking 
system do. They observe the protocols under the Gramm-Leach-
Bliley Act.
    So we have asked a number of questions to ascertain what is 
happening with this data, how are they using it, and we look 
forward to getting those responses and be able to share with 
the public what we learned, Senator.
    Senator Cortez Masto. Wonderful. And let me just say thank 
you also for working with me to curb the unfair practices that 
affect some franchise business investors.
    Will the CFPB consider the role of Government-guaranteed 
loans to franchises in its Section 1071 rulemaking?
    Mr. Chopra. Yes. So the rulemaking requires the Bureau to 
collect certain data about small business loans for a host of 
purposes. We do want to make sure that we are hearing from the 
public. There is a Notice of Proposed Rulemaking to implement 
that statutory directive.
    You are right, Senator. I am very, very interested in the 
franchise market, to the extent that there may be 
discrimination or to the extent to which we need to learn more, 
to understand how loans are being originated to franchisees. I 
definitely welcome your feedback, the public's feedback, to 
make sure we understand how that is working.
    You know, franchisees in this country have been beat up on 
for too long, and we need to make sure that they have the 
ingredients for success and a small business credit program 
that is nondiscriminatory, that we fully understand, is 
important to make that model successful.
    Senator Cortez Masto. Thank you. I could not agree more. 
Thank you so much. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Cortez Masto. Senator 
Tillis from North Carolina is recognized from his office.
    Senator Tillis. Thank you, Mr. Chair. Mr. Chopra, thank you 
for being here. I would like for you, maybe for just a moment, 
to look around the room, for Members in the chamber, Senate 
Members in the chamber, and based on their appearance and names 
can you provide me with the person's ethnicity and race?
    Mr. Chopra. So, Senator, I understand that that may be a 
reference to the Section 1071 Notice of Proposed Rulemaking. I 
understand that there are some guidelines there where a 
borrower has not filled out the form appropriately or 
completely, that it allows, I believe in the proposal, the 
lender to comply by making an ascertain. Obviously, that is 
something we will collect comment on. I think this is trying to 
strike a balance of finding ways for lenders to be able to 
comply. But I have heard these concerns, I understand these 
concerns, and we will need to take these concerns into account 
when crafting any final rule. I hear you loud and clear.
    Senator Tillis. But it does sound like you may be forcing a 
lender to guess ethnicity and race, based on appearance. It 
does not seem like to me to be a good way to get accurate 
information, and you are forcing people to make assumptions 
about ethnicity and race. If the goal is to end discrimination, 
that does not seem like a very good way to do it.
    Mr. Chopra. I appreciate that, and I hope everyone submits 
feedback to our open comment period on it. Again, I think there 
is always a struggle to figure out how to make sure to give 
lenders the ability to understand their obligations and what to 
do in the circumstances where someone may not be filling out a 
form. I am happy to look into this further, but I understand, 
and I have already heard this concern in my first 2 weeks of 
the job.
    Senator Tillis. Well, I hope you will, because to me it 
seems fundamentally flawed. We will be interested to see how 
the comments come back.
    Mr. Chopra, just moving to another subject about the 
Bureau's past experience with midnight embargos. It seemed like 
a biased process for releasing CFPB updates to minimize the 
chance of outside groups to rebut it before the CFPB could 
control the narrative.
    Do you recognize why the practice of the midnight embargo 
garnered mistrust from the CFPB?
    Mr. Chopra. I actually, candidly, I do not, but I am happy 
to look into it and learn from it. My understanding----
    Senator Tillis. Why do you think it is an acceptable 
practice?
    Mr. Chopra. Well, I do not know. I am saying I need to 
learn more about it. As I understand, many times, for 
especially complicated policies or very detailed rules, it is 
sometimes released so that the news media have the ability to 
identify experts, find all points of view. I am happy to look 
into that, but----
    Senator Tillis. Yeah. It just seems to me, though, that 
there appears to be a pattern of behavior, and perhaps you can 
present evidence to the contrary, that appears to me to be an 
embargoing of outlets that may be more prepared or more willing 
to take the talking points versus a critical assessment for all 
takers in the media. So I think it is something I would like 
you to look at, and maybe you can demonstrate to me patterns of 
behavior contrary to the perception that many of us have on the 
midnight embargo practice. So if you could follow up on that I 
would appreciate it.
    Speaking of news, we had several news reports of outlets 
indicating a kind of a purge in the CFPB of career staff 
earlier this year with the transition to the Biden 
administration. Can you confirm that early retirements or 
internal investigations of the CFPB employees were never 
offered or launched for political reasons?
    Mr. Chopra. As far as I know they were absolutely not. As I 
shared earlier, I am getting briefed on it. I am seeking to 
understand, and we will, of course, comply with any inspector 
general inquiry on it. But I have no evidence at all to suggest 
that there was any political purge. I am not even aware of any 
terminations. So I will look into it.
    Senator Tillis. Do you intend to respond to Ranking Member 
Toomey's request--I think it dated back to June 17th--on this 
subject?
    Mr. Chopra. We will work with the Committee to try and be 
responsive, but again, these involved personnel matters, and in 
the Executive branch when it comes to specific personnel, 
particularly when it comes to allegations of misconduct, there 
are certain protocols that must be followed.
    Senator Tillis. Well, it just seems to me, in your 
confirmation hearing you committed to transparency. I 
specifically asked that question. And I think it can begin with 
prompt responses to Committee Members, particularly the Ranking 
Member.
    Thank you, Mr. Chair.
    Mr. Chopra. Thank you, sir.
    Chairman Brown. Thank you, Senator Tillis. Senator Van 
Hollen of Maryland is recognized for 5 minutes.
    Senator Van Hollen. Thank you, Mr. Chairman. Welcome, 
Director Chopra. I just wanted to cover a couple of topics with 
you this morning, beginning with the foreclosure issue and what 
I worry could become a foreclosure crisis. As you indicated 
earlier, Congress put in place important protections against 
mortgage foreclosure during the pandemic, and yet CFPB 
documented, in June, a series of violations of that emergency 
protection rule. I am especially worried now that those 
protections have expired entirely, as of last month, that we 
could see a wave of foreclosures.
    I know you have put in place a new rule, in August. I 
applaud CFPB for doing that. But what is your experience to 
date now that the protections have lapsed, and what are you 
going to do to make sure that we enforce that rule, because it 
is only as good as its enforcement.
    Mr. Chopra. So, Senator, I have directed the staff, and I 
have already started getting updates on what is happening in 
the mortgage market with respect to delinquency and 
foreclosure. Right now we are still seeing foreclosure at very 
low levels, but I need to understand about whether there are 
certain loan servicers or certain geographies or certain 
population segments that are being--where there may be 
problems. I do not want to act too late on this. So I want to 
be hyper-vigilant.
    The rule that the past acting director put into place is an 
interim rule that seeks to have an orderly transition back to 
repayment. Servicers, as I understand, have embraced this and 
are already starting the process of evaluating homeowners for 
alternatives to foreclosure, including loan modifications. The 
thing that his best for homeowners, that is best for investors, 
that is best for our economic recovery is to prevent avoidable 
foreclosures, and it is a win-win-win when servicers are able 
to successfully get a borrower into successful repayment.
    Senator Van Hollen. I appreciate that. We will work with 
you. We may have some issues that we are seeing signs of in the 
State of Maryland.
    I want to endorse some of the statements my colleague, 
Senator Menendez, Senator Tester, and others have made 
regarding the Public Service Loan Forgiveness Program. I agree 
with your characterization that this has been botched over a 
series of Administrations. I am pleased, and applaud the 
Department of Education for waiving some of the excessive 
administrative hurdles that have to be gone through, but as you 
indicated, you have got the primary servicer of these loans, 
PHEAA, going out of business. And I am very nervous that it is 
going to be a challenge to implement those waivers and, at the 
same time, transfer these loans to another borrowers.
    Do you see CFPB as playing a significant role in there now 
that you signed the MOU with DOE?
    Mr. Chopra. Well, obviously with respect to student loan 
servicer they are covered under the consumer financial laws, so 
we have a role in supervising and enforcing them.
    I think you are right. There is this issue, particularly 
when it comes to servicing, when one of them fails or when one 
of them exits the reverberation is very challenging to manage. 
We need to make sure generally that servicing is a resilient 
ecosystem and that we are making sure we are anticipating those 
risks, that the incentives are right. So yes, the transition 
back to repayment is going to be something that is high on my 
list to make sure we do not have a cascade of borrowers across 
the country getting wrong bills.
    Senator Van Hollen. Got it. No, I appreciate that. Just to 
give you the Maryland figure, 90 percent of Maryland applicants 
for this public loan----
    Mr. Chopra. Denied.
    Senator Van Hollen. ----were denied. And it is just 
outrageous because I have spoken to a lot of these folks and 
they clearly qualify, but because of a whole lot of technical 
and bureaucratic issues, and other things, they were denied.
    My last issue I just want to raise with you has to do with 
bank overdraft fees. In my view we have got to do a lot more to 
protect consumers in this area. Under current law, the bank 
consumer, on a one-time basis, says, ``OK, it is OK to overdraw 
my account and be charged penalties.'' But what we see is after 
that first signature, no other communications or notice. And so 
it leads to what I call the $35 cup of coffee and multiple $35 
cups of coffee in 1 day, because you go in, you provide your 
credit card, whatever it may be, no notice in many cases that 
you are overdrawing, and then huge penalties. And especially 
for lower-income people, this is really a, you know, slug in 
the wallet and stomach.
    So I do not know if you are doing anything in this area but 
we look forward to working with you on this consumer protection 
issue.
    Mr. Chopra. Thank you, Sir.
    Chairman Brown. Thank you, Senator Van Hollen. Senator 
Ossoff from Georgia is recognized from his office.
    Senator Ossoff. Thank you, Mr. Chairman. Welcome back, Mr. 
Chopra. Thank you for your service. It is nice to see you 
again. I enjoyed our discussion during your confirmation 
hearing.
    I want to ask you a few questions about fintech, data 
privacy, and tech platforms that are exploring entry into the 
fintech or payments markets. First of all, with respect to 
privacy, we have seen, over the past decade, particularly the 
last couple of years, new entrants in financial technology 
providing services that have typically been the domain of more 
traditional financial services companies, offering those 
companies a significant opportunity to collect data about their 
users, about their patterns and habits of consumption, about 
their location, other personally identifying information, that 
may have value in secondary markets, for sale to data brokers, 
or for marketing purposes by the fintech companies themselves.
    Can you please comment on these developments and what 
jurisdiction your agency may have, or partner agencies may 
have, to consider how to protect data privacy as more and more 
customers are using these novel financial products?
    Mr. Chopra. Thanks for the question, Senator. You know, our 
country is turning into a bit of a surveillance State when it 
comes to some of these tech companies. The ability to combine 
browsing information, geolocation information, health 
information, and the list just goes on and on and on, and to 
add to it the ability to combine that potentially with not just 
our transaction data but SKU-level data--not just how much you 
spent at a place but specifically what you bought--this is 
actually a major issue when it comes to how can small entrants, 
entrepreneurs, small businesses who want to enter this arena, 
how can they meaningfully compete with that, especially when 
some of these firms have gatekeeper power.
    So we need to make sure that we have fair, transparent, 
competitive payment system that is protecting privacy. I do not 
think we have that now, and I think we need to make sure that 
we get to that place. So part of the reason we have issued 
those orders is to understand those issues. I think that the 
Gramm-Leach-Bliley Act's privacy provisions are so outdated and 
almost useless to this point, and, of course, we will continue 
to enforce them. But it is a problem, and I hope that it is 
something that we can fix. The Bureau, of course, has many 
authorities related to this, but for me the first step is to 
study the market and see what is happening so that we can shine 
more light on it.
    Senator Ossoff. Thank you, Mr. Chopra. Well, I am currently 
working on some draft privacy legislation. Let's sit down in 
coming days and discuss your perspective. I appreciate you 
raising the competition policy angle as well. Can you please 
approach that from the perspective of looking at companies that 
may not currently be under CFPB jurisdiction but entering the 
financial services base may come under CFPB jurisdiction? We 
have heard, for example, proposals from Facebook to develop 
their own proprietary pseudo-currency or cryptocurrency, other 
big tech firms that may be pursuing entry into the fintech 
space already having access to vast swaths of data. Would that, 
in your view, open up those firms to your agency's 
jurisdiction?
    Mr. Chopra. Oh yes. If they are engaged in, as a covered 
person, of course they would be under the jurisdiction. What we 
also have to make sure we are thinking about, Senator, is how 
are we going to make determinations as to whether they are even 
complying with the law if we do not even know what data is 
being used or if it is hiding behind some sort of black box 
algorithm?
    You know, Secretary Carson issued a complaint against 
Facebook for violations of the Fair Housing Act, partially 
because of this algorithmic targeting, and we know that that is 
likely the future of where financial services is going. And to 
the extent that big tech companies are using the treasure 
troves of data, there needs to at least be some parity with 
local banks and other financial institutions who are following 
the law. We cannot hold them to a separate standard and simply 
let them off the hook.
    Senator Ossoff. Thank you, Mr. Chopra, and with my 
remaining time a question for you. Do you consider 
cryptocurrency wallets consumer financial products subject to 
your agency's jurisdiction?
    Mr. Chopra. You know, it is a broad question. All of the 
financial regulations are based on activities. In many cases we 
need to look at the specific facts of the business model, look 
at the law. It is a place I know that all of the financial 
regulators are actively looking at, and I am happy to circle 
back in a question for the record to give you more detail.
    Senator Ossoff. Thank you, Mr. Chopra. Thank you, Mr. 
Chairman. I yield.
    Chairman Brown. Thank you, Senator Ossoff. Senator Hagerty 
from Tennessee is recognized for 5 minutes.
    Senator Hagerty. Thank you very much, Mr. Chairman, Ranking 
Member Toomey. Thank you for holding this hearing today. 
Director Chopra, thank you for being here with us as well.
    This hearing is a key part of Congress' oversight 
responsibilities, and I feel that much more oversight is 
required for the regulatory agency that you run, Mr. Chopra. 
That is why last month, along with 16 of my colleagues, I 
introduced legislation that would subject the CFPB to the 
regular appropriations process and return civil penalties that 
do not go to direct victims back to the Treasury general 
account.
    This morning we saw that third-quarter GDP economic growth 
has really slowed down. Now is especially not the time for the 
Biden administration to double down on an antibusiness agenda, 
one which imposes excessive regulatory costs on small business, 
one that limits the availability of a range of financial 
services to those most in need of them.
    Again, as I mentioned last month, I introduced legislation 
that would subject the CFPB to the regular appropriations 
process so that the CFPB is accountable to the American 
people's elected representative, just like every other 
Executive branch agency.
    Mr. Chopra, I want to understand whether you are opposed to 
making the CFPB accountable to the American people's elected 
representatives through the appropriations process.
    Mr. Chopra. So, Senator, that is really a decision for 
Congress, but just to say what the facts are on it. So the way 
in which the banking regulators are funded, the CFPB has two 
components. So there is a base level of funding that is 
guaranteed by statute and then separately, inasmuch as the 
Bureau makes requests for supplemental funding, that is subject 
to the normal appropriations process.
    To date, as I understand, the CFPB has not made a 
supplemental request above that amount. The FDIC and the OCC, 
which are much larger agencies, they have a fee-charging 
arrangement. They charge fees to their regulated institutions. 
As I understand, that was not practical to be implemented in 
this context because we do not just oversee chartered banks. We 
oversee nonbanks as well that may not be subject to the same 
chartering and licensing.
    So I am happy to work with anyone if the Bureau can provide 
technical advice on this, but I do think, as a factual matter, 
there are two components, the base-level budget and the 
supplemental budget that is subject to appropriations.
    Senator Hagerty. Well, I would very much like to see more 
accountability here in this case. The bounty system that is 
created by taxing people through fees and then using that as 
your bank account I think is quite concerning. It creates a set 
of incentives that is discomforting to me and to many.
    Mr. Chopra. And just to be clear, we do not have that 
system. That is what the FDIC, the OCC and a component of the 
Federal Reserve Board's budget is. We do not assess fees.
    Senator Hagerty. And penalties?
    Mr. Chopra. So with respect to civil penalties, the civil 
penalties under the law go into a Victim's Relief Fund. For any 
entity that is subject to a civil penalty, and where the 
victims have not been fully redressed, the civil penalty is 
used for that purpose. Congress also authorizes it to be used 
for certain financial literacy programs, but I will share with 
you that my priority for the civil penalty fund would be for 
victim redress----
    Senator Hagerty. As it should be.
    Mr. Chopra. ----because there are many entities where we 
cannot recover redress, and those victims should be made whole 
from that fund.
    Senator Hagerty. I absolutely agree. They should take the 
absolute top priority. And again, I just hate to see a bounty 
system set up that in some way might incentivize your agency to 
impose fees, because that is a funding source for you that goes 
beyond the oversight.
    Mr. Chopra. And I take the feedback seriously. I know there 
were some concerns raised over the past about how the financial 
literacy programs are used. We will make sure we look into 
that. I want to know what disbursements are currently going on, 
to make sure that everything is in accordance with the law.
    Senator Hagerty. Thank you. I want to turn to 
cryptocurrency for a moment please. My office receives numerous 
complaints every month from constituents about their 
cryptocurrency either being fraudulent or hacked. Digital 
ledger technology offers a tremendous amount of promise in 
terms of financial innovation and inclusion. It is an industry 
where I think the United States is leading, has led, and I 
would like to see us continue to lead there, especially when we 
look at other countries like China and the Chinese Communist 
Party, that has moved to ban private sector activity in that 
arena.
    Would you mind to just describe for the Committee what the 
CFPB is doing in the cryptocurrency arena, where you are 
aiming?
    Mr. Chopra. So our focus is really on consumer payments and 
the payment system. As you know, we administer the Electronic 
Funds Transfer Act, and last week I issued a series of orders 
to Facebook, Google, Amazon, Apple, and others to understand 
some of their business practices with respect to their payment 
platforms. I, for one, am concerned that they may have the 
incentive to, at their whim, kick off participants based on 
their own business incentives or something else that we do not 
know. I would like to understand how they are protecting 
against fraud. The Electronic Funds Transfer Act does have 
requirements with respect to that, but we do not really have 
much transparency with respect to these big tech platforms.
    Ultimately, cryptocurrency right now is generally used for 
speculative purposes, including the stablecoin, but we do not 
know how that will scale. My sense is that it would scale very 
rapidly if big tech platforms are taking it globally.
    Senator Hagerty. Trying to push it. I just want to make 
certain that as you do exercise your oversight responsibilities 
that we do not stifle innovation in this arena. Thank you.
    Mr. Chopra. Yeah, I agree, and I think one of the things 
that is going to be a priority for me is making sure that 
regulation and enforcement is not just empowering the 
incumbents even more. We need more entry, we need more 
dynamism, we need more innovation, and the way to do that is to 
not pick winners and losers by crowning incumbents further.
    Senator Hagerty. Understood. Thank you.
    Chairman Brown. Thank you, Senator Hagerty. Senator Warner 
from Virginia is recognized from his office.
    Senator Warner. Thank you, Mr. Chairman, and Mr. Chopra, it 
is great to see you. Congratulations on firmly getting into the 
saddle.
    The first question I have got--and I am going to jump 
around a little bit here, so I apologize on the front end--is 
on the QM rule. I know the former acting director delayed 
implementation until, I believe, October of 2022. You know, the 
rule was drafted using a data-driven approach and had a lot of 
support from civil rights and consumer advocacy groups. I 
supported the final rule, and it was supported in a bipartisan 
way. We actually put a letter together on this, and I would be 
happy to share that.
    I worry that in delaying the implementation we might be 
drifting a little bit off course, and I am very concerned, 
particularly coming out of the coronavirus that we may be 
pushing families of color out of access to capital. So do you 
have any thoughts about when we might get this final rule out, 
and I hope the delay will not weaken the strong APR 
underwriting regulation put in place, the safe product 
standards, and a new Governor for affordability on a QM cap. 
Again, I know you are very concerned about access to credit. 
How do we make sure that this final rule does not undermine 
where we landed, which was a pretty good spot?
    Mr. Chopra. So, Senator, just to clarify, the rule was not 
delayed in terms of effective date. It was delayed in terms of 
the mandatory compliance date. So as I understand, and as I 
read the Federal Register notice and have been briefed, the 
change allowed----
    Senator Warner. I am sorry. Compliance. You are right. The 
compliance date.
    Mr. Chopra. Yeah. So it essentially gave lenders more 
flexibility in determining which path they would get QM status 
for. Now as I understand, most of the market has really moved 
to pricing, and a lot of it has already been implemented. So 
the last thing I want to do is create disruptions in the 
mortgage market.
    That being said, Senator, I do think there are some places 
I am particularly interested and where there may be 
opportunities to find more loans that may be subject to QM 
protections. That is actually in the refinance space. I think 
there are a lot of places where homeowners with lower-value 
homes or with lower-balance mortgages are not necessarily 
getting the benefits of refinancing. I am obviously following 
closely the changes to the agreement between Treasury and FHFA 
about what the enterprises are eligible to buy.
    So we will take that all into account, but just to be 
clear, that rules has taken effect, lenders can use the pricing 
regime now, and they can continue to do so, given the existing 
rule that has been put in place, even with the delayed 
mandatory compliance date.
    Senator Warner. Well again, on the compliance component, we 
want to make sure that we do not wander off some of the 
protections.
    I know Senator Cortez Masto raised some of the questions 
around big tech getting into the payment space. I have some 
real concerns there, and I agree with Senator Hagerty, we have 
got to maintain the innovation from fintech. But when Facebook 
and Google and others potentially get into the payment space it 
does raise some concerns, beyond privacy issues, but frankly 
even from antitrust, money laundering, a whole host of issues. 
And I really appreciate the fact that you have asked the big 
six tech companies for some information and scope of where they 
are headed.
    Why don't you share with me your concerns and what you 
think CFPB's role in addressing some of these safety 
implications as the big tech gets into payments as well as, 
unfortunately, the question around some, like Facebook, getting 
into digital currency.
    Mr. Chopra. Yeah. That is right. I think, again, as I 
mentioned, if big tech companies can scale this globally and 
rapidly it opens up a whole host of questions. There is a whole 
host of concerns about fair competition, and, Senator, I think 
we have discussed before, sometimes when the large, dominant 
tech companies enter a space it actually freezes up capital 
formation, and venture capital and other investors are less 
willing to put money on the table for new entrants because they 
think to themselves, well, what if one of these big firms just 
shuts it off?
    So that is something we want to make sure our payment 
system is resilient, that we have a fast, fair, and competitive 
system, and I am not really sure that this body should want our 
payment system to look more like Alipay and WeChat Pay. I think 
we have to take an American approach to it, not a Chinese 
approach or a European approach----
    Senator Warner. Can I just interject there for 1 second, 
because we do have to think about that in the context of what 
China is doing----
    Mr. Chopra. Of course.
    Senator Warner. ----in terms of the digital yuan and the 
Chinese platform companies getting very, very active in this 
space.
    Mr. Chopra. No, of course. That is part of the----
    Senator Warner. Finish your answer.
    Mr. Chopra. ----Senator, that is the part of the reason why 
our inquiry is also going to study the Chinese tech giants' 
practices, because we need to understand the interplay and to 
make sure that our consumers are protected but also that our 
national interest is protected as well.
    Senator Warner. I look forward to working with you on that. 
Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Warner. Senator Daines 
from Montana is recognized.
    Senator Daines. Thank you, Mr. Chairman. I want to start, 
first of all, by expressing my concern and joining my 
colleagues about a return to the consistent overreach that we 
are seeing by the CFPB, and we saw that same thing under the 
Obama administration. Under the Obama CFPB they pursued this 
regulation by enforcement, choosing to go after companies 
before giving them clarity about how to avoid engaging in what 
the CFPB deemed as, quote, ``abusive behavior.''
    The behavior of the CFPB has had a very detrimental effect 
on businesses and has limited consumer choice and, in fact, 
increased the cost of credit across America and in my home 
State of Montana. I am concerned and I fear that CFPB is 
already reverting back to some of those practices of the Obama 
era CFPB, reimposing some burdensome rules.
    Director Chopra, you said during your confirmation hearing 
that you would not prejudge a business based on the industry 
that it is in. Will you reaffirm that commitment to this 
Committee here today?
    Mr. Chopra. Yes. We should never prejudge a law-abiding 
business, and I am happy to answer in whatever you want, yes.
    Senator Daines. OK. Well, thank you. And you also said 
during your hearing that you intend on focusing your oversight 
on large businesses. Will you commit to leaving small 
businesses alone?
    Mr. Chopra. So let me share some detail on that. My 
experience with many Federal agencies, including at the Federal 
Trade Commission, is that rather than actually going through 
the process of appropriate enforcement that is subject to court 
review, what they do is they strong-arm small businesses into 
settlements--no litigated decisions--to create a sort of hidden 
common law, and I think that is very inappropriate.
    I think we have to focus on the biggest players, with 
national harm, and that we are doing so because they also have 
the know-how, ability, and resources to defend us. Most of 
these large firms have compliance departments way bigger than 
the CFPB. So it is much more fair when we are focusing on 
widespread harm rather than doing what the FTC and others do 
which is just beat up on small businesses without really ever 
going to court.
    Senator Daines. Yeah, a lot of small businesses do not have 
a compliance department, period.
    Mr. Chopra. Exactly. And small businesses are typically not 
ones that are engaged in large-scale harm. That being said, in 
some cases, Senator, when we are referred or when we are given 
a large number of complaints about a small entity, I am not 
saying that small businesses have a free pass from the law, but 
that is not going to be my focus.
    Senator Daines. I know Senator Tillis touched on this as 
well, but I am troubled by the CFPB's proposed rule on Section 
1071 on Dodd-Frank. I can tell you that Montana is made up of 
very small financial institutions, many of them, and this 
proposed rule would apply to those that originate 25 or more 
loans per year. I think that is punitive by design and will 
place a major regulatory burden on our very small financial 
institutions who are, frankly, the least equipped to deal with. 
As we talked about, their compliance departments are much, much 
smaller.
    Are you concerned about imposing undue regulatory burdens 
on small financial institutions? I mean, 25 or more loans per 
year.
    Mr. Chopra. So I do not know the specific details of what 
the compliance costs are, but I am going to answer your 
question with yes, because here is how I see a lot of 
rulemaking that occurs in Washington. It is extremely 
complicated, it hundreds of pages so that the large players, 
who have a lot of ability to influence it, can cover every 
single scenario they want rather than having clear, bright 
lines that are easy to follow, easy to enforce. And that is 
something I want to move toward. In some cases it is 
challenging to do simple, bright-line rules, but I am very 
sensitive to what our local financial institutions are facing. 
In my testimony I discussed the importance of restoring 
relationship banking. We have lost so much of that in our 
country, and it is a harm to our economy and our national 
resilience, I think.
    Senator Daines. Thank you. And you incentivize that, and 
relationship banking is a big part of how we do it in Montana. 
I just ask you to relook at that 25-loans-or-more threshold. Is 
that the right place to draw a line, because that really is 
going after the very small financial institutions, and it is 
chilling for those institutions back home.
    Mr. Chopra. And I want to understand, too, what costs go 
involved in reporting, because the law is asking us to collect 
data on, you know, the wide swath of the small business lending 
market. So I really encourage your financial institutions and 
others to submit comments in the record. We are required to 
look through those comments and consider them, and I certainly 
will look at that carefully.
    Senator Daines. Thank you.
    Chairman Brown. Thank you, Senator Daines. Senator Smith 
from Minnesota is recognized from her office for 5 minutes.
    Senator Smith. Thank you very much, Mr. Chair, and thank 
you, Director Chopra, for joining us. Welcome to the Committee. 
And I would like to focus my questions on abuses by structured 
settlement buyers.
    So over the last few weeks the Minneapolis Star Tribune has 
run a series of stories, really alarming stories, based on what 
structured settlement buyers are doing. So as you no doubt 
know, Director Chopra, there are about 750,000 Americans who 
receive some sort of structured settlement, which are periodic 
payments, usually monthly or yearly, to compensate people for 
injuries that they or their family members have suffered. These 
payments are critical for helping families pay for medical 
care, or sometimes just being able to survive after a tragic 
incident. We are talking about stories of people who have 
experienced, in some cases, a catastrophic injury that in some 
cases makes it impossible for them to live independently.
    So then what happens is these businesses come in, realizing 
that they can make money off of these catastrophes, and they 
take advantage of these victims when they are the most 
vulnerable. The firms offer one-time, up-front cash payments in 
exchange for the family agreeing to sign over future settlement 
payments, and on average these firms are taking 60 percent of 
the value of a settlement. So that means that the individual 
who was harmed, or their family, are getting less value from 
those structured payments than the business that bought them.
    And what is especially concerning is the high-pressure 
sales tactics that are being used by these settlement buyers, 
targeting people when they are in deep crisis. In fact, one 
former employee of one of these structured settlement 
businesses was quoted as saying, quote, ``You have to not have 
a conscience to be involved in this industry.''
    So, Director Chopra, I want to ask you about this. I know 
that you are working on responding to the letter that I sent to 
you on this issue, but could you tell me today whether you will 
be looking into this very troubling and abusive practice?
    Mr. Chopra. So I totally appreciate this question, and, 
Senator, I also read those Star Tribune writeups. You know, 
structured settlements often target those who are getting 
recurring payments in exchange for a lump sum, and under my 
predecessor, Director Kraninger, there was an enforcement 
action done with, I believe, several States, including the 
State of South Carolina.
    We will obviously want to make sure we are getting the 
right type of consumer complaints, understand what is happening 
in the market, and take appropriate action. I would hate to see 
that those who have been subject to a horrible accident or some 
other tragedy essentially lose financial stability for 
themselves and their family because of unlawful practices.
    Senator Smith. Thank you for that. I think this is the 
worst kind of predatory behavior that we have seen described 
here by businesses taking advantage of people, and I appreciate 
you paying attention to this and looking into this.
    Let me ask you, just as a quick follow-up, and then, Mr. 
Chair, I will probably wrap up after this. Do you think, 
Director Chopra, that the CFPB's existing rules are sufficient 
to stop these abuses, or do you think that new rules are 
needed?
    Mr. Chopra. You know, I am not sure. I am happy to take a 
question for the record on that. I think the specific practices 
involved in a structured settlement, you know, exchange, I want 
to understand a little bit more about how they contractually 
deal with that so that we can understand whether our laws are 
adequately protecting people. But I hear you very loud and 
clear that in some way this is a loan, has the equivalent of a 
loan in some ways, and we need to make sure that we are 
protecting people in that way.
    Senator Smith. Well, and as I was reading these stories, in 
some cases, for example, you will have an individual who is 
considering selling their future benefits, and then they are 
provided with an advisor, and in some cases that advisor is 
provided by the company that is going to be taking advantage of 
this individual, and they are often, by some reports, being 
compensated. So you have clearly a conflict of interest that is 
part of this predatory behavior.
    I appreciate you looking into this, and I think that it is 
a great example of how we need to be protecting people from 
this kind of just really predatory activity.
    Thank you very much, Mr. Chair. I yield back.
    Chairman Brown. Thank you, Senator Smith. Senator Warnock 
from Georgia is recognized, and he will be followed by Senator 
Warren from Massachusetts from her office, and Senator Reed 
will close the hearing as I go vote. Senator Warnock is 
recognized.
    Senator Warnock. Thank you so much, Chairman Brown. 
Director Chopra, I look forward to working with you as Chair of 
the Consumer Protection Subcommittee.
    I am proud of the significant number of military families 
living in the great State of Georgia. We have more than 60,000 
active-duty military personnel, and nearly 700,000 veterans all 
calling Georgia home. A CFPB survey estimated that at least 20 
percent of servicemembers separating from the military will 
have their credit scores drop a tier after just 6 months. This 
concerns me and it should concern all of us. We know what 
happens when that happens. We know that predatory lenders 
target members of our military, particularly young members of 
the military. Servicemember complaints to the CFPB reached a 
high of 40,800 last year.
    Director Chopra, how is the CFPB addressing these 
complaints and protecting our service men and service women 
from predatory lenders?
    Mr. Chopra. So, Reverend, or Senator----
    Senator Warnock. Both apply. That is fine.
    Mr. Chopra. OK. I want to make sure we are refreshing all 
of our work in the servicemembers and veterans area. I have got 
to tell you, there are a lot of problems when it comes to 
identity theft of military families, because they move very 
frequently. It is not just a target for a scammer, it is also a 
target for State and non-State actors. We also have to 
understand they have unique housing issues that they face, 
often when needing to move, particularly when it comes to their 
mortgage.
    I expect that we will be working with the Judge Advocate 
General Corps, we will be working with the DoD, with the VA. I 
will tell you that I am going to be robustly increasing the 
analytical capabilities to complement what the DoD is doing 
with their own status of the force collections so that we 
understand specifically, including by geography.
    And you may know, Senator, that our servicemembers are a 
very diverse group of people. We also have to make sure that 
they are not being unfairly harmed due to their, you know, 
their identity or to their servicemember status.
    Senator Warnock. Well, it is a complicated issue, as you 
point out, and there are many contributing factors, some of 
which you have listed, and it leads to kind of cascading issues 
for these members of the military. And it seems to me that when 
these servicemembers fall behind on their predatory loans, 
manipulative debt collectors are ready to swoop in, and they 
take advantage of people who do not know their rights.
    So what is the CFPB doing to protect members of our 
military from manipulative debt collectors to ensure that they 
know their rights and that they have resources to help when 
they are facing harassment?
    Mr. Chopra. Well, we need to make sure that we are actively 
enforcing the Military Lending Act. I am quite concerned about 
when debt collectors inform a CO, a commanding officer, about a 
debt. In some cases this feels like coercion, that someone may 
not even owe the debt but they feel they just have to pay up 
because, you know, their chain of command is hearing about it.
    So we have to make sure we are understanding those debt 
collection issues. And, you know, the DoD made it very clear 
that financial readiness is part of force readiness, and I take 
that very seriously.
    Senator Warnock. Thank you so much. If I might switch 
topics, unfair, deceptive, and abusive acts and practices in 
the housing and mortgage market was a big reason for the 
creation of CFPB. The National Housing Act of 1934 was supposed 
to make housing accessible for all Americans. However, this was 
not the case, and we saw a long history of Americans of color, 
especially, being redlined out of opportunities and wealth, 
which the Fair Housing Act addressed.
    Today, many describe artificial intelligence and machine 
learning as equalizers that are supposed to correct unfair 
practices of the past. We know that not to be true, that often 
this is false. For instance, in 2019, the Department of Housing 
and Urban Development, HUD, sued Facebook for its targeting 
advertising platform violated the Fair Housing Act and 
encouraged discrimination.
    How is the CFPB addressing the effects of algorithmic bias 
on consumers?
    Mr. Chopra. So this past Friday, the Attorney General and I 
announced, as part of a broader redlining initiative, that we 
are going to be looking--and I specifically stated that we need 
to hold accountable those who use discriminatory algorithms. 
There is a myth out there that algorithms can take the bias out 
of a transaction. In reality, they can make that bias go on 
steroids. We cannot have a two-tier system where financial 
institutions have to play by the rules, where Facebook and 
other tech companies, using mysterious black box algorithms, 
get to skate off with no accountability.
    Secretary Carson's complaint against Facebook in the Fair 
Housing Act context is one that all of us should closely 
analyze, because there are many corollary areas of conduct 
where it applies throughout our economy, including with respect 
to financial services.
    Senator Warnock. Thank you so very much. I look forward to 
working with you on all of these issues.
    Mr. Chopra. Thank you, sir.
    Senator Reed [presiding]. On behalf of Chairman Brown, let 
me recognize Senator Warren.
    Senator Warren. Thank you very much. Director Chopra, it is 
good to see you here, in front of this Committee for the first 
time as the confirmed Director of the CFPB. I know that you are 
going to help make our consumer financial markets both fairer 
and more transparent, and that is going to help millions of 
American families.
    So today I want to ask you about an emerging trend in 
consumer finance, the rapid growth of big tech companies in our 
payment systems. So big tech platforms like Venmo and Square 
and Apple Pay and Facebook Pay have multiplied in recent years. 
So Director Chopra, a giant company like Amazon owns an online 
marketplace, a cloud computing platform, a chain of grocery 
stories, and a payments platform. Is that combination a risk 
for consumers?
    Mr. Chopra. Yes, and it is a risk to small businesses too, 
Senator, and that is part of the reason why I issued this 
series of orders, including to Amazon, Apple, Facebook, and 
Google, to understand what they are doing with this data, how 
are they going to decide who gets admitted and who they are 
going to kick off, and is it going to be distorted by their own 
financial incentives.
    Senator Warren. And their own financial incentives here 
meaning when they have got that kind of information, what is it 
that they can do?
    Mr. Chopra. Well, they can do a lot, and I do not think all 
of it is very good. Look at what Apple has done in its App 
Store context. There are allegations that as soon as there is 
app in the App Store that competes with one of Apple's, they go 
in for the kill, charging higher commissions, higher fees. If 
our payment system and the flow of our currency is distorted by 
this, that is a real harm to consumers, and not just to their 
privacy but to the options that they have.
    Senator Warren. Good. Not good. It is a terrible thing but 
I appreciate your making this point, because the risk are real, 
and I am glad to see that the CFPB is requiring these companies 
to provide data on how they operate their payment systems. It 
is long past time for transparency in this space.
    Now you saw these companies up close and personal when you 
were an FTC commissioner, so I want to ask a different 
question. Do you think we can trust these companies on their 
own to put in place the safeguards that are necessary to make 
sure that consumers and small businesses that use these payment 
platforms do not get ripped off, or do you think you need a cop 
on the beat, like the CFPB?
    Mr. Chopra. Well, one of the problems is that when I 
arrived at the FTC there was a clear bias in favor of these 
firms. Take Venmo. Under Republicans and Democrats, the FTC 
just let them off the hook with a no money, no fault settlement 
that did almost nothing to fix things. Facebook violated its 
order over and over again, and the FTC's response? An immunity 
clause for Mark Zuckerberg and Sheryl Sandberg.
    We need to make sure that it is not just the FTC, it is not 
just the CFPB, every single Government agency is being impacted 
by how big tech companies are infiltrating sectors of the 
economy. It is not just going to be one of us. We have to work 
all together to protect consumers, protect businesses, and 
frankly, to protect our country.
    Senator Warren. That is a powerful point. You know, we have 
already seen big tech use their size and use their scope to rig 
marketplaces, and there is no reason to believe that they are 
going to be any different as they infiltrate payment systems 
here.
    But as you indicated earlier, we are not powerless here. I 
know that you took these companies on while you were at the FTC 
and that that work continues under FTC Chair Khan. But to the 
extent that financial products like payments platforms are part 
of the equation, the CFPB has an important role to play here.
    Can you talk about just a few of the ways in which the 
Bureau can actually help level the playing field?
    Mr. Chopra. Well, we have a whole host of tools, including 
with respect to our partnerships with the prudential banking 
regulators. But, of course, we administer laws, like the 
Electronic Fund Transfer Act, like the Gramm-Leach-Bliley 
privacy provisions. There may be places that we need to bring 
enforcement actions or issue guidance or rules to make sure 
that there is not a roll-over-and-play-dead mentality when it 
comes to policing these powerful firms.
    Senator Warren. Well, and I very much appreciate your focus 
on the importance of protecting personal data, and I know that 
that is going to be an important role for the CFPB.
    Look, I have made my position clear. I think these 
companies have far too much power and they should be broken up. 
But in the meantime, we need our regulators, all of our 
regulators, using every tool that is available to them to make 
sure that they protect marketplaces, that they protect small 
businesses, and that they protect America's families.
    So thank you very much for your work. Good luck to you.
    Senator Reed. Thank you, Senator Warren. On behalf of 
Chairman Brown let me recognize Senator Moran, please.
    Senator Moran. Chairman Reed, thank you very much. Mr. 
Chopra, Director Chopra, nice to see you again. Nice to have a 
brief conversation this morning.
    I want to thank you for a comment you made in regard to 
relationship banking, which is actually a phrase I use, and I 
am very interested in what I call relationship banking at home, 
and I have been an advocate for a different kind of treatment 
for those relationship banks. And I just want to emphasize, 
again, the importance that has to be placed on preserving their 
capability of making loans to farmers and small businessmen and 
women. They are just a significant part of the community.
    For really as long as I have been in the Congress, I have 
reminded my colleagues that economic development where I come 
from is often whether or not there is a grocery store in town, 
and that is often determined by whether or not there is a 
lender who will make that loan, because they know the people, 
it is in the best interest of the community, and this ever-
increasing regulatory burden that our relationship bankers are 
facing means that we have fewer relationship bankers and the 
banking industry gets bigger and bigger.
    The Bureau's implementation of Section 1071 is ongoing, and 
I would love to hear from you what assurances you can provide 
me that that final rule will be appropriately narrowed to limit 
the compliance burdens on our smallest community banks and 
credit unions.
    Mr. Chopra. So, Senator, I really appreciate the question. 
One of the things that we have seen, throughout the history of 
our country but particularly in all the financial panics, that 
really impacted rural areas was that it was a community bank 
that served locally and the ability to tide that farmer over, 
or rancher over, when there were times of distress. And, you 
know, farm bankruptcies are very disconcerting right now. So I 
am with you that we have lost that in our country, and a way we 
can be resilient and more equitable across areas, whether it is 
urban neighborhoods or rural areas, the relationship banking is 
a key element of that.
    Now with respect to your specific question, I do not want 
to prejudge it. There is an open comment period. Obviously the 
CFPB has to implement what Congress has said to collect on 
small business loans. There are some places where we need to 
put in some parameters on what will be reported. I shared with 
Senator Daines that we obviously want to take a close look at 
what is the impact on a financial institution to report that. 
You have my commitment, and I am happy to meet with you further 
about this, to talk through what those impacts would be.
    At the same time, we also want to make sure--Congress made 
clear in the law--we need to get a picture of what is happening 
with small business lending in America. I think our country was 
at a disadvantage, particularly when constructing the PPP 
program, to not have this robust dataset. But I hear you loud 
and clear in your concern that we want to make sure we are 
attuned to making relationship banking and local banking 
successful, rather than just having them all merge and 
consolidate into the big guys.
    Senator Moran. I would be happy to meet with you and have 
further conversation, and I appreciate the suggestion. You also 
said something, and I would highlight--and I know that Senator 
Daines raised this topic with you, but I did not want you to 
miss the opportunity to hear its importance, perhaps to Montana 
and Kansas but really lots of places across the country.
    The farm bill that the Committee on Agriculture will deal 
with over the next several years--we do a farm bill every 5 
years--it is important and it is often described as the safety 
net for farmers and ranchers. There is an additional safety 
net, and it is the relationship between the farmer/rancher and 
their banker, their lenders. And it is a safety net that comes 
into play, and it is often a relationship between a bank that 
is owned by a family, generationally, with a farmer that has 
had the farm in the generation, from great-grandparents to 
today. And so there is a relationship that matters, and there 
is an understanding and a trust and a knowledge that is 
different than any regulation can ever demonstrate. It has more 
value than that relationship as far as safety and soundness.
    In the 25 seconds I have left I would raise a complaint I 
had with Director Cordray and hope that you have a different 
leadership plan. Under Director Cordray's leadership, the 
enforcement authority was often used as an extension of 
rulemaking, and it was expected that financial institutions 
that read between the lines and discern the rules going forward 
based on, for example, the press release announcing the action, 
thus circumventing any transparent rulemaking process.
    I hope you will commit to avoid rulemaking by enforcement.
    Mr. Chopra. So I have said repeatedly that I want to make 
sure we move toward a system where the law and the rule are 
easy to understand, easy to follow, easy to enforcement. I know 
we are out of time, but I am happy to have a discussion with 
you about how I plan to do that. Of course, the CFPB cannot 
override or veto congressional legislation. We do have to 
enforce the law as written. But there are ways that we can work 
with you and others to develop the law so that expectations can 
be made more clear, inasmuch as that we can do it given the 
constraints of the statute.
    Senator Moran. The entities you regulate, large or small, 
ought to have input into the process, and it can be eliminated 
by a way of rulemaking that is not rulemaking. Thank you.
    Senator Reed. Thank you, Senator Moran. Director Chopra, 
thank you for being here today. Because of pending votes I will 
submit my questions for the record, but on behalf of Chairman 
Brown I want to thank you for your very thoughtful and very 
compelling testimony. And for my colleagues and Senators who 
wish to submit questions for the record, those questions are 
due 1 week from today, on Thursday, November 4th. To the 
witnesses, please submit your responses to questions for the 
record 45 days from the day you receive them.
    Once again, thank you, Director Chopra. I have great 
confidence in you. I was very pleased to support you, and you 
are doing, I think, remarkable work to protect consumers 
throughout the country.
    With that the hearing is adjourned. Thank you.
    [Whereupon, at 11:43 a.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    Welcome Director Chopra. You are stepping into a vital role for the 
American people.
    It's your job as Director of the Consumer Financial Protection 
Bureau(CFPB) to stand up for the hundreds of millions of Americans who 
don't have a corporate lobbyist, who don't have a Super PAC. You work 
for all the people who don't have a high-priced attorney fighting for 
them if a company opens a fake account in their name, or overcharges 
them on their credit card, or there are mistakes in their credit 
history.
    You're stepping into this role at a time when so many people feel 
like they don't have a voice in our economy, or anyone on their side in 
Government.
    Your job is to prove them wrong--to be on the side of everyone 
who's been preyed on and looked down on by corporate America. And to 
empower them to get their hard-earned money back.
    Your history and the history of this agency tell me you're up to 
the challenge.
    Millions of families are still dealing with the effects of the 
pandemic.
    And over the past year-and-a-half, scammers have done what they do 
best--prey on people in a crisis.
    People masquerading as Government workers conned families out of 
money, promising them early access to a COVID vaccine, student loan 
debt relief, even funeral expense benefits.
    It's why, after the 2008 crisis, we created the CFPB, to stand up 
to the powerful companies that will use a crisis to cheat every extra 
cent they can out of people.
    Unfortunately, for four years, the Consumer Financial Protection 
Bureau was held back by an Administration that tried to tear down the 
Bureau from within.
    Now, after an election where Americans decisively rejected that 
corporate kowtowing, the Biden administration has ushered in a new era 
of consumer protection.
    Under the leadership of Acting Director Dave Uejio, and now under 
your leadership, the CFPB has gone back to work, looking into financial 
companies, and getting people their money back.
    This year, the Bureau has worked to protect the rights of renters 
and homeowners, and has connected them with resources to get rental 
assistance or housing counseling.
    It created new requirements for mortgage servicers, to make sure 
homeowners can keep their homes and get back on track with their 
payments.
    The CFPB is helping people with student loans as loan payment 
moratoriums end.
    And I applaud your decision to join the Department of Justice and 
the Office of the Comptroller of the Currency to enforce our fair 
housing and fair lending laws, as we work to undo the long legacy of 
redlining.
    Of course we know corporations and big banks and loan sharks aren't 
giving up. And as big tech companies encroach into the consumer finance 
and housings markets, new threats emerge every day.
    Look at what's happening in the tenant screening industry. Renters 
are often forced to pay out of their own pocket for tenant screening 
reports that can be riddled with errors and block them from renting, 
with no explanation.
    I've asked the Bureau to conduct a review of the tenant screening 
industry to protect renters, and look forward to learning how we can 
better crack down on these companies.
    Bias in algorithms--and other predatory targeting--risks 
reinstating Jim Crow in a new, high-tech form.
    And new revelations about Facebook's promotion of the most extreme 
and divisive content--including vaccine lies--is just the latest 
reminder that we cannot trust these Big Tech algorithms.
    The last thing we need is them moving into the payments system and 
other financial markets critical to families' financial futures.
    The Bureau's recent efforts to investigate big tech companies' 
invasion of the financial system and their abusive data privacy 
practices are so important, and must continue.
    No matter the industry, the Consumer Financial Protection Bureau is 
all about empowering people. It's about giving people a tool to stand 
up to the big banks and the financial corporations and the big tech 
companies that have far too much power in this country.
    I know those corporate interests and their allies in this building 
don't like that. Director Chopra, you were confirmed unanimously by 
voice vote to be an FTC commissioner--yet not one of my Republican 
colleagues wanted you take this job. They don't want this job to exist.
    Anyone who goes after corporate interests, you attack. Every time 
we have one of these hearings, we hear the same made-up complaints 
about accountability.
    You know how accountable this agency is. You know how many times 
Richard Cordray came before this committee.
    This agency has returned billions of dollars to consumers. What you 
don't like is that they go after your contributors and the big banks.
    So if you want to attack the Consumer Protection Bureau, say what 
this is really about--don't make up this fake stuff about 
accountability.
    Director Chopra, I don't expect you to be cowed. I expect to see 
vigorous enforcement of consumer protection laws, consistent monitoring 
of fintech companies, and crackdowns on big corporations who routinely 
and repeatedly violate orders issued by the Bureau during your tenure.
    Director Chopra, I look forward to hearing about the agenda you are 
setting in this new era for consumer protection at the Bureau.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Mr. Chairman, thank you. Welcome, Director Chopra.
    During the Obama administration, the CFPB was a lawless, 
antibusiness, unaccountable agency. Through restrictive policies, it 
limited consumer choice, drove up the cost of credit, and heedlessly 
harassed employers. Unfortunately, the Biden administration has rushed 
to return the CFPB to its bad old ways.
    In less than ten months, the Biden CFPB has disregarded its 
jurisdictional limits, rescinded policies that provided regulatory 
clarity, returned to regulating by enforcement actions rather than 
rules, reportedly pushed out career civil servants for political 
reasons, and refused to comply with congressional oversight.
    Let's consider the Biden CFPB's return to regulation by 
enforcement. This unfair practice occurs when agencies fail to set 
clear rules of the road before bringing enforcement actions.
    A classic example is with the Dodd-Frank Act. Dodd-Frank prohibited 
providers of consumer financial products from engaging in ``abusive'' 
acts or practices. However, the law's definition of this new term is so 
vague it's not clear what it prohibits.
    During the CFPB's entire existence, it has never bothered to issue 
a rule to clarify this definition. But that didn't stop the Obama CFPB 
from bringing enforcement actions accusing businesses of abusive 
conduct and pressuring them into settling.
    The Trump CFPB issued a sensible policy to curb this practice. The 
Biden CFPB, however, quickly rescinded this policy and took no steps to 
provide regulatory clarity.
    Instead, in just his second week on the job, Director Chopra 
brought and settled an enforcement action against a company for abusive 
conduct even though the CPFB has never defined that term. Worse yet, 
CFPB relied on a novel theory of abusive conduct. CFPB alleged an 
``abuse of market dominance''--a foreign concept taken from European 
antitrust legal theories, not American consumer laws.
    The Biden CFPB has also repeatedly exceeded the bounds of its 
statutory authority by acting outside of its jurisdiction. Take for 
example the CFPB's overreach into housing rentals and landlord-tenant 
law in effort to advance the Biden administration's unlawful CDC 
eviction moratorium.
    In May, the CFPB and the FTC, where Mr. Chopra was serving as a 
commissioner, jointly sent threatening letters to large landlords about 
the moratorium. The problem is housing rentals and landlord-tenant law 
are completely outside of the CFPB's jurisdiction.
    By statute, the CFPB's jurisdiction is limited to overseeing 
``consumer financial products and services,'' which do not include 
housing rentals, and enforcing certain enumerated consumer laws, none 
of which govern landlord-tenant relationships.
    In its notice to landlords, the CFPB even seemed to begrudgingly 
acknowledge its lack of jurisdiction, but that didn't stop the CFPB 
from threatening them with potential legal action. The letters stated: 
``Neither the FTC nor the CFPB has determined whether you or your 
company is violating the law . . . the FTC or CFPB may still take 
action based on law violations.''
    It's deeply troubling that the CFPB made these threats when it had 
no legal authority to follow through on them because housing rentals 
and landlord-tenant law are outside of its jurisdiction.
    The Biden CFPB has also refused to comply with legitimate 
congressional oversight requests. According to press reports, the Biden 
CFPB has taken unusual and possibly unlawful actions to push out career 
civil servants in order to replace them with political loyalists.
    In June, I sent the CFPB a letter seeking documents about these 
allegations. For 5 months, the CFPB has sought to evade this legitimate 
oversight request.
    In June, the CFPB claimed it needed more time to respond. Then, in 
July, instead of providing records, the CFPB claimed that the Privacy 
Act prevented it from producing any of the requested records.
    After my staff challenged this claim, the CFPB finally produced 
some heavily redacted records this month. Despite the heavy redactions, 
at least one document refers to a ``Voluntary Separation Compensation 
Agreement,'' which sounds like reports that CFPB civil servants were 
offered extraordinary separation incentives to leave their posts.
    From the redactions to delay tactics, it makes one wonder: What 
does the CFPB have to hide? In fact, I could ask the same question 
about you, Director Chopra.
    In June, while your nomination was pending, I sent you a letter 
about the reports of troubling personnel actions at CFPB. My letter 
asked simple questions about whether you were involved in--or aware 
of--these actions. You refused to answer these questions or respond at 
all.
    As a result, in July, every Republican Member of this Committee 
sent you a letter calling on you to answer these questions. But you 
still refused to provide answers or respond. That's simply 
unacceptable.
    Let me closing by saying: You've been CFPB Director for less than a 
month. There's still time for you to reverse course.
    Some good places to start would be to end the CFPB's unfair 
practice of regulation-by-enforcement, respect the CFPB's 
jurisdictional limits, and stop stonewalling legitimate congressional 
oversight requests. I hope you will, but I won't hold my breath.
                                 ______
                                 
                   PREPARED STATEMENT OF ROHIT CHOPRA
             Director, Consumer Financial Protection Bureau
                            October 28, 2021
    Chairman Brown, Ranking Member Toomey, and distinguished Members of 
the Committee, I am pleased to appear before you today in conjunction 
with the Consumer Financial Protection Bureau's submission of the 
Semiannual Report to Congress.
    Two weeks ago, I was honored to be sworn in as the Bureau's 
Director. I am grateful to all of you for your input and guidance 
during the confirmation process on the issues of importance to you and 
your constituents.
Economic Conditions
    2021 is far different than 2020. The economy is reopening and 
growing. Labor demand is strong, and employers have added millions of 
new jobs. Household spending has rapidly increased, and demand for 
housing is robust. While these macro indicators are promising, the 
recovery has been uneven.
    In many parts of the country and in many individual neighborhoods, 
conditions remain fragile. Many families continue to struggle to afford 
their mortgage and rent payments. Many small businesses are facing 
severe challenges to make ends meet. And, many communities have not 
felt much of a recovery, especially communities of color and 
neighborhoods that have been historically disadvantaged.
    Household debt has started to increase at a faster rate. American 
families owed $15 trillion as of the end of the second quarter of this 
year, roughly $800 billion more than at the end of 2019. From July of 
2020 through June of this year, mortgage originations, including 
refinancing, hit historic highs with $4.6 trillion in originations. 
There has been high demand for auto loans, and Americans now owe $1.4 
trillion in auto debt.
    The CARES Act has kept delinquency rates on mortgages and student 
loans at low levels. However, many of the borrower forbearance programs 
have expired, so we lack a complete picture about distress. Many family 
farmers continue to confront significant challenges and the immediate 
outlook for the sector remains highly uncertain. Medical debt in 
collections continues to grow as a concern for many households.
Market Monitoring
    Congress has tasked the CFPB with monitoring market conditions to 
spot risks, ensure compliance with existing law, and promote 
competition in order to protect families and honest businesses.
    Most importantly, the CFPB is carefully monitoring conditions in 
the mortgage market and is taking steps to minimize avoidable 
foreclosures. Avoiding unnecessary foreclosures and putting homeowners 
into repayment plans they can afford is essential. In June, the CFPB 
put forth an interim rule with the goal of ensuring an orderly 
transition back to repayment, so families do not experience unnecessary 
hardship and disruptions in the mortgage market do not impede the 
recovery. We are keen on understanding how homeowners from different 
segments of the population are faring, including communities of color, 
military-connected families, older Americans, first-time homeowners, 
and family farmers.
    Technological progress holds the potential for enormous benefits to 
households and the economy, particularly with respect to real-time 
consumer payments. At the same time, the desire of Big Tech to gain 
greater control over the flow of money in the economy raises a number 
of questions. For example, how will these firms harvest and monetize 
data they collect on our transactions? What criteria will they use to 
decide who is removed from the platform? How will they ensure that 
payment systems adhere to consumer protections? Will Big Tech giants 
have an incentive to impede the entry of new firms seeking to offer 
competitive products and services?
    With this in mind, the CFPB has issued orders to dominant firms 
such as Facebook, Google, Apple, Amazon, Square, and PayPal to shed 
light on some of these questions. We will also be studying some of the 
practices of Chinese tech giants, including services provided by WeChat 
Pay and AliPay. These efforts complement other work within the Federal 
Reserve System to ensure families and businesses can rely on a fast and 
reliable payments system. It will also inform other initiatives to 
ensure that our evolving payments landscape is in alignment with our 
national interest. Given the state of today's economic conditions, the 
Bureau also intends to ramp up its monitoring of other markets and 
their impact on specific population segments.
Path Forward
    The CFPB intends to faithfully and fairly administer the consumer 
financial laws entrusted to the agency by Congress. We must use our 
tools to promote an equitable and inclusive recovery. Given existing 
economic conditions and these tools, I expect to have several areas of 
focus.
    First, I hope to focus attention on ways to stimulate greater 
competitive intensity in consumer financial markets. When I was last at 
the CFPB, we undertook a number of initiatives to promote student loan 
refinancing options for borrowers to obtain lower rates and better loan 
servicing. Today, there are many other places where greater competitive 
intensity would benefit households and businesses alike. For example, I 
am concerned that there is a dearth of competition in the mortgage 
refinance market for families with lower balance mortgages. The lack of 
refinancing may disproportionately affect communities of color and 
others that are historically disadvantaged. There is also evidence to 
suggest that many Americans could be paying lower interest rates on 
their credit cards or earning higher interest rates on their savings. 
We will be keeping a close eye on practices that might impede 
competition, we plan to listen carefully to local financial 
institutions and nascent competitors on the obstacles they face when 
seeking to challenge dominant incumbents, including in Big Tech.
    Second, I anticipate that the CFPB will sharpen its focus on repeat 
offenders, particularly those that violate agency or Federal court 
orders. The agency has now entered into a substantial number of orders, 
largely by consent of the agency and the financial institution, and it 
will be critical that we closely monitor compliance with these orders. 
Repeat offenders that violate orders and cause ongoing harm to families 
and law-abiding businesses must be stopped.
    The CFPB will need to work closely with State regulators and other 
Federal banking regulators, like the Office of the Comptroller of the 
Currency, in order to fashion appropriate remedies for repeat 
offenders.
    Third, we will look for ways to restore relationship banking in an 
era of big data. As automation and algorithms increasingly define the 
consumer financial services market, there is less transparency into how 
credit decisions are made. In some cases, these practices can 
unwittingly reinforce biases and discrimination, undermining racial 
equity. Increasingly, households and businesses have no place to turn 
to when they need help, especially when they face errors and problems 
in their financial lives. In markets like credit reporting, consumers 
are not the customer and lack the leverage to get problems fixed in a 
timely manner. The inability to cut through red tape and get help in 
one's financial life can be a major obstacle when seeking a job or when 
applying for credit. Preserving relationship banking is critical to our 
Nation's resilience and recovery, particularly in these times of 
stress.
    Thank you for the opportunity to appear before you today, and I 
look forward to your questions.
        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                       FROM ROHIT CHOPRA

Q.1. Congressional Oversight--Are you aware of whether the CFPB 
has taken any steps between January 20, 2021, and the present 
to push out, replace, or encourage any career CFPB employees to 
leave their positions?

A.1. As you know, I was sworn in as the Director of the 
Consumer Financial Protection Bureau on October 12. Upon 
arriving at the Bureau, I met with career staff to discuss the 
allegations made in media reports last summer that suggested 
that the Bureau was taking personnel actions with respect to 
career executive civil servants for partisan reasons. I take 
such allegations seriously, and I can assure you that, as then-
Acting Director Uejio wrote to you, when making personnel 
decisions, the Bureau complies with all applicable laws and 
regulations, including laws governing the fair and nonpartisan 
treatment of career employees. I can also assure you that I had 
no involvement in these decisions.
    Since January 20, 2021, no career Bureau Executive has been 
``pushed out'' or involuntarily separated from the Bureau. On 
occasion--and pursuant to a policy adopted in March 2020 by 
former Director Kraninger--the Bureau has offered a voluntary 
separation incentive payment (VSC payments) to voluntarily 
separating career executives. As further explained in response 
to Question 2 below, I understand the Bureau has offered VSC 
payments on four occasions, two of which resulted in 
agreements.

Q.2. If so, what specific steps are you aware of to push out, 
replace, or encourage career CFPB employees to leave their 
positions, and at whose direction were they taken?

A.2. See above response to Question 1.

Q.3. When were you first made aware that the CFPB was 
attempting to push out, replace, or encourage any career CFPB 
employees to leave their positions?

A.3. I was aware of the media reports this past summer but, as 
noted above, had no direct knowledge or involvement in the 
events described.

Q.4. Have you discussed any plan or decision to push out, 
replace, or encourage any career CFPB employees to leave their 
positions, and if so, with whom did you discuss this plan or 
decision?

A.5. See above response to Question 1.

Q.6. Are you aware of whether the CFPB between January 20, 
2021, and the present offered any career CFPB employees 
separation incentives to leave their positions?

A.6. The Bureau first instituted a Voluntary Separation 
Compensation (VSC) policy in March 2020, under former Director 
Kraninger. The VSC policy was enacted pursuant to the 
Director's authority under Section 1013 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act; it is similar to 
programs in use at other Federal financial regulatory agencies 
and was modeled in part on the Voluntary Separation Incentive 
Payment Authority, which has been available to and in use at 
most Federal agencies since 2002. See 5 U.S.C. 3521-3525.
    Since the VSC policy was instituted, the Bureau has offered 
VSC payments under both former Director Kraninger's and then-
Acting Director Uejio's leadership on four occasions, two of 
which resulted in VSC agreements. The Bureau has not offered 
any VSC payments under my leadership.
    While I was not involved with the offering of these VSC 
payments, I can tell you that I am confident that the Bureau 
acted appropriately and that payments were not offered for 
partisan or political reasons.

Q.7. If so, please provide a list of all career CFPB employees 
offered separation incentives to leave their positions 
(identified by their position titles, not their names) and the 
specific terms of the separation incentives they were offered.

A.7. See above response to Question 2. Information that would 
identify the employees who were offered or accepted a VSC 
payment is protected by the Privacy Act.

Q.8. When were you first made aware that the CFPB had offered, 
or was intending to offer, any career CFPB employees separation 
incentives to leave their positions?

A.8. I was aware of the media reports this past summer but, as 
noted above, had no direct knowledge or involvement in the 
events described.

Q.9. Have you discussed any plan or decision to offer career 
CFPB employees separation incentives to leave their positions, 
and if so, with whom did you discuss this plan or decision?

A.9. No.

Q.10. Are you aware of whether the CFPB between January 20, 
2021, and the present opened an investigation into any career 
CFPB employee at the Associate Director or Assistant Director 
level?

A.10. Senior officials at the Bureau are not above the law. All 
employees, including senior officials, are subject to a wide 
range of requirements, including avoiding conflicts of interest 
and not misusing Government funds. I am committed to setting 
the highest standards of ethics and integrity for Bureau 
employees. To that end, Bureau recently issued additional 
ethics guidance to protect the public trust and detect 
revolving door misconduct.
    As to specific investigations of individuals, in light of 
the significant personal privacy interests of Bureau employees 
where allegations of misconduct are concerned and to protect 
the integrity of internal Bureau processes and the due process 
rights of employees, it would not be appropriate for me to 
confirm or deny any internal investigations into alleged 
employee misconduct.
    I can assure you that any Bureau decisions to initiate 
investigations are not made for any partisan or political 
reason. I can also assure you that any such internal 
investigations are directed by career employees solely to 
determine whether misconduct has occurred and in order to 
assess whether and, if so, what appropriate disciplinary action 
should be taken.

Q.11. If so, please provide a list of all such individuals 
(identified by their titles, not their names) and the reason 
for opening the investigation.

A.11. See above response to Question 3.

Q.12. When were you first made aware that the CFPB had opened, 
or was intending to open, an investigation into any career CFPB 
employee at the Associate Director or Assistant Director level?

A.12. I was aware of the media reports this past summer but, as 
noted above, had no direct knowledge or involvement in the 
events described.

Q.13. Have you discussed any plan or decision to open an 
investigation into any career CFPB employees at the Associate 
Director or Assistant Director level, and if so, with whom did 
you discuss this plan or decision?

A.13. See above response to Question 3.

Q.14. Are you aware of whether the CFPB between January 20, 
2021, and the present placed any career CFPB employees at the 
Associate Director or Assistant Director level on 
administrative leave?

A.14. When there is evidence of or credible allegations of 
misconduct on the part of Bureau employees, the Bureau takes 
such allegations seriously and conducts appropriate 
investigations directed by career employees. Where appropriate, 
the Bureau will place employees on administrative leave during 
such investigations. Such use of administrative leave is 
consistent with the provisions of the Administrative Leave Act 
setting forth the appropriate basis for placing employees on 
investigative leave.
    In light of the significant personal privacy interests of 
Bureau employees it would not be appropriate for me to confirm 
or deny the placement of any Bureau employee on investigative 
leave.

Q.15. If so, please provide a list of all such individuals 
(identified by their titles, not their names) and the reason 
for placing them on administrative leave.

A.15. See above response to Question 4.

Q.16. When were you first made aware that the CFPB had placed, 
or was intending to place, any career CFPB employee at the 
Associate Director or Assistant Director level on 
administrative leave?

A.16. I was aware of the media reports this past summer but, as 
noted above, had no direct knowledge or involvement in the 
events described.

Q.17. Excluding politically appointed positions, how many 
personnel has CFPB hired since January 20, 2021?

A.17. From January 20, 2021, to October 23, 2021, the Bureau 
has hired 169 career employees (including 27 interns), i.e., 
employees who are not serving in politically appointed 
positions.

Q.18. Excluding politically appointed positions, how many 
personnel have departed since January 20, 2021?

A.18. From January 20, 2021 to October 23, 2021, there have 
been 109 career employees (including 19 interns) who have 
separated from the Bureau. This turnover is consistent with the 
Bureau's historic turnover rates, which range from 7.6 percent 
and 11.7 percent, depending on the fiscal year.

Q.19. Abusive Acts or Practices--The Government is obligated to 
set clear rules of the road before holding anyone responsible 
for breaking them. Regulation by enforcement is exactly what we 
don't need--it is neither fair nor consistent with the rule of 
law.
    Additionally, the Government is obligated to be 
transparent, explain its reasoning, and address public feedback 
when making important decisions. Regulatory guidance is not the 
same as notice-and-comment rulemaking. Only rulemaking involves 
public feedback and Government transparency.
    Unfortunately, in the last 10 years, the CFPB has not 
issued a rule to clarify the definition of the ``abusive'' acts 
or practices standard created by the Dodd-Frank Act.
    Will you commit to going through a transparent and public 
notice-and-comment rulemaking to provide much needed clarity to 
this definition?

A.19. Congress has made it clear when rules are required before 
a prohibition on unfair, deceptive, and abusive acts and 
practices can be enforced. For example, under the Consumer 
Financial Protection Act, rules are required for State 
attorneys general to enforce that law's prohibitions on unfair, 
deceptive, and abusive acts and practices against national 
banks and Federal savings associations and for the Federal 
Trade Commission to enforce the same against nondepositories. 
The Bureau, however, is required to enforce the statutory 
prohibitions against unfair, deceptive, and abusive acts and 
practices, regardless of whether the Bureau has issued rules 
relating to those prohibitions. Accordingly, the Bureau pursues 
enforcement actions when it becomes aware of unlawful conduct 
that violates the prohibition against abusive acts and 
practices. Legal principles develop as cases are litigated and 
judicial rulings add to a body of jurisprudence. This important 
process is currently working to further develop the prohibition 
against abusive acts and practices. I will continue to review 
all the various options available to the Bureau to help develop 
the law and a durable jurisprudence as to abusive acts and 
practices.

Q.20. CFPB's Office of Innovation--Financial innovation has the 
potential to expand and improve consumers' options for 
financial products and services. Regulatory uncertainty stifles 
financial innovation and stops financial institutions from 
offering more and better choices to consumers.
    The CFPB's Office of Innovation administers programs that 
resolve regulatory uncertainty about how the CFPB will treat 
new financial product and services, provide clarity on how to 
comply with the law, and foster responsible innovation.
    I am concerned that under the Biden administration the CFPB 
has stopped working to foster responsible innovation. Since the 
Biden administration took office:
    How many requests for No-Action Letters has the Office of 
Innovation received?
    How many No-Action Letters has the Office of Innovation 
ruled on?
    How many requests for No-Action Letters are currently 
pending review (regardless of when received)?
    How many applications for admission to the Compliance 
Assistance Sandbox program has the Office of Innovation 
received?
    How many applicants has the Office of Innovation admitted 
to the Compliance Assistance Sandbox program?
    How many applications to the Compliance Assistance Sandbox 
program are currently pending review (regardless of when 
received)?
    How many applications for admission to the Trial Disclosure 
program has the Office of Innovation received?
    How many applicants has the Office of Innovation admitted 
to the Trial Disclosure program?
    How many applications to the Trial Disclosure program are 
currently pending review (regardless of when received)?

A.20. Financial innovation plays an important role in the 
consumer marketplace to improve options and products for 
consumers. The Bureau has acknowledged this, for example, in 
its recent Notice and Request for Comment regarding the 
Bureau's inquiry into Big Tech Payment Platforms (Notice). In 
that Notice, the Bureau acknowledged that faster, frictionless, 
and cheaper payment systems can offer significant, potential 
benefits to consumers, workers, and their families. Fast 
payment systems can also help small businesses succeed with 
quicker transactions, lower cost, and more revenue conversion. 
But, despite the benefits of innovation, little is known 
publicly about how Big Tech companies may exploit their payment 
platforms. Further, as the Notice states, the Bureau's inquiry 
to Big Tech will help inform and yield insights that may help 
the Bureau implement other statutory responsibilities, 
including potential rulemaking.
    Fostering innovation and options for financial products and 
services are important goals. In addition, the Bureau is 
committed to advancing innovation through competition by 
guarding against market concentration, anticompetitive 
practices, and gatekeeping by major market incumbents. These 
kinds of anticompetitive behaviors depress innovation and 
prevent new entrants from providing consumers with additional 
choices.
    To provide regulatory clarity, the Bureau intends to 
provide guidance to industry through vehicles that are broadly 
applicable to all companies (e.g., advisory opinions and policy 
statements), including those that don't have the resources and 
lawyers to file an application with the Bureau, and even 
companies that have not been created yet. The Bureau should not 
be picking winners and losers or giving any individual company 
even the informal impression of Bureau endorsement. I'm also 
concerned about advantaging companies that hire the right 
lawyers who know how to lobby and jump through the red tape 
necessary to obtain a No-Action Letter (NAL) or Compliance 
Assistance Sandbox (Sandbox) Approval. Advisory opinions and 
policy statements apply broadly, they cannot advantage 
particular companies.
    Applications for eight NALs (three received after January 
20, 2021), eleven Sandbox Approvals (nine received after 
January 20, 2021), and four disclosure trials (none received 
after January 20, 2021) are pending as the Bureau assesses 
whether any of these company-specific applications are 
appropriate in light of scarce Government resources and the 
above referenced preference for more broadly applicable 
guidance. None have been approved this year. Please note that 
applications for NALs, Sandbox Approvals, and Trial Disclosures 
Waivers go through an iterative process with the relevant 
company before being ready for disposition. Not all of the 
pending applications have gone through that full process.

Q.21. Cryptocurrency--On November 1, 2021, you issued a 
statement on the CFPB and the Report on Stablecoins issued by 
the President's Working Group on Financial Markets, the Office 
of the Comptroller of the Currency, and the Federal Deposit 
Insurance Corporation.
    You stated that the CFPB ``will be taking several steps 
related to this market.'' What specific steps related to the 
stablecoin or other cryptocurrency markets will the CFPB take?

A.21. As I testified to, one of the first actions I took after 
my confirmation was to order six technology companies (Big 
Tech) to turn over information about their payment services to 
the Bureau--including information about what cryptocurrency and 
stablecoin activities these companies are engaged in in the 
context of consumer payment services. As I underscored in my 
statement at the time, little is known about how Big Tech 
exploit data on their platforms, including how such platforms 
engage in payment-related activities. The information requested 
will help the Bureau better understand how these firms engage 
in payment services, and related activities so the Bureau can 
ensure adequate consumer protection.
    The Bureau also continues to monitor the market for 
consumer financial products and services. While stablecoins are 
currently used primarily for speculative trading, they may also 
be used for and in connection with other applications within 
the Bureau's jurisdiction. To the extent that cryptocurrency 
and stablecoins are used for and in connection with consumer 
deposits, stored value instruments, retail and other consumer 
payments mechanisms, and in consumer credit arrangements, these 
acts and practices are subject to Federal consumer financial 
laws, such as the Consumer Financial Protection Act, Electronic 
Fund Transfer Act, Truth in Lending Act, and other laws within 
the Bureau's jurisdiction. We will continue to closely monitor 
market developments to determine what further actions, if any, 
are necessary.

Q.22. You stated that ``the CFPB is actively monitoring and 
preparing for broader consumer adoption of cryptocurrencies.'' 
What specific actions is the CFPB taking in this regard?

A.22. See above response to Question 9.

Q.23. You stated that ``As the Report on Stablecoins notes, 
established players with large user bases could accelerate the 
adoption of stablecoins as a payment device, and lead to an 
excessive concentration of market power.'' Congress has 
entrusted the Federal Trade Commission and the Department of 
Justice with authority to enforce U.S. competition laws. 
Congress has never entrusted the CFPB with such authority. And, 
to my knowledge, the CFPB has never attempted to assert that 
Congress has. What did you mean by this statement?

A.23. My statement referred to what the President's Working 
Group Report (Report) on Stablecoins noted. I agree with that 
statement in the Report.
    The Bureau is authorized to ensure that markets for 
consumer financial products and services are fair, transparent, 
and competitive. The Bureau also must enforce Federal consumer 
financial laws consistently to ensure fair competition.
    Payments businesses are network businesses and can gain 
tremendous scale and market power, potentially posing new risks 
and undermining fair competition for consumer financial 
products and services. I'm concerned that Big Tech companies 
could operate their payments platforms in a manner that 
extracts rents from market participants; coerces small 
businesses into participating for fear of being suppressed in 
search or product listings; and disadvantages the companies' 
competitors in other markets, all to the detriment of consumers 
and markets for consumer financial products and services.
    Knowing what we spend our money on is a valuable source of 
data on consumer behavior. This data can be monetized by 
companies that seek to profit from behavioral targeting, 
particularly around advertising and e-commerce. In some 
situations, too, consumers may have little market power to 
decide which products to use or to shape how their data is 
used. If consumers adopt stablecoins as a payment device, we 
need to make sure that there is dynamism and innovation in the 
market and that incumbents' advantages are not being 
reinforced.
                                ------                                


         RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED
                       FROM ROHIT CHOPRA

Q.1. We are seeing an emerging problem of credit products that 
are structured to avoid Federal and State consumer protection 
laws, including buy now, pay later (BNPL) loans provided by 
nonbank lenders. What can the CFPB do to ensure that BNPL 
borrowers receive the full protections of our credit and fair 
lending laws?

A.1. The Bureau actively monitors the buy now pay later (BNPL) 
market for consumer benefit and risk and is focused on ensuring 
that new entrants and products comply with existing law. On 
December 16, 2021, the Bureau issued several 1022(c)(4) Orders 
under its authority to collect information to monitor the 
organization, business conduct, markets, and activities, in 
order to increase the Bureau's knowledge of some of the 
foundational elements of the domestic BNPL market. The Bureau 
continues to post educational materials for consumers as well, 
such as posting recent educational material \1\ and a consumer 
blog entitled ``Should you buy now and pay later'' advising 
consumers of potential risks associated with the products. \2\ 
The Bureau also closely reviews the consumer complaints it 
receives about BNPL products. Furthermore, the Bureau noted in 
its 2021 Consumer Credit Card Market Report, published on 
September 21, that BNPL may present different risks to 
consumers than credit cards. \3\ The Bureau is committed to 
using all of its tools, including but not limited to 
enforcement, consumer education, research, and rulemaking, to 
protect consumers of BNPL products.
---------------------------------------------------------------------------
     \1\ https://www.consumerfinance.gov/ask-cfpb/what-is-a-buy-now-
pay-later-bnpl-loan-en-2119/
     \2\ https://www.consumerfinance.gov/about-us/blog/should-you-buy-
now-and-pay-later/
     \3\ https://files.consumerfinance.gov/f/documents/cfpb-consumer-
credit-card-market-report-2021.pdf

Q.2. What are the CFPB's tools and authorities to address 
predatory small-dollar loans, including high-interest payday 
---------------------------------------------------------------------------
loans?

A.2. The Bureau has enforcement and supervisory authority over 
depository small-dollar lenders with total assets over $10 
billion and any affiliates thereof. The Bureau also has 
enforcement authority over nondepository small-dollar lenders, 
regardless of their size. The Bureau's supervisory authority 
over nondepository small-dollar lenders under the Consumer 
Financial Protection Act applies to payday lenders, regardless 
of size.
    Small-dollar lenders are subject to several Federal 
consumer financial laws that the Bureau enforces and supervises 
compliance for, including the Consumer Financial Protection 
Act, Truth in Lending Act, Equal Credit Opportunity Act, 
Electronic Fund Transfer Act, Fair Credit Reporting Act, Gramm-
Leach-Bliley Act, and Fair Debt Collection Practices Act, as 
well as regulations promulgated under those laws. This includes 
the Bureau's rules that address certain unfair and abusive 
practices in the small-dollar market and certain problematic 
debt collection practices, which are common sources of 
complaints from consumers. Small-dollar lenders are also 
subject to the Military Lending Act. The Bureau also enforces 
the Military Lending Act.
    The Bureau also provides tools to consumers to help them 
make responsible decisions about financial transactions. For 
small-dollar lending, the Bureau has a dedicated consumer-
focused website section on payday loans. \4\ The website 
contains information to help consumers decipher costs and fees 
associated with payday loans, key terms, consumer protections, 
and more.
---------------------------------------------------------------------------
     \4\ https://www.consumerfinance.gov/consumer-tools/payday-loans/

Q.3. How does the CFPB plan to exercise its authority to 
---------------------------------------------------------------------------
supervise for compliance with the Military Lending Act?

A.3. Unlawful financial abuse of servicemembers and their 
families is unacceptable. Such abuse not only hurts them, it 
also hurts our country's military readiness. The Military 
Lending Act is a crucial component in protecting American 
servicemembers, their spouses, and certain dependents from 
financial harm. The Bureau enforces the Military Lending Act 
and examines institutions for conduct that violates the 
Military Lending Act, which is closely associated with 
activities that are subject to the Truth in Lending Act, which 
the Bureau examines for compliance with as well. This is an 
efficient use of resources and helps to protect servicemembers 
from all illegal financial harms.

Q.4. What are the CFPB's plans for reporting and oversight of 
financial products offered to college students, beyond the 
credit card agreements that are already subject to the CARD 
Act?

A.4. College students deserve access to financial products with 
competitive and transparent terms, offered free from conflicts 
of interest with schools. After finding that 40 percent of 
college students attend a school that has made a deal with a 
financial institution to help with or allow the promotion of 
debit or prepaid cards, the Bureau designed its Safe Student 
Account Toolkit to help colleges ensure access to safer and 
more affordable accounts for students. And after working with 
the Bureau to explore these issues, the Department of Education 
established new marketing and transparency requirements for a 
range of school-sponsored accounts. As students return to 
campuses across the country, the Bureau is committed to 
ensuring that the market for these financial products is fair 
and transparent. In addition to this work, the Bureau's Student 
Loan Ombudsman has been issuing annual reports on student loans 
pursuant to the Dodd-Frank Wall Street Reform and Consumer 
Protection Act since 2012. In the most recent report, the 
Student Loan Ombudsman made policy recommendations in the areas 
of transparency and accountability, return to repayment and 
servicer transitions, and student loan debt relief scams. The 
Bureau also reported on debit cards in its 2016 College Credit 
Card Agreements Report.
    The Bureau will continue to monitor this market to ensure 
college students are protected when they use the financial 
products and services offered to them.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
              SENATOR VAN HOLLEN FROM ROHIT CHOPRA

Q.1. Digital redlining, through the use of technology, 
alternative data sets, and social media behaviors, 
systematically suppresses the presentation of certain online 
and mobile advertisements to certain populations. While it is 
generally reasonable that advertisers want to deliver ads to a 
targeted audience who have a greater likelihood of buying their 
products and services, this type of targeting is problematic 
when it comes to financial services. Controlling the ad 
delivery process through the use of certain variables can have 
the effect of discriminating against protected classes, in a 
manner that constitutes an Unfair, Deceptive or Abusive Act or 
Practice (UDAAP) or otherwise violates fair lending laws.
    How can the Bureau ensure that social media platforms that 
use proprietary algorithms do not allow advertisers to use 
those algorithms to target users based on protected 
characteristics such as race or gender (or their proxies) in 
order to market credit products to consumers?

A.1. The Bureau takes its responsibility to root out digital 
redlining seriously. As you know, the Consumer Financial 
Protection Act (CFPA) authorizes the Bureau to enforce the 
Equal Credit Opportunity Act, which prohibits creditors from 
discriminating in any aspect of a credit transaction and, as 
implemented by Regulation B, also prohibits discouragement of 
prospective applicants on a prohibited basis. The CFPA also 
authorizes the Bureau to take action against certain persons 
who engage in unfair, deceptive, or abusive acts in the 
offering of a consumer financial product or service. Policies 
and practices that target consumers based on protected 
characteristics, such as race, gender, or their proxies, are 
unlawful. While artificial intelligence offers some promise in 
terms of accessibility, it also raises important questions 
about the transparency of decision making and the accuracy of 
algorithmic outcomes. It is critical that we not allow 
technology to automate, replicate, or amplify bias. At the 
Bureau, we are committed to bringing our full authorities to 
bear to address these risks.
    So-called neutral algorithms and social media platforms may 
disguise digital redlining and reinforce biases that have long 
existed. Companies cannot simply avoid accountability by 
claiming a lack of knowledge about their algorithms or data 
feeding their algorithms. The Bureau will not assume that black 
box underwriting algorithms are free of bias or create a more 
equal playing field. This is particularly true given the speed 
with which banks and lenders are turning lending and 
advertising decisions over to algorithms.
    I am particularly concerned about technology companies and 
financial institutions amassing massive amounts of data and 
using it to make more and more decisions about our lives, 
including loan underwriting and advertising. For example, the 
U.S. Department of Housing and Urban Development details and 
alleges, in its complaint against Facebook, how Facebook, 
through its audience selection tools, ad delivery algorithms 
and other features, functions as an advertiser who 
intentionally targets or excludes users based on their 
protected class, such as race.
    One of the first actions I took after my confirmation was 
to order six technology platforms (Big Tech) offering payment 
services to turn over certain information to the Bureau. As I 
underscored in my statement at the time, little is known about 
how Big Tech exploit data on their platforms, including how 
such platforms ensure that black box algorithms do not lead to 
discrimination and exclusion. The information requested will 
help the Bureau better understand how these firms use personal 
payments data and manage data access to users so the Bureau can 
ensure adequate consumer protection. This is only one example 
of how the Bureau is actively engaging in this space to protect 
consumers from unlawful discrimination.

Q.2. What actions can be taken to prevent detrimental impacts 
on consumers seeking financial service products through online 
or mobile channels?

A.2. The full panoply of consumer protection laws applies to 
consumer financial products, regardless of whether the products 
are marketed and originated online or through brick-and-mortar 
methods. Thus, to be clear, industry has an affirmative 
responsibility to ensure that online advertising, marketing, 
and origination practices comply with consumer protection laws, 
including fair lending laws and the prohibition against unfair, 
deceptive, or abusive acts or practices. The Bureau is 
committed to enforcing Federal consumer financial laws, 
regardless of the platform or technology that entities use, and 
to applying an ``all of Government'' approach by working with 
Federal, State, local, and tribal agencies to enforce the law 
and protect consumers.
    In keeping with that Bureau commitment, the Bureau joined 
the Federal Trade Commission and the North Carolina Department 
of Justice in filing an amicus brief relating to Section 230 of 
the Communications Decency Act. Consistent with the arguments 
in that brief, I remain concerned that technology companies 
will continue to try to claim sweeping immunity under Section 
230 to circumvent consumer and banking laws and undermine fair 
competition. As technology companies expand into a large range 
of markets, they need to follow the same laws applicable to 
other market participants.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                       FROM ROHIT CHOPRA

Q.1. As Arizona begins to recover from the COVID-19 pandemic, 
many hardworking families who were affected financially are 
beginning to get back on their feet. Many were able to remain 
in their homes due to temporary eviction moratorium and 
mortgage forbearance measures that are now expiring. What 
actions has the Bureau taken to ensure Arizonans have the tools 
and resources to navigate tough decisions about housing as 
COVID-19 housing provisions expire?

A.1. The Bureau is committed to ensuring that appropriate 
resources reach struggling homeowners, renters, landlords, and 
those who have lost their housing. Indeed, we learned from the 
2008 financial crisis that systemic problems in the housing 
market can quickly ripple through the whole economy. We also 
learned that when regulators act too late, miss key early 
warnings signals, and fail to take appropriate actions, the 
results can be devastating.
    To ensure that families have the tools and resources they 
need to navigate the current situation, the Bureau and its 
other Federal partners launched consumerfinance.gov/housing, an 
interagency housing assistance portal that provides information 
to homeowners, renters, landlords, and those who have lost 
their housing. This resource dovetails with other resources 
designed to address consumers' financial needs related to 
COVID-19, available at consumerfinance.gov/coronavirus. The 
Bureau is also working to ensure resources are reaching 
homeowners, renters, and landlords in need through a 
coordinated, interagency initiative on housing insecurity.
    The Bureau is also prioritizing mortgage servicing in its 
supervisory work and overseeing servicers' management of 
forbearance exits and the loss mitigation process, including to 
determine if mortgage servicers have fully corrected problems 
and remediated any harmed consumers. \1\ This summer, the 
Bureau also amended its mortgage servicing rules to reinforce 
the ongoing economic recovery as the Federal foreclosure 
moratoria are phased out and to help protect mortgage borrowers 
from unwelcome surprises as they exit forbearance. \2\ 
Relatedly, the Bureau and the prudential regulators announced 
on November 10, 2021, that these agencies would once again 
enforce all the mortgage servicing rules to protect borrowers.
---------------------------------------------------------------------------
     \1\ See Supervisory Highlights, Issue 23, January 2021, https://
files.consumerfinance.gov/f/documents/cfpb-supervisory-highlights-
issue-23-2021-01.pdf.
     \2\ See Press Release, Bureau of Consumer Financial Protection, 
June 28, 2021, https://www.consumerfinance.gov/about-us/newsroom/cfpb-
issues-rules-to-facilitate-smooth-transition-as-federal-foreclosure-
protections-expire/.

Q.2. During COVID-19, there was a significant increase in 
telephone and cyber scams, which can affect any age demographic 
and disproportionately affect seniors. What new programs or 
practices will the Bureau carry out to educate consumers and 
mitigate the risk of increased telephone and cyber scams 
---------------------------------------------------------------------------
resulting from the pandemic?

A.2. The Bureau is committed to addressing the unique 
challenges faced by older Americans, who may be especially 
vulnerable to financial exploitation from increasingly 
sophisticated scammers. It is important that these scammers and 
those who help them are criminally prosecuted for unlawful 
financial abuse. We are closely examining the work of the 
Federal Communications Commission on how their tools can help 
mitigate telephonic scams.
    Additionally, the Bureau has responded to the increase in 
telephone and cyber scams by making available a variety of 
educational materials. In response to the increase in scams 
during the pandemic, the Bureau enhanced its Money Smart for 
Older Adults (MSOA) curriculum. MSOA is a scam awareness 
resource developed in collaboration with the FDIC that 
community groups, financial institution staff, and others can 
teach to older adults to help them identify and respond to 
scams. In June 2021, the Bureau released a COVID-19 scams 
supplement to MSOA and updated the Resource Guide to include 
romance scams. \3\ To address COVID-19 scams, the Bureau 
published blogs and shared emails on scams related to vaccines, 
errand helpers, online shopping, and mortgage relief. That 
content, including a short video about scams, can be found on a 
special COVID scams landing page. \4\ The Bureau also provides 
fraud prevention handouts, a simple and engaging way to empower 
older adults to protect themselves from scams. \5\
---------------------------------------------------------------------------
     \3\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-
fdic-release-enhanced-version-money-smart-for-older-adults/
     \4\ https://www.consumerfinance.gov/coronavirus/avoiding-scams/
     \5\ https://www.consumerfinance.gov/consumer-tools/educator-tools/
resources-for-older-adults/financial-education-placemats/
---------------------------------------------------------------------------
    The Bureau also conducts outreach on cyberscams by 
frequently hosting and participating in cyberscam webinars with 
Government entities and nonprofits including the Federal Trade 
Commission, Federal Communications Commission, HHS 
Administration for Community Living, Village to Village 
Network, Home and Community Based Services Conference, and the 
Cybercrime Support Network (CSN).
              Additional Material Supplied for the Record
                               CBA letter

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                              NAFCU letter

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               IPA letter

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]