[Senate Hearing 117-761]
[From the U.S. Government Publishing Office]
S. Hrg. 117-761
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
SECOND SESSION
ON
THE CONSUMER FINANCIAL PROTECTION BUREAU'S SEMIANNUAL REPORT TO
CONGRESS
__________
DECEMBER 15, 2022
__________
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
53-823 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
Dan Sullivan, Republican Chief Counsel
Cameron Ricker, Chief Clerk
Shelvin Simmons, IT Director
Pat Lally, Hearing Clerk
(ii)
C O N T E N T S
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THURSDAY, DECEMBER 15, 2022
Page
Opening statement of Chairman Brown.............................. 1
Prepared statement....................................... 30
Opening statements, comments, or prepared statements of:
Senator Toomey............................................... 5
Prepared statement....................................... 31
WITNESS
Rohit Chopra, Director, Consumer Financial Protection Bureau..... 8
Prepared statement........................................... 33
Responses to written questions of:
Senator Sinema........................................... 36
Senator Warnock.......................................... 37
Senator Scott............................................ 39
Senator Moran............................................ 39
Senator Daines........................................... 45
Additional Material Supplied for the Record
Semi-Annual Report of the Consumer Financial Protection Bureau--
Spring 2022.................................................... 48
(iii)
THE CONSUMER FINANCIAL PROTECTION
BUREAU'S SEMIANNUAL REPORT TO CONGRESS
----------
THURSDAY, DECEMBER 15, 2022
U.S. Senate
Committee on Banking, Housing, and Urban Affairs
Washington, DC.
The Committee met at 10 a.m., in room 538, Dirksen Senate
Office Building, Hon. Sherrod Brown, Chairman of the Committee,
presiding.
OPENING STATEMENT OF CHAIRMAN SHERROD BROWN
Chairman Brown. The Committee on Banking, Housing, and
Urban Affairs will come to order. Our witness is in person.
Welcome, Mr. Chopra. The Committee is in hybrid format. Some
Members might do this remotely.
Let me start by talking about two of our colleagues who are
retiring at the end of this Congress.
Senator Toomey sat by my side, I by his side, for 87 of the
89 hearings the Committee held this Congress. We each missed
one. I was sick one day, and he had a family issue. I mention
that because it shows how seriously he takes this job, both as
Senator and as Ranking Member, and I will always, always
remember that and be grateful. I am sure there were many
hearings he did not want to sit through, but he did, and I give
him credit for that.
I have enjoyed getting to know him as we sat together and
got to know each other better for literally hundreds of hours
over the last 2 years. We moved dozens of nominees through the
Committee, we worked together on crucial national security
issues like China, most recently we have worked together on
FTX, and off the Committee worked on important maternal health
issues.
While we have our disagreements, there may be no other
Republican as passionate as Senator Toomey, and it is backed by
his strong world view and intellect, especially on financial
matters. He was a critical voice in our Committee's response to
the COVID crisis and the Congressional oversight afterwards.
The quality of debate and discourse in this Committee was
improved because Pat and his incisive intellect--I use that
word again--were engaged.
I also want to commend Pat's staff--Brad Grantz, Dan
Sullivan, John Crews. I thank them and the rest of the team for
their hard work and diligence.
I wish Pat, Kris, and their three children the best in the
next phase of Pat's career.
I have not known a Banking and Housing Committee without
Senator Shelby. I came to the Committee in 2007, in the middle
of the financial crisis, and Senator Shelby points out that on
his first day on the Committee, Senator Proxmire, of Wisconsin,
who was the predecessor to Senator Cole, was chairing this
Committee.
He has helped shape the agenda of the Committee for 35
years--during Enron, during Sarbanes-Oxley, the Great Recession
of 2008, Dodd-Frank, the COVID pandemic, and so many other
critical moments in the history of this Committee. He served in
leadership roles as either Chair or Ranking Member for more
than a decade, working as Chair with Senators Sarbanes, Dodd,
Johnson, and then finally me in the last 2 years as the leader
of this Committee. No one on the Republican side was a greater
proponent of strong capital at banks, something I always
admired about Senator Shelby's philosophy and work.
I wish you and Annette well in your retirement. Thank you.
Welcome back Director Chopra.
The Banking, Housing, and Urban Affairs Committee used to
be referred to simply as the Senate Banking Committee because
it was mostly all about Wall Street. When Democrats took
control, 19, 20 months ago, we changed that.
So it is fitting that this Committee's last hearing for the
117th Congress is the CFPB's Semi-Annual Report, because
fighting for consumers is one of the most important things we
can do on this Committee.
Since the CFPB first opened its doors 12 years ago, the
consumer agency has returned about $15 billion--with a B--$15
thousand million to consumers, including principal reductions,
canceled debts, and other relief. That is $14.9 billion. Over
183 million consumers have been eligible for that relief. The
CFPB has a track record of helping real people get real
compensation for real harm from financial institutions that
have wronged them.
In 2012, just over a year after becoming fully operational,
the CFPB ordered American Express subsidiaries to refund $85
million to an estimated 250,000 consumers for illegal credit
card practices, including charging unlawful late fees.
In 2014, the CFPB reached a settlement requiring Sallie Mae
to pay $60 million to an estimated 60,000 servicemembers
serving our country, for overcharging them on student loans.
In 2016, the CFPB fined Wells Fargo $100 million for
opening unauthorized accounts and ordered Wells to refund an
estimated $2.5 million in fees accrued.
This year, the CFPB fined Bank of America $10 million for
unlawfully garnishing consumer accounts.
When financial institutions illegally took consumers' hard-
earned money through unlawful late fees, through too-high
interest rates, through unauthorized fees, and through improper
garnishment, the CFPB cracked down and ensured that consumers
keep their hard-earned money.
No other agency fights for consumers like the CFPB. It is
no wonder Wall Street hates the agency. Since the passage of
Dodd-Frank, Wall Street and its allies have aimed their fire at
the CFPB, trying over and over again to undermine and gut the
agency responsible for fighting for Main Street and consumers.
Republicans have proposed bill after bill to weaken the
CFPB, to take away the effective single director structure, to
put the agency's funding in the limbo of congressional
appropriations, or to simply undo the CFPB.
But Congress created it and specifically designed its
funding structure to make the agency an effective consumer
watchdog.
According to this Committee's report on Dodd-Frank, ``the
assurance of adequate funding, independent''--independent, my
emphasis--``of the Congressional appropriations process, is
absolutely essential to the independent''--again, that word
independent--``operations of any financial regulator,'' which
is why other financial regulators like the Federal Reserve,
OCC, FDIC, and NCUA are independently funded and not subject to
congressional appropriations.
And when Wall Street and Republicans in Congress, always
allies on these kinds of things, tried to put the CFPB out of
business, the public loudly and clearly said ``no.'' So even in
a unified, all-Republican President, House, Senate, they could
not put it out of business. It has remained intact because it
does its job--helping consumers.
Consumers know Wall Street does not have their best
interest at heart.
Consumers know that Wall Street needs a strong regulator to
keep it in check.
Consumers remember the damage that Wall Street wrought on
the economy, on their neighborhoods, and on their wallets. I
live in Cleveland, Ohio. My ZIP code had the highest number of
foreclosures in 2007 of any ZIP code in America. I know where
that damage comes from.
And consumers know that CFPB follows the facts. They go
after bad actors, from banks overcharging customers to
predatory payday lenders trapping consumers in debt. The CFPB
stands up to Wall Street. Director Rohit Chopra and the CFPB
use all of their powers to fight discrimination, and they
continue to go after financial institutions for their treatment
of Black and Brown consumers.
In 2021, the CFPB required a bank to pay $5 million to
address redlining that harmed Black consumers. This year the
agency announced that it will reexamine whether discrimination
violates the Dodd-Frank prohibition against unfair, deceptive,
and abusive acts and practices.
And in July, in response to a local lender's failure to
serve Philadelphia's majority-minority neighborhoods, the CFPB,
along with the DOJ's Combatting Redlining Initiative, brought
$18 million in funds to support home ownership in those
neighborhoods.
In total, the CFPB has gotten $637 million from
discriminatory financial institutions, tens of millions of
which have gone directly to minority consumers who experienced
that discrimination.
There is a reason why the civil rights community was
instrumental in the creation of Director Chopra's agency. They
knew that they needed an agency that was empowered and unafraid
to fight against discrimination. It is creating a fair,
transparent, and competitive economy.
Major and consequential CFPB rules like the Ability to
Repay rule not only provide protections for consumers buying
homes, but also create rules for financial institutions and the
broader economy.
That is why we created the CFPB, to ensure that the
financial marketplace is fair for everyone, and that
corporations cannot rig the system and get away with it. That
is the essence of capitalism.
Ranking Member Toomey.
Senator Toomey. Thank you, Mr. Chairman.
Mr. Chairman, if it is OK with you I would like to say a
few words about my time serving here with you. I would like to
say a couple of words about my time with former Chairman
Shelby, and then, if I could, yield to him for brief comments
before I go into the opening comments on the subject at hand.
Chairman Brown. Of course.
Senator Toomey. Thank you very much.
First of all, thank you, Mr. Chairman, for the kind words
that you said. The fact is, Chairman Brown and I actually have
more in common than many people might think. We both represent
big, complicated States. We both love baseball and politics,
probably in that order. We actually get along quite well,
despite the fact that we have diametrically opposed views of
the world, and his are mistaken but they are sincerely held.
And I have to say I do really appreciate the really good,
constructive working relationship that we have had. Sherrod
Brown is honest, he is a straight shooter, and we have our
disagreements. I think they have been cordial, and when it has
been possible to find agreement we have tried to do that, and I
think we have had some success.
I also want to personally thank your staff, the majority
staff on the Committee. These are very, very capable, smart,
hardworking and collegial folks, and I am grateful to them for
their hard work, as, of course, I am for my own staff. I think
we have had a terrific team, and in these 2 years they have
done tremendous work, and I will always be extremely grateful
to them.
And so my last wish is I wish you well, and 2 years from
now I wish you well as the Ranking Member of the Committee.
Chairman Brown. Which would suggest you are supporting my
reelection in 2024.
[Laughter.]
Senator Toomey. Well, that is an interesting inference.
Let me say a couple of things about Senator Shelby. He and
I also have some things in common, believe it or not, one of
which is we both had the good sense to marry women who are
smarter than we are. And that was the best decision I ever
made. I think Richard probably feels the same way.
But I am very grateful to him for the very, very long and
very distinguished career that he has had. I understand that he
has served on the Senate Banking Committee longer than any
other human being in the history of the Committee. He has
served as its Chairman. He has served as the Ranking Member.
His accomplishments are too numerous to enumerate, but for me
he has been a role model and an example of how to be a really
effective Senator and a great representative for his State.
Last, about Senator Shelby, I will always remember him as
simply too big to fail. Senator Shelby.
Senator Shelby. Thank you. Thank you. Chairman Brown, thank
you first for your kind remarks, and also I want to thank
Senator Toomey.
Thirty-six years ago--it is hard to believe--36 years ago I
came on this Committee. I think I was sitting way down there,
maybe on the other side of the TV, somewhere. I wanted to be
recognized one time--Senator Proxmire was the Chairman--and I
had to ask two or three times before he even looked my way. So
we go through this.
This is a great Committee. It covers everything. It is
essential. It is essential to our economy, everything that we
do here. It is also essential in the SEC, what the SEC, what
the Chairman coming before us today does, everything. But it is
essential to free markets because it is the banking system that
we have.
But 36 years is a long time. It seems like yesterday. I
have had the great privilege to, as the Senator said, to be
Ranking three different Congresses and Chairman three different
Congresses. It is an awesome responsibility. I have served some
good people on both sides of the aisle.
I remember the late John Heinz. He would have been Chairman
of this Committee but he had a big accident and lost his life.
Senator Proxmire was when I first came on, as the Chairman
mentioned. By gosh, he was a good Chairman, good, tough, fair.
Then Senator Riegle, then Senator D'Amato, and Senator
Gramm, Phil Gramm, and so forth. Senator Brown, Senator
Sarbanes. Senator Sarbanes, we worked together like you two. We
had our differences. We were good friends. We traveled
together. We ate together. We did some good things together, we
thought, for the American people. But I remember sitting here
with so many smart, good people, both sides of the aisle, both
sides.
But I want to say we have had, since I have been on the
Committee, smart staffers, good staffers. They flock to be on
this Committee from everywhere, on both sides, you know, our
staffs working together. And I want to thank all of them for
what they have done over the years. A lot of them have gone on,
as you know, to bigger and greater things.
But I will always miss this Committee I have served on. I
have chaired four Committees. This is a very interesting
Committee. That is why Senator Brown is Chairman and Senator
Toomey would have been Chairman.
So thank you for your kind remarks. I will miss you, but
carry on. Thank you very much.
Chairman Brown. Thank you. Senator Toomey.
STATEMENT OF SENATOR PATRICK J. TOOMEY
Senator Toomey. Thank you very much, Senator Shelby.
Today's hearing, of course, is about the CFPB. It would be
understandable if Director Chopra is pleased that it is the
last time he will be here dealing with me on this Committee. So
let me express my concerns.
The last time Director Chopra testified I did raise
concerns about the CFPB's overreach in pursuit of a politicized
agenda, and unfortunately, this behavior is nothing new for the
CFPB, and under Director Chopra, my concern is it is more out
of control than it has ever been. So I am disappointed, but not
surprised, to note, yet again, that the CFPB has continued this
pattern of overreach.
In our constitutional system of checks and balances, only
Congress has the power to appropriate money. James Madison
called this, and I quote, ``the most complete and effectual
weapon with which any constitution can arm the immediate
representatives of the people,'' end quote.
But the Dodd-Frank Act exempted the CFPB from
appropriations. It empowers the CFPB to simply take funds from
the Fed, which is itself also not subject to appropriations,
thereby doubly insulating the CFPB from any congressional
control.
I acknowledge there are other financial regulators not on
appropriations, and we can disagree about whether they should
be. But it is indisputable that Congress has precisely zero
leverage over the CFPB. It is very hard for me to imagine that
our Founders intended an agency to have the power of the
legislative branch, and precisely zero accountability to the
legislative branch. And in any case, clearly the CFPB is
overreaching and does not seem to care about Congress' view.
This is why the Fifth Circuit recently found the CFPB's
funding structure is, in fact, unconstitutional. The court
noted, and I quote, ``The Bureau's perpetual insulation from
Congress' appropriations power . . . renders the Bureau `no
longer dependent and, as a result, no longer accountable' to
Congress and, ultimately, to the people,'' end quote.
Well, what can we expect from an agency designed to be
unaccountable to Congress, if not overreach? For example, under
Director Chopra, the CFPB unilaterally decided that the Dodd-
Frank's grant of authority to prevent unfair, deceptive, or
abusive acts or practices, known as UDAAP, now includes
controversial disparate impact liability. It announced this
change by fiat, without rulemaking. It ignored not only the
text of Dodd-Frank but also the fact that Congress never
contemplated that UDAAP would encompass disparate impact.
Congress took the UDAAP language from the FTC Act. For nearly a
century, the FTC never interpreted that language to include
discrimination or disparate impact. Finally, the CFPB willfully
ignored the fact that Congress overturned the CFPB's disparate
impact guidance for auto lending in 2018.
So it is extremely implausible to think that an agency that
was dependent on Congress for appropriations would engage in
activity so clearly contrary to Congress' intent.
In addition, the CFPB has publicly targeted businesses for
taking lawful actions, like its smear campaign against bank
fees for overdraft services. By the way, this campaign does
nothing for consumers. It will just cause banks to shift fees
to less transparent means of recouping the costs of providing
overdraft services.
This week, the CFPB doubled down on its use of name-and-
shame tactics with a new proposed rule. It would create a
public database of enforcement orders, judgments, and
settlements, against nonbank financial institutions, obtained
by Federal and State regulators and attorneys general,
including under State consumer laws that are not applicable
nationwide. Now maintaining such a list may well make sense,
but making it public is different, and would create the false
impression that the orders of the most activist States are the
nationwide standard.
What is more, the proposal would require a senior official
of certain nonbanks to attest to the CFPB that they are
complying with these orders. That would effectively give the
CFPB enforcement power over other agencies' orders for
violations of State and Federal laws. The CFPB has no
jurisdiction to enforce. And there is no limiting principle to
stop the CFPB from extending this rule from nonbanks to all
financial institutions.
These examples are just some of the symptoms of an agency
that is out of control and knows Congress cannot do a thing
about it. That is why I am introducing legislation, along with
Senator Hagerty, to place the CFPB on appropriations. The best
way to make the CFPB accountable to Congress is through
appropriations.
Through its rulemaking, the CFPB can exercise legislative
power, and it does. What is ambiguous about the first line in
the first paragraph of the first article of the Constitution?
It says, and I quote, ``All Legislative powers herein granted
shall be vested in a Congress of the United States,'' end
quote. At the very least, Congress should carry out the
responsibility that the Constitution assigns to us, and
exercise control over agencies like the CFPB that exercise
legislative power.
But that is not all our legislation will do. It will also
replace the agency's single director with a five-member,
bipartisan commission, like the SEC and the FDIC. This
structure will ensure that the CFPB considers a diversity of
voices when it forms policy. And it is not a new idea.
Bipartisan legislation to convert the CFPB into a commission
has been repeatedly introduced. These accountability measures
will help make the agency more responsible, more balanced, and
more measured, and Congress will have to accept the
responsibility for what the CFPB does, as it should.
What is more, if Congress does not put the CFPB on
appropriations, the Supreme Court may very well do it for us.
The Court is expected to consider, and I think might very well
uphold the Fifth Circuit's decision that the CFPB's funding
structure is, in fact, unconstitutional. If it does, I have no
doubt Congress will act swiftly to provide the CFPB with
appropriate funding. After all, Congress has plenty of
experience at appropriations.
But, by acting now, through legislation, Congress can
ensure the smoothest possible transition. This is in the best
interest not only of the CFPB and Congress, but also consumers
and the economy. That is why I call on my colleagues, Democrats
and Republicans, to join me in supporting this sensible reform.
Thank you, Mr. Chairman.
Chairman Brown. Thank you, Ranking Member Toomey. I will
introduce today's witness.
The Honorable Rohit Chopra is Director of the Consumer
Financial Protection Bureau. Director Chopra previously served
at the Federal Trade Commission commissioner after the passage
of Dodd-Frank. He joined the CFPB as Assistant Director and
then was appointed as the CFPB student loan ombudsman. He
subsequently served as a special advisor in the Department of
Education.
Director Chopra, welcome, and please proceed. Thank you.
STATEMENT OF ROHIT CHOPRA, DIRECTOR, CONSUMER FINANCIAL
PROTECTION BUREAU
Mr. Chopra. Thank you so much, Chairman Brown, Ranking
Member Toomey, and Members of the Committee.
Our economy and our consumer finance markets are truly in
transition, out of a pandemic and further into a digital era.
Given the economic uncertainties in today's markets, the CFPB
is focused on monitoring these markets carefully, to prevent
the type of widespread harms that we saw in the financial
crisis more than a decade ago.
Over the last year we have recovered hundreds of millions
of dollars in victim redress and penalties, and in our
enforcement program we have sharpened our focus on repeat
offenders, to protect both consumers and law-abiding
businesses. Congress has directed the CFPB to implement several
rules, and we have prioritized getting these done.
While we continue to address the challenges consumers face
today, the CFPB is also preparing for the future. When
companies can take on incumbents and when consumers can easily
switch providers in a decentralized market structure, we are
all better off.
In October, the CFPB kicked off a rulemaking process under
Section 1033 of the Consumer Financial Protection Act. The
proposals under consideration would require that financial
firms provide consumers access to their own financial data.
Consumers would then be able to provide permissions to this
data safely and securely to other financial firms.
The CFPB is also focused on refinance markets, including an
auto, credit card, and mortgage, and have been making it a
priority to identify ways to lower barriers to entry to small
banks and small firms and to foster innovation that addresses
important market gaps.
We are taking a hard look at how big tech and other
technology conglomerates are entering payments in consumer
finance, and the threats they pose to relationship banking and
free choice.
Over the past year we have had discussions with members
from both chambers and on both sides of the aisle on reforms
that can be advanced on a bipartisan basis. First, I would
really urge Congress to take action to protect our payment
system. Facebook's Libra proposal, in 2019, was a wakeup call
to regulators around the world when it came to virtual
currencies. There is now growing concern about how a small
group of payment platforms, including Google, Apple, PayPal,
Venmo, and others, are gaining a greater foothold in the
payment system. Large tech firms are now the conduit for
trillions of dollars in transactions, and the CFPB is
conducting an ongoing study into how these companies are
playing a role in the payment system.
The rise in dominance of a small group of these firms
raises questions about how they can suppress, suspend, or even
discriminate against some users over others. The CFPB has heard
considerable concern about payment apps kicking off users or
even fining users for their speech, and we have also heard
concerns from dominant firms abusing their positions to hike
fees on small banks, merchants, and consumers. Our Nation's
payment system serves as core economic plumbing that should be
nondiscriminatory and neutral.
Second, Congress needs to do more to strengthen financial
privacy protections. More than 20 years ago, Senator Shelby and
others on this Committee began raising concerns about the
creation of behavioral profiles, using our credit and debit
card data. Today, with the rise of tech platforms and e-
commerce that monetize user behavior with lots of data, these
concerns are even more acute. I worry that the notice-based
privacy regime of the Gramm-Leach-Bliley Act is ineffective in
the modern world. Privacy policies for financial services are
often all or nothing, and consumers must choose to accept the
company's terms wholesale or decline to use the product
altogether.
So while Congress is looking at privacy protections across
all sectors of economy, I hope you will also consider looking
at the Gramm-Leach-Bliley Act to provide limitations on the
collection, use, and sharing of personal financial data. There
are a number of other opportunities for bipartisan efforts, and
the CFPB is eager to work with this
Committee on these and many other issues.
Thank you again for the opportunity to appear before you. I
look forward to your questions.
Chairman Brown. Director, thank you, and good to see you
again.
Protecting Americans from harmful medical debt, as you
point out and as your predecessors also pointed out, is a
priority for this Committee and for the CFPB. Earlier this
year, Experian, Equifax and TransUnion announced they would no
longer include some forms of medical debt on consumer credit
reports. But according to a recent report that your office
released, it sounds like the changes announced by industry will
not make as meaningful a difference as we had expected going
in. Your report said, quote, ``In terms of dollar amount, a
large majority of reported medical collections likely will
still remain.''
My question is your report clearly indicates that changes
on how medical debt is reported are not enough. How do we make
sure that medical debt on credit reports is not crippling far
too many Ohio, Pennsylvania, and American families?
Mr. Chopra. Well, medical debt is one of the top items now
in terms of collections on consumer credit reports and is a
major challenge when it comes to accuracy. You know, oftentimes
providers, patients, and insurance companies are going round
and round, and in many cases consumers are being asked to pay
something they already paid or never owed in the first place.
So we have to make sure that credit reports are not a tool to
coerce someone into paying something that they do not owe.
Accuracy issues in credit reporting are very, very acute in
medical debt. We are going to continue to look at ways to make
sure that medical debt does not, especially when it is
inaccurately reported, does not really harm a person's ability
to participate in the economy.
Chairman Brown. Thank you. Important answer.
To ensure consumers keep their money where it belongs, in
their purses, in their wallets, the CFPB issued guidance
advising financial institutions that surprise overdraft fees
may be unfair and unlawful. How are consumers being harmed by
surprise overdraft fees?
Mr. Chopra. Well, sometimes a consumer might expect just
one overdraft fee and then they see they get three or four,
even when their balance showed that they had enough money in
their account. This is the type of overdraft practice where, on
the back end, there can be not just mischief but illegal
practices. We have taken action. Other regulators have done so
as well, and in some cases institutions have ignored repeated
warnings and decided to do it anyway, and we are committed to
holding them accountable.
Chairman Brown. Did industry request additional guidelines
on this matter?
Mr. Chopra. Industry is actually always looking for more
information and more clarity. It is one of the reasons why the
CFPB has published so many advisory opinions and other
interpretations. We have continued the practice from my
predecessor, Director Kraninger, on the Advisory Opinion
program, and will continue to do so. Of course, guidance does
not create any new legal requirements but it seeks to provide
transparency on obligations under existing law.
Chairman Brown. And it speaks to--you were criticized, as
you know, by a number of particularly conservative lawmakers
and interest groups. But it does point to how you have tried to
build as cooperative a relationship with people as you possibly
can, and I think on that it shows.
Mr. Chopra. Yeah. I think there has been sometimes the term
``regulation by enforcement,'' and, of course, we have to
enforce existing law. But where we can provide more information
about what law-abiding businesses are trying to make good-faith
efforts to comply, we are going to do that. They might not
always like what existing laws require of them, but of course,
that is one of the best ways we seek to also protect law-
abiding businesses and help them.
Chairman Brown. Thank you. One last question. Some 50 years
after passing the Fair Housing Act, 40 years after fair lending
laws, we know that redlining still exists in our housing
system. In July, CFPB helped to identify one lender in
Philadelphia that, through its office locations, through its
lending, and through the racist language of its employees
showed a clear pattern of discrimination. Because of CFPB's
actions, more borrowers in communities of color will have
access to a mortgage.
So my question is how is CFPB working with DOJ and other
agencies to make sure everyone has equal access to mortgage
credit?
Mr. Chopra. Well, one of the great things about that action
in Philadelphia was that it was not just the CFPB but also the
three State attorneys general of the Philadelphia metropolitan
area also participated, because their counties were impacted
too.
The Department of Justice and the Attorney General of the
United States have a redlining initiative, and we are not just
looking at traditional forms of redlining but also digital
redlining as well, and there is much more work to do there.
Chairman Brown. Thank you. Senator Toomey.
Senator Toomey. Thank you, Mr. Chairman.
Director Chopra, when you came before this Committee for
your nomination hearing you said that you preferred that the
CFPB not be on appropriations because you believed that
independent agencies are able to stay more clear of political
influence. Do you stand by that opinion?
Mr. Chopra. I do.
Senator Toomey. OK. Here is the problem. Under your tenure
at the CFPB it has become as politicized and as far left as I
have seen any Federal agency ever. It seems the only political
influence the CFPB is not subject to is the influence of the
elected representatives of the American people, which is
sometimes known as democracy.
Now some have suggested that the CFPB is accountable
because you were confirmed several years ago and because you
have to come up here twice a year and answer, or not answer,
questions from my colleagues and me. But let us be honest about
the reality here. We are going to raise a lot of concerns
today, and at the end of the hearing you are going to leave,
and if you want to, you can choose to just ignore everything
that is said here at this podium, and there is nothing anybody
here can do about it.
I would remind my colleagues the Fifth Circuit Court has
recognized this lack of accountability to be unconstitutional.
There is a very good chance the Supreme Court will as well. And
that is why I think it would be a good idea to begin
discussions now about legislation that would remedy this.
Quick, I think this is a yes-or-no question also, Mr.
Chopra. Do you believe that Congress should change the CFPB's
governance structure to that of a multimember commission?
Mr. Chopra. Well, that is really Congress' decision.
Senator Toomey. I get that. You are correct, 100 percent,
it is Congress' decision. But would you recommend it to
Congress?
Mr. Chopra. Well, my own experience, having served on both
a multimember and a single director, there are pros and cons of
each. I think there is more accountability with a single
director. With a commission you can point the fingers at others
when something does not get done----
Senator Toomey. I am about to run out of time. I get it.
But the suggestion that there is accountability, I am sorry,
that is hard to take seriously. There is no accountability
here. And at least if there were a commission there would be
multiple voices. There would be different points of view. There
would have to be a vote to advance various proposals. I think
that would make a lot of sense.
Mr. Chopra. Well, Senator Toomey, I think we take all of
the congressional oversight very, very seriously. In fact, a
lot of what we have done just in the past year is truly in
response to some of the things that you have shared as issues
with the CFPB as well as your colleagues.
We also think that for the long term there are so many
issues that we ultimately have to do together, and we try our
best to be responsive to all of that.
Senator Toomey. I appreciate that.
Mr. Chopra. In fact, Congress has passed laws many times--
--
Senator Toomey. I am going to run out of time here. I
understand. I have no doubt that that is your impression, but I
know that you are aware that impression is not shared by most
Senators on my side of the aisle. So there is a difference of
opinion there.
Let me ask you a couple of questions about the new rule
that you proposed this week, and let me start with a
hypothetical. Let us say the California Department of Financial
Protection agrees to a consent order to settle an enforcement
action that it brought against a nonbank lender for violating
State consumer law, and in this case the CFPB is not involved
in the case in any manner whatsoever. It seems clear to me that
the CFPB has no authority to enforce California's consent
order.
But under the rules you proposed this week, the nonbank
would have to report the consent order to the CFPB to be
included in a new public database, and a senior executive of
this nonbank would have to attest as to whether or not their
institution was complying with this order.
Now here is my question. What would you do if this nonbank
said it was compliant with the order but you disagreed?
Mr. Chopra. So as a factual matter, what you are saying is
not exactly accurate. It is for certain supervised entities
that attestation would be required. So this is a proposed rule,
and what I would share is that in the proposal we outline what
are the consumer laws that in some ways are derivatives of
similar unfair, deceptive, or other consumer financial laws.
So generally speaking, this is really for States and all of
us to coordinate. Often you have an entity that violates the
law in one State and picks up and moves to someplace else. This
helps everyone coordinate and detect fraudsters, which often
rip off people----
Senator Toomey. So my concern is this could be used as a
hook to give the CFPB leverage to enforce other agencies' State
consent orders.
Mr. Chopra. Well, generally----
Senator Toomey. And that is not the authority----
Mr. Chopra. ----violations of law, some of these State
consumer laws, sometimes are often Federal law violations. But
I hear what you are saying and we will take the comments in the
record very seriously.
Senator Toomey. Well, that is a real concern that I have. I
am also concerned about--and I know I am out of time but let me
just make my point here, Mr. Chairman, and that is that the
CFPB is, in fact, implementing a disparate impact standard
without using that phrase, and I worry that the effect of that
is the possibility that the CFPB would not feel obligated to
observe the guardrails that the Supreme Court has imposed on
the application of disparate impact.
Mr. Chopra. May I respond, Mr. Chairman?
Chairman Brown. Of course.
Mr. Chopra. I think that is not accurate. If you look
carefully at the unfairness language in the statute that was
codified by Congress in 1994, in the FTC Act, and repeated in
the Consumer Financial Protection Act in 2010, that is not
about disparate impact. It is about injury, reasonable
avoidability, and countervailing benefits. I am happy to talk
with you more about that, Senator Toomey, but I just totally
disagree.
Senator Toomey. Well, I know you do, but in your press
releases and in the exam manual you refer to UDAAP authority
providing the prohibition on unfair practices and that it does
not require an element of intent. This starts to sound a lot
like the definition of disparate impact without using the
phrase ``disparate impact.'' And what concerns me is the
application of disparate impact is constrained by the Supreme
Court and you should follow that constraint if you were to be
implementing it.
And finally, UDAAP is a longstanding concept, in fact,
codified, and for 100 years nobody discovered that disparate
impact was somehow embedded. But----
Mr. Chopra. I think that reflects a fundamental
misunderstanding of unfairness, what Congress codified in 1994.
And again, I am happy to speak to you about it afterwards.
Senator Toomey. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Toomey.
Senator Reed, of Rhode Island, is recognized.
Senator Reed. Well, first let me begin by saluting Senator
Toomey for his service and dedication, his thoughtfulness and
professionalism. We have a major event in common. We both went
to the same high school, LaSalle Academy in Providence, Rhode
Island. What I do not have in common with Senator Toomey is I
was not first in the class and I was not accepted at Harvard
College. So you have got a couple of things up on me, Patrick.
Let me also say to Senator Shelby, congratulations for your
service. I arrived here 25 years ago, and he was a leader then,
and he is a leader now, and an extraordinary gentleman.
Now let me turn to the director. First, a question that has
come to mind as I have listened to the discussion. The decision
by the Fifth Circuit also calls on the question of validity of
the Federal Reserve. Is that correct?
Mr. Chopra. Well, the CFPB's funding is the same funding as
the Federal Reserve system. So I think yes, it certainly does,
and that is part of what the Solicitor General, in her petition
for cert to the Supreme Court, has articulated.
Senator Reed. So we should really start warning Wall Street
right now and get their reaction to a Federal Reserve that is
subject to congressional appropriations. And by the way, we are
trying to get that wrapped up a few months later than normal.
But I think that is something that should be at least on the
table and considered.
But let me direct my major attention to the Military
Lending Act because I was helpful in getting it passed. Can you
tell us, give us an update on what you have done this year with
supervision and enforcement of the Military Lending Act?
Mr. Chopra. Yes. We have actually taken a number of actions
including against repeat offenders of the Military Lending Act.
We have sued First Cash, the Nation's largest pawn lender. We
have taken action in a number of other places, including
Moneylion Technologies a few months ago.
Let me say pretty straightforwardly that when this law is
not adequately enforced the effects on the force are real.
People can lose their security clearances. They can face their
own financial distress for them and their families. So we are
very committed to fully prosecuting this law and being very
clear about our expectations.
Senator Reed. Let me shift to another piece of legislation.
That is the Servicemembers Civil Relief Act. When I was in the
service it was called the Soldiers and Sailors Civil Relief
Act. But it provides, among other things, a maximum interest
rate of 6 percent. And last week I believe CFPB published some
research findings. Can you provide us some details of that?
Mr. Chopra. Yeah. So what we identified is for
servicemembers' preservice obligations they are entitled to a 6
percent rate cap to ensure that, especially if they are
activated Guard or Reserve, that their financial life does not
move into disarray. So we identified that there are millions of
dollars in extra interest that servicemembers are paying when
they are activated, and we are particularly worried about the
Guard and the Reserve.
I will also say as interest rates in the economy go up,
that is bigger money when it comes to activations and what
happens to those families.
Senator Reed. Thank you, because I think you have made the
point quite clearly that this not just an issue of financial
transactions, it is an issue of military readiness and the
impact on families and individual servicemembers.
Let me shift gears again to the Buy Now, Pay Later
phenomenon which is going on. It is getting more and more
popular. Are these loans, Buy Now, Pay Later, being structured
to avoid the Military Lending Act?
Mr. Chopra. So I do not want to say that it is
intentionally done a certain way, but certainly the
applicability of the Military Lending Act gets trickier when it
comes to Buy Now, Pay Later. One of the things that we have
been working with Buy Now, Pay Later firms on is how can they
also get credibility and certainty in the market and make sure
that, you know, if it is a substitute for credit cards, how
might we make sure that disclosures and other protections are
equivalent?
I think we have seen what happens when there is no
credibility in a product, and it can be chaotic. I think Buy
Now, Pay Later is going to continue to be a major way people
borrow, and I think it is important we continue to think about
the servicemember and military protections in that.
Senator Reed. Thank you very much, Mr. Director, and keep
up your good work. Thank you.
Chairman Brown. Thank you, Senator Reed.
Senator Tester, of Montana, is recognized.
Senator Tester. Yeah. Thank you, Mr. Chairman, and before I
get to Mr. Chopra, which I appreciate being here today, I also
want to say thank you to Patrick Toomey. I remember the first
time we worked on a bill and we were in the dining room of the
Capitol, and I said, ``You are not nearly as crazy as the
scouting report indicates you are,'' and I think you said
something like, ``You want to keep that perception.'' So I
appreciate everything that you have done, and even though it
has ruined my career calling you a ``smart dude,'' I do want to
say that it has been good to work with you.
And in honor of Shelby, I will just let you know I have my
Roll Tide coffee cup, so it is all good.
Look, Rohit, you and I have discussed the importance of
making sure that we are holding big tech companies accountable
for how they are using consumers' data, especially when they
are providing services like those at local bank and other
regulated financial institutions traditionally provide.
So what are you seeing at the CFPB around big tech
companies and where they may be trying to skirt the law?
Mr. Chopra. Well, I think what we are seeing is that big
tech firms [technical issue] payment system, and they are
collecting an extraordinary amount of very detailed and
personal information.
We also know that some of the other big financial players
are getting into data assets that small banks would never
really even get near, and I think we have to address that
together.
Senator Tester. So how will the CFPB [technical issue]
standards that regulated financial institutions meet so that
consumers are protected?
Mr. Chopra. Well, Senator Toomey raised the issue of
nonbank registration. [Technical issue] they are subject to
supervision, and one of the big things they ask for the CFPB is
to make sure there is a level playing field. So we have focused
much of our supervisory attention on these nonbanks who are not
subject to the same oversight as normal banks.
Senator Tester. Senator Reed asked about the Military
Lending Act. For veterans and their families, what kind of
risks are you seeing from your chair?
Mr. Chopra. Generally, you know, I think veterans right now
[technical issue], you know, how long they have been out of
service. We have very serious issues with economic instability
among our veterans in our country. Many have a whole set of
issues with housing and credit and debt. Financial issues are a
major driver of challenges.
So, of course, the Military Lending Act [technical issue]
do not apply to those out of service. In particular, we see
medical debt being pretty severe. We worked [technical issue]
how the VA's own medical debt programs can be fair and not be
overly punitive and to really help veterans get through things.
So we have a lot [technical issue] but the challenge may be
growing.
Senator Tester. Is there anything Congress needs to be
doing?
Mr. Chopra. Well, I think as it relates to veterans and
credit and debt, especially medical debt, [technical issue] I
hate to see when veterans are not able to get through a tenant
screening [technical issue]. I hate to see when they cannot
pass an employment verification check because of coding issues
in their background.
So I [technical issue] that we can tangibly focus on
fixing. Of course, I also want to make sure that if there is
changes in the mortgage markets and housing prices [technical
issue] veterans be subject to unlawful foreclosures, the VA and
its mortgage program play a huge role in making sure that those
veterans can get loan modifications, that they are not subject
to churning. And so housing is going to be a big piece when it
comes to the veterans mortgage market.
Senator Tester. Just very quickly, [technical issue] in
contact with the VA on these issues on a regular basis?
Mr. Chopra. We do. I would say the Secretary himself is
also very supportive of thinking about financial issues that
our veterans are facing [technical issue] with them and you on
that.
Senator Tester. Thank you. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Tester.
Senator Hagerty, and I apologize. I did not see you come in
and I should have called on you before Senator Tester, so thank
you for joining us.
Senator Hagerty. No worries, Mr. Chairman. Chairman Chopra,
good to see you here today.
I really want to direct my comments, Mr. Chairman, toward
our Ranking Member today, if that might be OK. I have not known
you long [technical issue] I have a soft place in my heart for
you. Someone who was a derivatives trader at Chemical Bank and
Morgan, Grenfell. Your knowledge and depth of experience in the
financial [technical issue] experiences here in Washington I
feel have left an indelible mark. And if I think about how you
have been a leading voice, and really a staunch advocate for
conservative [technical issue] you helped us navigate through
some very uncertain times, particularly these past few years as
we have come into recession--we have seen inflation like we
have never seen, challenges to the economy that have [technical
issue]. You have been very strong in terms of making certain
that the policies that come from this Committee will have long-
term and enduring benefits for hardworking Americans, for job
creators, and for our competitive [technical issue].
And on a personal level, I would just like to say this.
From my wife, Christy, and our kids, we have enjoyed getting to
know Chris. Patrick, Bridget, and Duncan are just treasures
[technical issue], and I think they are very happy you are
coming home, I am sure, and we are all looking forward to where
you career may take you next. Thank you for your wonderful
service.
Thank you, Mr. Chairman.
Senator Toomey. Mr. Chairman [technical issue] and the
respect and admiration is mutual.
Chairman Brown. And, Senator Hagerty, you have a couple of
minutes left if you would like to do a question or two.
Senator Hagerty. I yield my time back. Thank you.
Chairman Brown. Senator Menendez.
Senator Menendez. ----we have not always agreed, but I have
always known where you stood and your views and the way in
which you pursue it. We have enjoyed our relationship on behalf
of [technical issue]----the CFPB doing to ensure that MOHELA
provides an acceptable level of customer service to borrowers?
Mr. Chopra. Well, I cannot comment on a specific
supervisory [technical issue] to do so with----
Senator Menendez. Well, I would urge you to be robust about
it, because the consequence to consumers----
Mr. Chopra. Is enormous.
Senator Menendez. ----is enormous.
A 2021 report by the Financial Health Network found that
nearly 60 percent of all overdraft fees in 2020 were paid by
low- and moderate-income households, and about 25 percent were
paid by Latino households specifically. According to the CFPB,
the banks made $15 billion a year in overdraft and
nonsufficient funds. To put that into context, the banks
altogether made $71.7 billion in the third quarter of 2022.
Do overdraft fees appear to be a major source of revenue
for banks?
Mr. Chopra. So they certainly have been. What we are
seeing, though, is a shift in the market where they are finally
starting to compete, and some banks are drastically reducing
them, eliminating them. And the key consumer problem is
sometimes a consumer expects one overdraft fee but they get hit
with a ton of bricks and three fees, even though when they
looked in their balance they had enough money. We are trying to
take action to go after illegal overdraft practices to make
sure that these are not an unnecessary financial hardship and
that there is compliance with the law.
Senator Menendez. Yeah, it seems to me that these
institutions would be well successful in terms of their
financial wherewithal without these fees, and the particularly
affect the most significant in our society who are already at a
disadvantage. So I urge your continued engagement on this and
appreciate it.
I continue to hear story after story from New Jersey
constituents who have fallen victims to scams and fraud on
Zelle, and in many instances been denied relief by their banks.
I understand that the big banks that own Zelle are considering
a plan to require the network members to compensate victims of
certain kinds of scams. That would be [technical issue]. CFPB
was working on guidance regarding liability from Zelle scams.
Has that work progressed? Where are we at with that?
Mr. Chopra. Well, we have been talking to banks, small
banks and big ones, about how to reduce the scourge of fraud in
real-time payments. This is not just about Zelle. It is also
about other P2P apps, some small banks who are not part of the
ownership structure of Zelle and others are really wondering
how they too can make sure that they investigate what is going
on and get answers to their own customers. So we continue to
work to make sure that as our country moves to real-time
payments that we do not add more vectors of fraud where people
can run.
You know, in many cases these network rules are established
by the industry, and I hope that the industry too can set up
frameworks that actually reduce the total amount of fraud when
it comes to P2P apps and bank-owned solutions.
Senator Menendez. Well, I appreciate that. I know that
Senator Reed, myself, Senator Warren, and others have urged the
agency to continue to be engaged in this space, and it is
incredibly important.
And, Mr. Chairman, if I have one more minute, I just want
to note the bipartisan work we did here in Congress to shepherd
the Debt Bondage Repair Act into law. That bill was led by
Ranking Member McHenry in the House and [unclear] in the
Senate, and certainly I helped make it happen.
This helps the survivors of human trafficking have a
mechanism to remove negative marks associated with their abuse
from credit reports. In June you issued a final rule to
implement the legislation, and I want to thank you for the hard
work you put in to get that done. I think we should all be
reminded of the scourge of human trafficking, and in this case
how we can provide some relief to the victims.
Mr. Chopra. I would add that I have similar concerns about
impacts on victims of domestic violence and how credit
reporting can be used as a weapon. We are trying to think about
all of the ways in which all of your work on human trafficking,
other [unclear].
And by the way, Senator Menendez, this is another example
of one of the many times that Congress has passed a law and the
CFPB has faithfully implemented it. Every time Congress acts in
statute, the CFPB responds and is accountable for it.
Senator Menendez. One of the many reasons we need CFPB.
Thank you very much.
Chairman Brown. Thank you, Senator Menendez.
Senator Scott, of South Carolina, is recognized.
Senator Scott. Thank you, Chairman Brown. I wanted to stop
by as well to pay my regards to Ranking Member Toomey as well
as to former Chairman Shelby. We certainly will miss his
service from the State of Alabama. But Pat has been a great
friend of mine, and certainly a mentor as it relates to the
Banking Committee and all things financial. I will never forget
our work on the TCJA and the hours upon hours that we spent
trying to figure out how to make America healthier financially
and to look for ways to grow the small business community
through our economy, to focus on making sure that this great
land of opportunity, the United States, was open and
accessible, from a financial perspective, to all Americans.
Your hard work on this Committee, since I arrived in the 114th
Congress, is going to be sorely missed.
I know that this is not the end. It is just a new chapter
opening up for you. But we certainly [technical issue] the work
that you have started on this Committee to make sure that this
incredible country works for every single American and that we
continue to look for ways to strengthen our economy to increase
opportunities across this country. I will hear from you,
hopefully often, and we will stay in touch. But I thank you for
your years of service to this Committee, and frankly, your
philosophical wisdom [technical issue] left or the right on the
American people.
Senator Toomey. Mr. Chairman, if I could take just a moment
to say a big thank you to Senator Scott, a great friend, and a
great American. Your service to the State of South Carolina has
been tremendous, your contribution to the Republican Conference
has been tremendous, and you have an unlimited future in front
of you that I will be very eagerly watching.
Senator Scott. I have had the good fortune of being the
Ranking Member on the Aging Committee this year, and the
Committee has been meeting at the exact same time as the
Banking Committee. So I cannot think of a better place to serve
right now than in the Aging Committee, perhaps the Banking
Committee, and I look forward to coming back over here. It has
been a blessing to be there, and unfortunately I have missed a
lot over here, but will be here next year. Thank you.
Chairman Brown. Do you have questions?
Senator Scott. No, sir.
Chairman Brown. Senator Warren, of Massachusetts, is
recognized.
Senator Warren. Thank you, Mr. Chairman, and actually I
want to add my thanks as well to Senator Toomey. I want to say
thank you for your many years of public service and how well
you have served the people of Pennsylvania and the people of
the United States. I also want to say thank you for your
willingness to work across the aisle. We do not see eye to eye
on every issue, in fact very few, but where we can, we do, and
I appreciate that.
So let us talk about CFPB. Big businesses and their
lobbyists have spent the last decade trying their hardest to
take down the CFPB, and throughout it all, the CFPB has done
its job holding banks and giant corporations accountable. So it
is no wonder that the Chamber of Commerce and its corporate
clients have now launched a new campaign, spending hundreds of
thousands of dollars to attack the CFPB and to attack you,
Director Chopra. And that is on top of the many millions of
dollars it has already spent fighting for giant banks and
corporations in their right to cheat, trick, and discriminate
against consumers.
So I just want to talk about a few of the things that CFPB
does that big banks really seem to hate. Director Chopra, one
of the first things that you did when you took over the CFPB
was to launch an initiative against junk fees, you know, the
couple of dollars here, and a couple of dollars there, that
banks and other businesses are increasingly loading on families
in order to boost corporate profits. We are talking about
things like way-high overdraft fees, hotel resort fees, other
random fees that people cannot usually see until it is too
late.
Now the Bureau recently issued guidance to crack down on
junk fees. I just want to ask you, how much do you think
consumers will be able to save if you can get rid of these fees
in their lives?
Mr. Chopra. Well, our estimate is just on surprise
overdraft fees. There is about $1 billion that has already been
cut out, and when it comes to others in the market, $3 billion
in overdraft fees, and I think the list is going to go on and
on and on.
Let me just say this. If you believe in a market system
where people can compete with each other, when you hide fees or
jam fees onto people that they cannot reasonably avoid, that is
not really a market system.
Senator Warren. That is right. All right. So when financial
institutions insist on continuing to saddle consumers with junk
fees, you have been successful in taking enforcement actions
against them. I see one here, Regents Bank, for example, was
found to have charged surprise overdraft fees to its customers.
So how much money did CFPB recover for cheated consumers once
it took on Regents Bank?
Mr. Chopra. Just in that one we got $141 million in victim
restitution, and then a $50 million civil penalty. And it is a
repeat offender so we had to take it seriously.
Senator Warren. Yeah, and that is money that stays in
people's pockets because of your work.
Let me turn to another example. CFPB has also been working
to protect student loan borrowers. You identified student loan
servicers engaging in deceptive practices and tricking teachers
and firefighters and nurses out of the opportunity to access
loan forgiveness under the Public Service Loan Forgiveness
Program.
Director Chopra, is the CFPB action going to put money back
in the pockets of public services like nurses and firefighters
and teachers?
Mr. Chopra. Yes. They will have, in many cases, their
financial lives will be completely [unclear].
Senator Warren. All right. So let us take a look then at
housing. The CFPB has been looking into shoddy tenant screening
services that too often result in families of color being
unfairly denied rental housing. Earlier this year, the Bureau
issued guidance warning tenant screening companies to clean up
their practices. Director Chopra, will CFPB's work on this
issue help reduce barriers to affordable quality housing?
Mr. Chopra. Yes, and it will also be good for landlords
too, who want to be able to find a tenant that works for them
and not be shut out because of erroneous background reporting.
Senator Warren. OK. So once again, making markets work
better, just making them work for consumers as well.
I am going to do one more quick example here. Many people
pay more for car loans, for credit cards, and for mortgages
because they have unpaid medical bills that that tarnish their
credit ratings. So in March, the CFPB issued a report showing
just how severe this problem is, and here is what I love.
Before you even had to deliver some kind of rule around this, a
few weeks later, the three big credit reporting agencies
announced they would eliminate nearly 70 percent of medical
collection debt from consumers' credit reports. Director
Chopra, how many families will this change impact?
Mr. Chopra. Millions, I think. Inaccurate credit reporting,
especially on medical debt, can be a blockade to so much, and I
think our work on credit reporting will continue to pay
dividends for families and individuals.
Senator Warren. Well, I want to say thank you. Now there we
have. Junk fees, student loans, housing, medical debt--I could
keep going on if we had more time--all of the things that CFPB
has accomplished under your first year at the helm. The CFPB is
saving tens of millions of families a lot of money.
I know that big banks and their lobbyists may hate that,
but I am glad American families have a cop on the beat who is
working for them.
Thank you. Thank you, Mr. Chairman.
Chairman Brown. Thank you, Senator Warren.
Senator Daines, of Montana, is recognized.
Senator Daines. Mr. Chairman, thank you for your remarks
and I have a few questions. I too want to recognize Ranking
Member Toomey. I remember my days at Procter and Gamble. One of
my earlier mentors told me, ``When you hire, you look for
people that can check three boxes: integrity, intelligence, and
initiative.'' Everything else you can coach, but you have got
to have those three fundamental attributes.
Senator Toomey, you have truly modeled that for me
personally, as you have served in the U.S. Senate, as you have
led so well as the Ranking Member on this Committee. You will
be dearly missed. Thank you for your sacrifice, your service
for our country, and for your strong leadership, and I, too,
echo Senator Scott's comments. I will never forget the work we
did together on the tax cut bill, and cutting taxes for small
businesses as well as other businesses. But it was a moment, we
did a big thing together, and thank you for that.
In a petition to the Supreme Court on November 14th, the
CFPB asked the Court to reverse the Fifth Circuit Court of
Appeals ruling that determined that CFPB's unprecedented power
to defund itself was unconstitutional. The petition claims that
the CFPB's funding is constitutional because Dodd-Frank
authorized the CFPB director to unilaterally decide how large
its budget can be and mandates that Federal Reserve transfer
the requested funds. However, the Constitution prohibits
Federal agencies such as the CFPB from spending Federal
Treasury without, quote, ``appropriations made by law,'' end
quote.
In its decision, the Fifth Circuit writes that ``an
expansive agency, insulated from Congress' purse strings,
expressly exempt from budgetary review, and headed by a single
director removable the President's pleasure is the epitome of
the unification of the purse and the sword of the Executive.''
I believe it is highly likely that the Supreme Court ultimately
reviews this case and upholds the Fifth Circuit decision.
My Republican colleagues and I have continually asked for
our colleagues on the other side of the aisle to join us in
reforming the CFPB. That offer sincerely remains on the table.
And now turning to my questions. Director Chopra, during
your last appearance before the Committee you stated, following
a question of mine, that, quote, ``Consumers benefit from a
transparent and competitive market. A transparent and
competitive market will help develop lower-cost, small-dollar
loan products,'' end quote.
Director Chopra, under your leadership what steps has the
Bureau taken to create an open and competitive market for
consumers to ensure continued access to small-dollar loan and
financing products?
Mr. Chopra. That is a great question. Two things come to
mind. One is that we have really put an effort to make sure
that our credit card market is extremely vibrant. Credit cards
are the biggest source of small-dollar loans in America. It is
a place where so many people are able to afford things, even if
they may not have the liquidity. We are looking at ways for
small banks and credit unions to be able to play a bigger role
in the credit card market, to be able to help refinance credit
card debt, and much more.
We have also proposed implementing a long-dormant authority
called Section 1033. This is how fintechs, nonbanks, and small
banks may be able to access customers at lower customer
acquisition costs by allowing permission data. So you would be
able to move your data and use it as a way to be underwritten
potentially for lower-cost credit elsewhere.
So I really see that technology, we can harness it in a way
that creates more opportunities for new entrants, more
opportunities for small players. Because right now, small-
dollar lending and credit cards, it is dominated by just a
handful of the largest. The truth is local banks would be very
good at serving people in that market, and we are looking for
more ways to support them doing that as well.
Senator Daines. Thank you, Director Chopra. And I want to
go to another lane here and that is about abusive practices. In
late September, the U.S. Chamber of Commerce filed a lawsuit
challenging the legality of CFPB's changes to the Unfair,
Deceptive, or Abusive Acts or Practices, UDAAP, Exam Manual.
While lawmakers such as myself and many here expect the CFPB to
enforce legislation that protects consumers against
discrimination, it seems as though the Bureau has unilaterally
decided, without congressional oversight, that UDAAP now
includes disparate impact liability.
In the 12 years since Dodd-Frank was enacted, neither
Congress nor the CFPB has claimed that the legislation
authorizes disparate impact under UDAAP. Unfortunately, instead
of implementing these changes in an open and very transparent
rulemaking process, your Bureau simply issued a press release
announcing a very controversial change.
Back in 2018, the CFPB disparate impact guidance for auto
lending was overturned by Congress after the Bureau's
enforcement methodologies were found to be flawed and,
importantly, not authorized by statute. Now it appears as if
your Bureau is attempting to implement disparate impact
guidance not just for lenders but for all consumer financial
products and services, and we are hearing a lot about that.
Putting aside whether this tactic is legal or not, which I
do not believe it is, do you think the CFPB's implementation of
disparate impact guidance through a press release, without
congressional authorization or a notice and comment rulemaking,
is a transparent way to make policy changes?
Mr. Chopra. So I appreciate the question, Senator Daines.
This is not a disparate impact. Senator Toomey has claimed this
many times and it is just not true. I am happy to talk you
through the legal details of it, but I want to answer the
question you really posed at the end, which is about
transparency.
One of the things that Senator Toomey and others have
really expressed is that they worry about regulation by
enforcement, the sense that firms should know what is obligated
of them under existing law. So one of the things we have done
is we have tried our best to find lots of different ways to
issue guidance that does not have the force of law but it gives
entities a sense of what does the current law require.
In the case you mentioned of the exam manual, that is
really also about consistent examination. The manual is
guidance for examiners, that when they are investigating
potential discriminatory or other unlawful conduct, how might
it implicate some of the existing laws that Congress has
authorized and prohibited? In many situations, illegal conduct
can violate multiple laws.
But I want to figure out, and I am happy to work with you
to figure out what is the way to be transparent but also how to
best----
Senator Daines. I am way over time. One last sentence. I
appreciate you expressing interest in supporting community
banks, smaller banks, and competition. I think it is important
you get the feedback early in that rulemaking process, from all
entities, including these smaller banks and community banks.
Thank you. Mr. Chairman, thanks for your patience.
Senator Smith. I am Senator Smith.
[Laughter.]
Senator Smith. Thank you, Chair Brown.
Senator Toomey, Pat, we wish you the best in whatever
adventures you have before you. I am sure they will be
exciting, and thank you for your service to Pennsylvania and to
the United States of America through the Senate. So we wish you
the very best.
Senator Toomey. Thank you very much, Senator Smith.
Senator Smith. Thank you.
So Director Chopra, thank you so much for being with us,
and I appreciate your testimony and your answers to the
questions today.
You know, markets need to work for consumers as well as the
private sector businesses that serve those consumers. It needs
to be fair and transparent so that people are not taken
advantage of. And I want to thank you for the work that you and
CFPB do to make that value real. And it does seem like there
are new scams that hop up constantly.
Here is an example that I want to ask you about. In
November, ProPublica and the Sahan Journal copublished a story
describing practices targeting the Somali community in
Minnesota. Real estate investors are apparently pitching
contracts for deed, sometimes known as land contracts or seller
financing, as an interest-free way of purchasing a home, and
this is, of course, particularly attractive to Somali buyers,
many of whom have religious tenants, forbidding paying
interest.
Under these arrangements, a buyer pays a seller directly in
installments and there is no mortgage or bank, and there are
also very few consumer protections for buyers, and the
contracts are often structured to contain large, unmanageable
balloon payments. And so this is what happens. Families end up
defaulting on their mortgages and are at risk of losing their
homes. The stories are really terrible when you read them.
So I to just ask if you are aware of this issue, have you
heard about this, and what could you do in response to these
practices to protect these consumers?
Mr. Chopra. Well, I saw this report and one of the things
that I think I have shared with some of you before is this
issue of exploiting religious beliefs----
Senator Smith. Yes.
Mr. Chopra. ----I think is very pernicious. And I think to
the extent to which--I do not know all the facts to see if it
violates the law. It certainly raises red flags when there may
be deception or, frankly, taking someone's home without the
appropriate safeguards in place.
I want to make sure that--the CFPB is not in the business
of projecting the future of the economy, but we are always
paranoid about what could come. And I think housing and housing
insecurity and evictions and all of the associated rules, we
need to make sure that we can stop some of these before they
really go nationwide.
Senator Smith. Exactly, before they take off. And that is
my concern too, that what is happening here is bad actors
exploiting this prohibition amongst Muslim folks to not pay
interest, and then taking advantage of them.
Similarly, I am also concerned about recent reports about a
new deceptive practice that seems specifically designed to
deceive homeowners. It is related to contracts for providing
up-front cash to homeowners in exchange for an exclusive right
by a real estate firm to serve as their listing agent for out
to 40 years. And so this up-front cash is described as a loan
alternative, and the only way that a homeowner can exit this
arrangement is to pay 3 percent of the home value back to the
realtor company, and then that is enforced as a lien against
the property. It is just another example of the way, just as
you say, the way that this huge challenge that we have around
housing in our country is being taken advantage of, it appears,
by these bad actors.
Mr. Chopra. And I also, in that situation, particularly
worry about older homeowners who are often sitting in homes
they have lived in for a long time, and often that is their
core source of wealth and their ability to finance their
retirement.
I will say on this issue we have seen the Florida AG; we
have seen other AGs take actions. Sometimes it implicates our
authorities. Other times it does not. But that is part of the
reason we want more State AG and State regulator coordination
with us, because often if it does not trip our laws it may trip
theirs, and that is why we have really put a premium on
investing in those State AGs, and I want to commend your State
for really being part of that work.
Senator Smith. Yes. Our Attorney General does excellent
works and keeps consumer protection at the forefront of his
efforts, so I appreciate that.
Thank you, Mr. Chair.
Chairman Brown. Thank you, Senator Smith.
The Senator from Nevada is recognized.
Senator Cortez Masto. Thank you. Thank you, Mr. Chair, and
Ranking Member Toomey, again, as I said yesterday in the
Banking hearing, I just wish you all the best and it has been a
pleasure to know you and be able to work with you. Thank you.
Senator Toomey. Thank you very much. The feeling is mutual.
Senator Cortez Masto. Director Chopra, it is great to see
you. You know how I feel, as a former Attorney General. The
work that you do is just so important, and that partner with
the AGs across the country, like you said, is key to really
address some of the consumer challenges that we are seeing.
Every time there is a law that is passed, usually there is some
predatory actor trying to figure out another way to take
advantage, and so we have to stay diligent and be on top of all
of these issues.
One of them that has been important to me, and Jack Reed
has talked a little bit about this, is our servicemembers and
their families. I know in 2021, our servicemembers and their
families submitted more than 42,000 complaints to the Consumer
Bureau. The most common type of complaint, more than 60
percent, were about credit reporting and debt collection. I
know also that servicemembers have complained to the Bureau
about billing inaccuracies and that debt collectors use
aggressive tactics to recover allegedly unpaid medical bills.
So how has the Bureau protected servicemembers and their
families from unfair practices? Can you talk about what you are
trying to do to address that?
Mr. Chopra. Yes. We have actually taken a number of
enforcements actions on the Military Lending Act. Last week we
released a report about the Servicemembers Civil Relief Act,
which provides important protections.
Let me just say, more broadly though, the impact of the
credit report for a servicemember, it is different than for
civilians, because when they are moving a lot or when there are
certain life events, they need to be able to rely on that,
sometimes even for security clearances. So credit reporting
issues are really tough.
Senator Cortez Masto. Or continuation in the military.
Mr. Chopra. That is right.
Senator Cortez Masto. This is an important thing, and this
is what I hear from our servicemen and women in the State of
Nevada.
Mr. Chopra. And one of the things that I worry, too, is
they are more likely to be victims of identity theft. So the
issue of servicemember data and privacy and their credit
reports I think is going to continue to be a top issue. I know
this is also a place where the Federal Trade Commission has put
in work, and they have authorities, and we are going to
continue to work with them.
The DoD has been a very good partner in figuring out other
indicia of military family readiness, and so there is more work
which we can brief you on.
Senator Cortez Masto. Please do. I look forward to it. I
know Jack talked about, and you addressed the Civil Relief Act
and the concern that our active-duty, particularly our Reserve
and National Guard, are paying an extra $9 million in interest
every year. And so I appreciate your work in addressing it.
Let me jump back to just, in general, credit reporting. For
years the top complaint from consumers, in general, and this is
even when I was Attorney General, has been inaccurate credit
reports. And thanks to the Bureau's efforts we are seeing some
improvements with getting real and timely responses to the
complaints.
Can you talk about that progress that the Consumer Bureau
has had with improving responsiveness from some of these credit
reporting companies, but also what else do we need to be doing
and what can Congress do to address this issue?
Mr. Chopra. Well, I think that the three credit reporting
conglomerates obviously do not face the same competitive
constraints that a normal business does. Consumers are not
their customer often. So consumers are the product, and I think
that is a fundamental market failure that requires us to make
sure that they are taking accuracy and disputes seriously. It
is clear that for some of them they are willing to pay the
occasional fine or class action lawsuit, but ultimately there
is a serious issue when it comes to their incentives.
I want to share that I also worry about the new generation
of data broker and background screeners that are even
collecting data on small businesses, collecting data on others.
We need to make sure that those secret dossiers that
individuals have rights to make sure they are accurate and they
can dispute wrong issues.
Senator Cortez Masto. I do too, and I will just say, you
know, as a former Attorney General dealing with the subprime
mortgage crisis, I cannot tell you how many homeowners I even
heard from that they were trying to work with a credit
reporting company and they were being punitive against them. It
is an area that we really have to focus on.
Mr. Chopra. And that lingers with people for so long. And
often if one of your three reports has problems, you are shut
out.
Senator Cortez Masto. That is right. It is devastating. So
thank you again. Thank you for the work, and I look forward to
continuing that work with you and the Bureau, and your
incredible staff.
Chairman Brown. Thank you, Senator Cortez Masto.
Senator Ossoff, from Georgia, is online from his office.
Senator Ossoff. Thank you, Mr. Chairman, and thank you,
Director Chopra, for your service and your testimony here
today.
Building on what Senator Cortez Masto was just discussing
in terms of the impact that adverse credit reports can have on
Americans, let us talk about how this can impact veterans and
what you can do, Director Chopra, to protect veterans from
improper billing and collections from providers of community
care services referred by the VA. You published the Office of
Servicemember Affairs 2022 Annual Report. It noted that you
receive many complaints from veterans who incur medical debt as
a result of a community care health care provider that is a
third-party provider, to whom the veteran is referred by the VA
for some outpatient services, who trust that those community
care providers will bill the VA, but instead they bill the
veteran improperly, and then it gets referred for collections,
and then suddenly this veteran has collectors coming after
them, maybe an adverse credit reporting event.
The report that you issued, Director Chopra, recommended
that medical providers and third-party billing companies should
have adequate systems in place to serve veterans. Of course,
they should.
What else can you do with the powers at your disposal to
protect veterans who are at risk of becoming trapped by medical
debt, having adverse credit reports because of the failures of
these health care providers to properly bill the VA?
Mr. Chopra. Let me just say that credit reports should not
be a tool to extort money out of someone who does not really
owe it. And I think for many veterans, and frankly, many
Americans, they end up just paying it because it is such a
headache.
We have already taken a few steps. One, we have put some
focus on nursing home debt collection. This is a place where we
want to make sure that debt collectors who are collecting on
nursing home debt know that when there might be indicia that
those debts are invalid.
This issue of outpatient referrals from the VA, we are
really pleased to work with the VA on how they are dealing with
credit reporting. They have updated some of their rules about
when medical debts will be reported. It will drastically reduce
the number that are reported. Because ultimately, I think we do
not want to penalize veterans for getting medical care for
which the law entitles them to receive as benefits of their
service.
So, Senator Ossoff, I think there are other places in
credit reporting and debt collection that we continue to find
concrete solutions to address these issues.
Senator Ossoff. I appreciate that, Director Chopra. Let us
talk about new mothers and the costs of pregnancy and
childbirth. A University of Michigan study published last year
found 24 percent of pregnant and postpartum women report unmet
health care needs due to cost. One in 5 parents receive an
unexpected charge, averaging $744, on their hospital bill
following childbirth. That is on top of $4,500 in out-of-pocket
spending, on average, that each woman spends on care from 12
months before to 3 months after delivery. We know, and we have
been discussing, the impact that medical debt can have on
families. We are talking about families with new children.
How do you address the impact that this can have on
pregnant women and new mothers? What more can you do to protect
them?
Mr. Chopra. I think that there are big concerns about how
big medical events can often trigger personal bankruptcy. It is
a financial distress that is often--an underpinning is often
medical issues. And I think the last thing we would want is to
see that, you know, pregnancy and new mothers having to deal
with mistaken credit reporting, surprise billing.
Of course, the CFPB's role is really on credit reporting
and debt collection. But of course, we are happy to brief you
further on the work with the Department of Health and Human
Services, the work we do with others to address this really
complex and convoluted system of medical billing and how it is
becoming the No. 1 collection item over time on individuals'
credit reports.
Senator Ossoff. Director Chopra, thank you, and I think
that these issues faced by veterans and new mothers speak to
the essential role that the agency plans in protecting
consumers.
My final question is about servicemembers who, for example,
are undergoing security clearance investigations. Your Office
of Servicemember Affairs report found that in 2021, credit
reporting companies were ``not responsive to servicemembers'
requests for investigations, jeopardizing their security
clearances, job security, and promotion eligibility.'' They are
not getting timely responses from the credit reporting
companies when, for our military servicemembers, their jobs and
clearance is on the line.
What more can your agency do to ensure that credit
reporting companies respond in an efficient and effective
manner to these servicemembers' requests and when
servicemembers bring complaints to you?
Mr. Chopra. Well, we have certainly seen a bit of an uptick
in their responsiveness, but ultimately we are going to have to
assess them for legal compliance too. They have requirements to
assure maximum possible accuracy, using reasonable procedures,
and I think that is a place where we are very, very focused on
whether they are meeting their legal obligations on dispute and
accuracy.
So of course their compliance with the law has huge ripple
effects on all segments of the population across the country,
and so we will continue to do work when it comes to the Fair
Credit Reporting Act, including exploring potential rules.
Senator Ossoff. Thank you. And Mr. Chairman, I know my time
is up. I will just say this, Director Chopra. The Congress
authorized your agency to undertake these activities,
explicitly in statute, precisely so that you could protect
consumers, such as we have discussed today.
Thank you for your testimony.
Chairman Brown. Thank you, Senator Ossoff.
We will close. Senator Toomey has some parting words.
Senator Toomey. I will be brief. Mr. Chairman, thank you
very much. I just want to remind my colleagues of the
legislation that Senator Hagerty and I have proposed does two
things. It would change the governance of the CFPB to a
bipartisan commission, and it would change the funding of the
CFPB to funding through appropriations.
This in no way would end the CFPB. It would in no way
prevent the CFPB from carrying out its mission. But what it
would do is it would restore much more accountability than we
have today. The Constitution is so unambiguously clear that all
legislative powers are to be vested in the Congress. We hand
over powers to write rules which have the force of law to the
CFPB. That is a legislative power. It really only makes sense
that we actually exercise some control over this body to which
we have delegated our own responsibility.
So I would urge my colleagues to consider supporting our
legislation, and I thank you, Mr. Chairman.
Mr. Chopra. Chairman Brown, can I just offer one thing?
Chairman Brown. Very briefly.
Mr. Chopra. I did not get to do this, but I also want to
thank Senator Toomey, over the past few years. Congratulations
on finishing your service and returning to Pennsylvania, or
wherever you may go. And also to Senator Shelby, who over the
past decade I have had the chance to work with him and his
staff on so many things. You know, many years ago he was very
clairvoyant about data and data privacy, and so I again want to
thank him too for all his work.
Senator Toomey. Thank you.
Chairman Brown. Thank you for those kind words, Director. A
moment about accountability and then I will adjourn.
The CFPB director can be fired by the President. We know
that. The director is confirmed by this body. The CFPB submits
quarterly financial reports to OMB. CFPB's operations and
budgets are subject to a private sector, independent audit. It
is subject to numerous additional audits by the Office of the
Inspector General and GAO. It is the only independent banking
regulator with a cap on its funding, and annually audits the
financial transactions, the GAO does, of the CFPB, and the
director appears, as you know, painfully or not, in front of
this Committee twice a year.
These are just some of the accountability measures the CFPB
complies with. It is clearly accountable. It is not really the
objection here. It is the fact that CFPB is such an effective
watchdog for consumers, to the detriment of Wall Street. That
is why the CFPB is under attack.
Thank you, Director, for being here today. Senators who
wish to submit questions, those questions are due 1 week from
today, on Thursday, December 22nd. Director, please submit your
responses to questions for the record within 45 days from when
you receive them.
And as I adjourn, again thanks to Senator Toomey. It is our
87th hearing together, and I appreciate his public service and
his attention to detail and his good, intellectual, and
principled insight, and I learn from him on all kinds of
issues.
So Pat, thank you. Director, thank you. The Committee is
adjourned.
[Whereupon, at 11:37 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
Today's hearing is in a hybrid format. Our witness is in-person,
but Members have the option to appear either in-person or virtually.
Let me start by talking about two of our colleagues who are
retiring at the end of this Congress.
Senator Toomey sat by my side for 87 of the 89 hearings the
Committee held this Congress. We each missed one. I mention that
because it shows how seriously he takes this job--both as Senator and
as Ranking Member. I'm sure there were many hearings he didn't want to
sit through. But he did.
I've enjoyed getting to know him as we sat together for hundreds of
hours over the last 2 years. We moved dozens of nominees through the
Committee, we worked together on crucial national security issues like
China, most recently we've worked together on FTX, and off the
Committee worked on important maternal health issues.
While we have our disagreements, there may be no other Republican
as passionate as Senator Toomey, and it's backed by his strong
worldview and intellect, especially on financial matters. He was a
critical voice in our Committee's response to the COVID crisis and the
Congressional oversight afterwards. The quality of debate and discourse
in this Committee was improved because Pat and his incisive intellect
were engaged.
I also want to commend Pat's staff--Brad Grantz, Dan Sullivan, John
Crews, and the rest of the team for their hard work and diligence.
I wish Pat, Kris and their three children the best in the next
phase of his career.
I have not known a Banking and Housing Committee without Senator
Shelby. I came to the Committee in 2007 in the middle of the financial
crisis.
Senator Shelby helped shape the agenda of the Committee for 35
years--during the Enron scandal, Sarbanes-Oxley, the Great Recession of
2008, Dodd-Frank, the COVID pandemic, and so many other critical
moments in the history of this Committee and our country. He served in
leadership roles as either Chair or Ranking Member for more than a
decade, working with Senators Sarbanes, Dodd, Johnson, and me.
There was no one on the Republican side who was a greater proponent
of strong capital at banks, something I always admired.
Senator Shelby, I wish you and Annette well in your retirement.
Welcome back Director Chopra.
The Banking, Housing, and Urban Affairs Committee used to be
referred to as the Senate Banking Committee because it was all about
Wall Street. When Democrats took Control in the 117th Congress, we
changed that.
So it's fitting that this Committee's last hearing for the 117th
Congress is the CFPB's Semi-Annual Report--because fighting for
consumers is one of the most important things we can do on this
Committee.
Since the CFPB first opened its doors in 2011, the consumer agency
has returned $14.9 billion to consumers, including principal
reductions, canceled debts, and other relief. That's $14.9 billion,
with a B.
Over 183 million consumers have been eligible for that relief.
The CFPB has a track record of helping real people get real
compensation for real harm from financial institutions that have
wronged them.
In 2012, just over a year after becoming fully operational, the
CFPB ordered American Express subsidiaries to refund $85 million to an
estimated 250,000 consumers for illegal credit card practices,
including charging unlawful late fees.
In 2014, the CFPB reached a settlement requiring Sallie Mae to pay
$60 million to an estimated 60,000 servicemembers for overcharging them
on student loans.
In 2016, the CFPB fined Wells Fargo $100 million for opening
unauthorized accounts and ordered Wells to refund an estimated $2.5
million in fees accrued.
This year, the CFPB fined Bank of America $10 million for
unlawfully garnishing consumer accounts.
When financial institutions illegally took consumers' hard-earned
money through unlawful late fees, through too high interest rates,
through unauthorized fees, and through improper garnishment, the CFPB
cracked down and ensured that consumers keep their hard-earned money.
No other agency fights for consumers like the CFPB.
It's no wonder Wall Street hates the agency. Since the passage of
Dodd-Frank, Wall Street and its allies have aimed their fire at the
CFPB, trying over and over again to undermine and gut the agency
responsible for fighting for Main Street and consumers.
Republicans have proposed bill after bill to weaken the CFPB, to
take away the effective single director structure, to put the agency's
funding in the limbo of congressional appropriations, or to simply undo
the CFPB.
But Congress created the CFPB and specifically designed its funding
structure to make the agency an effective consumer watchdog.
According to this Committee's report on Dodd-Frank, ``the assurance
of adequate funding, independent of the Congressional appropriations
process, is absolutely essential to the independent operations of any
financial regulator.''
Which is why other financial regulators like the Federal Reserve,
OCC, FDIC, and NCUA are independently funded and not subject to
congressional appropriations.
And when Wall Street and Republicans in Congress tried to put the
CFPB out of business, the public loudly and clearly said ``no''.
The CFPB has remained intact because it does its job: helping
consumers.
Consumers know Wall Street does not have their best interest at
heart.
Consumers know that Wall Street needs a strong regulator to keep it
in check.
Consumers remember the damage that Wall Street wrought on the
economy, on their neighborhoods, and on their wallets.
And consumers know that CFPB follows the facts. They go after bad
actors, from banks overcharging customers to predatory payday lenders
trapping consumers in debt.
The CFPB stands up to Wall Street. Director Rohit Chopra and the
CFPB use all of their powers to fight discrimination. And they continue
to go after financial institutions for their treatment of Black and
Brown consumers.
In 2021, the CFPB required a bank to pay $5 million to address
redlining that harmed Black consumers.
This year the CFPB announced that it will examine whether
discrimination violates the Dodd-Frank prohibition against unfair,
deceptive, and abusive acts and practices.
And in July, in response to a local lender's failure to serve
Philadelphia's majority-minority neighborhoods, the CFPB, along with
the Department of Justice's Combatting Redlining Initiative, brought
$18.4 million in funds to support home ownership in those
neighborhoods.
In total, the CFPB has gotten $637 million from discriminatory
financial institutions, tens of millions of which have gone directly to
minority consumers who experienced discrimination.
There is a reason why the civil rights community was instrumental
in the creation of the CFPB. They knew that they needed an agency that
was empowered and unafraid to fight against discrimination, wherever it
may be found.
The CFPB is creating a fair, transparent, and competitive economy.
Major and consequential CFPB rules like the Ability to Repay rule
not only provide protections for consumers buying homes, but also
create rules for financial institutions and the broader economy.
That's why we created the CFPB--to ensure that the financial
marketplace is fair for everyone, and that corporations cannot rig the
system and get away with it. That's the essence of capitalism.
______
PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
Today's hearing is about the CFPB.
The last time Director Chopra testified, I raised concerns about
the CFPB's overreach in pursuit of a far-left agenda. Unfortunately,
this lawless behavior is nothing new for the CFPB, and under Director
Chopra, it's more out of control than ever before. Today, I'm
disappointed--but not surprised--to note, yet again, that the CFPB has
continued this pattern of overreach.
In our constitutional system of checks and balances, only Congress
has the power to appropriate money. James Madison called this: ``the
most complete and effectual weapon with which any constitution can arm
the immediate representatives of the people.''
But, the Dodd-Frank Act exempted the CFPB from appropriations. It
empowers the CFPB to simply take funds from the Fed, which is itself
also not subject to appropriations, thereby doubly insulating the CFPB
from any congressional control.
I acknowledge there are other financial regulators not on
appropriations--and we can disagree about whether they should be. But,
it's indisputable that Congress has precisely zero leverage over the
CFPB. It's hard for me to imagine our Founders intended an agency to
have the power of the legislative branch, and precisely zero
accountability to the legislative branch. And, in any case, clearly the
CFPB is overreaching and doesn't care.
That's why the Fifth Circuit recently found the CFPB's funding
structure is unconstitutional. The court noted: ``The Bureau's
perpetual insulation from Congress's appropriations power . . . renders
the Bureau `no longer dependent and, as a result, no longer
accountable' to Congress and, ultimately, to the people.''
What can we expect from an agency designed to be unaccountable to
Congress, if not overreach and hubris? For example, under Director
Chopra, the CFPB unilaterally decided that Dodd-Frank's grant of
authority to prevent unfair, deceptive, or abusive acts or practices--
known as UDAAP--now includes controversial disparate impact liability.
It announced this change by fiat, without rulemaking. It ignored not
only the text of Dodd-Frank, but also the fact that Congress never
contemplated that UDAAP would encompass disparate impact. Congress took
the UDAAP language from the FTC Act. For nearly a century, the FTC
never interpreted that language to include discrimination or disparate
impact. Finally, the CFPB willfully ignored the fact that Congress
overturned the CFPB's disparate impact guidance for auto lending in
2018.
It's extremely implausible to think that an agency that was
dependent on Congress for appropriations would engage in activity so
clearly contrary to Congress' intent.
In addition, the CFPB has publicly targeted businesses for taking
lawful actions, like its smear campaign against bank fees for overdraft
services. This campaign does nothing for consumers, it just causes
banks to shift fees to less transparent means of recouping the costs of
providing overdraft services.
This week, the CFPB doubled down on its use of name-and-shame
tactics with a new proposed rule. It would create a public database of
enforcement orders, judgments, and settlements, against nonbank
financial institutions, obtained by Federal and State regulators and
attorneys general, including under State consumer laws that are not
applicable nationwide. While maintaining such a list may well make
sense, making it public is different, and would create the false
impression that the orders of the most activist States are the
nationwide standard.
What's more, the proposal would require a senior official of
certain nonbanks to attest to the CFPB that they're complying with
these orders. This would effectively give the CFPB enforcement power
over other agencies' orders for violations of State and Federal laws
that the CFPB has no jurisdiction to enforce. There's no limiting
principle to stop the CFPB from extending this rule to all financial
institutions.
These examples are just some of the symptoms of an agency that's
out of control and knows Congress can't use the power of the purse to
rein in its overreach. That's why I'm introducing legislation--along
with Senator Hagerty--to place the CFPB on appropriations. The best way
to make the CFPB accountable to Congress is through appropriations.
Through its rulemaking, the CFPB can exercise legislative power.
What's ambiguous about the first line in Article I of the Constitution:
``All Legislative powers herein granted shall be vested in a Congress
of the United States''? At the very least, Congress should carry out
the responsibility that the Constitution assigns to us, and exercise
control over agencies like the CFPB that exercise legislative power.
But that's not all this legislation will do. It will also replace
the agency's single director with a five-member, bipartisan commission,
like the SEC and FDIC. This structure will ensure that the CFPB
considers a diversity of voices when it forms policy. And it's not a
new idea. Bipartisan legislation to convert the CFPB into a commission
has been repeatedly introduced.
These accountability measures will help make the agency more
responsible, balanced, and measured. And Congress will have to accept
some responsibility for what the CFPB does.
What's more, if Congress does not put the CFPB on appropriations,
the Supreme Court will likely force us to. The Court is expected to
consider and uphold the Fifth Circuit's decision that the CFPB's
funding structure is unconstitutional. If it does, I have no doubt
Congress will act swiftly to provide the CFPB with appropriate funding.
After all, Congress is experienced at the appropriations process.
But, by acting now, through legislation, Congress can ensure the
smoothest possible transition. This is in the best interest not only of
the CFPB and Congress, but also consumers and the economy. That's why I
call on all of my colleagues, Democrats and Republicans, to join me in
supporting this sensible legislation.
______
PREPARED STATEMENT OF ROHIT CHOPRA
Director, Consumer Financial Protection Bureau
December 15, 2022
Chairman Brown, Ranking Member Toomey, and distinguished Members of
the Committee, I am pleased to present the Consumer Financial
Protection Bureau's (CFPB) submission of the Semiannual Report to
Congress.
Our economy and our consumer finance markets are truly in
transition, out of a pandemic and further into the digital era. I will
offer some observations about the state of the economy today, as well
as what the CFPB is doing to prepare for the future, especially as we
confront the challenges of Big Tech in banking. I will also highlight a
number of opportunities for bipartisan reforms. \1\
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\1\ Statement Required by 12 U.S.C. 5492; The views expressed
herein are those of the Director and do not necessarily reflect the
views of the Board of Governors of the Federal Reserve System or the
President.
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The Current State of the Economy and Household Finance
The CFPB's market monitoring and supervision of financial
institutions provides one lens into the state of the economy. Consumer
demand has rebounded as our country transitions out of pandemic
conditions. While the labor market remains strong, household debt has
increased rapidly. The rise in household payment burdens from auto
loans and credit cards has been particularly pronounced, given rising
interest rates, the cost of vehicles, and the impact of inflation on
other goods and services in the economy.
As consumers continue to navigate the economic impacts and ripple
effects of the pandemic, their financial patterns have adapted and
responded to changing conditions--as have the companies that serve
them. For example, the CFPB has observed a notable increase in use of
Buy Now, Pay Later products over the past few years. As interest rates
on credit cards increase--and correspondingly, outstanding balances--a
low- or no-interest Buy Now, Pay Later product that spreads the cost of
goods over four payments can be particularly appealing. The CFPB's
recent study on Buy Now, Pay Later noted a significant increase in use
of these products to fund essential goods and services. The CFPB is
working to ensure that Buy Now, Pay Later lenders adhere to the same
protocols and protections as other similar financial products to avoid
regulatory arbitrage and to ensure a consistent level of consumer
protection.
Homeowners and home buyers are likewise adjusting to today's
economic environment, which is characterized by higher interest rates
and softening home prices. With interest rates above 6 percent for
fixed-rate mortgages and average monthly mortgage payments on the rise,
weekly mortgage applications for purchases are down 40 percent from the
same time last year. Adjustable-rate mortgages have increased from less
than 5 percent to nearly 10 percent of mortgages in just the last 3
years, suggesting that buyers seeking lower interest rates may be
increasingly looking for alternatives to fixed rate mortgages.
Unsurprisingly, refinancing volumes have declined substantially.
Given the importance of the mortgage market to both consumers and the
economy, we will continue to assess trends closely, identify risks that
require attention by regulators, and keep the public informed of their
options. Medical debt continues to be a significant pain point for many
Americans. Our analysis of consumer credit reports revealed that
approximately 43 million credit reports contained a medical debt
collection item. Given the complexities of medical billing in the
United States, there are serious questions about the accuracy of
medical debt credit reporting. The three major credit reporting
companies are voluntarily making changes that will lead to reductions
in the number of credit reports with medical debt items. We continue to
examine how medical debt burdens are impacting household balance
sheets.
Given the outlook for the global economy, we are also working
across Government to be prepared if the macroeconomic environment
deteriorates. We will be closely monitoring any impacts on U.S.
consumer finance markets and the effects on household debt and
household financial stability.
Promoting Competition and a Decentralized Market
In an open and competitive market, consumers can choose products
and services that meet their needs and shift away from providers that
treat them poorly. When new companies can challenge incumbents and when
consumers can easily switch in a decentralized market structure, we are
all better off. That's one of the reasons why Congress charged the CFPB
with ensuring that consumer finance markets are competitive.
In recent years, Big Tech companies and other digital giants have
leveraged their existing platforms to expand their reach into banking
and finance. While new entry is typically welcome news, Big Tech's
entry raises broader concerns about competition and user choice. The
CFPB has been closely studying these firms' expansion into consumer
finance markets, particularly with respect to payment platforms, like
Apple Pay, Google Pay, PayPal, and Venmo. We also continue to examine
the effects of large technology conglomerates entering payments and
financial services in other jurisdictions, like in China, where Alipay
and WeChat Pay have extraordinary reach.
Big Tech firms can tie their payment platforms to their social
media offerings or their mobile operating systems. Users may be
restricted in how they make contactless payments (like ``tapping'')
outside of the proprietary app affiliated with that operating system.
Since there are strong network effects from payment systems, other
payment apps have a strong incentive to leverage their scale to harvest
data for purposes other than moving money from one party to another.
We have issued orders to a number of these firms to determine what
data they are extracting from transactions and whether they can use
that data to preference their other business lines. We are also
particularly interested in how these payment platforms implement
existing consumer protections, as well as how they make decisions on
account approvals, freezes, and terminations.
In addition to identifying emerging risks to competition, the CFPB
is working to proactively create conditions for small firms and start-
ups to challenge incumbents. One way to prevent excessive
centralization is to accelerate the shift to open banking and open
finance. That is why it is a key priority for the CFPB to expand
personal financial data rights through a rulemaking under section 1033
of the Consumer Financial Protection Act. This long dormant authority,
once implemented, can give consumers more control over their personal
financial data.
In October, the CFPB launched the rulemaking process. The proposals
under consideration would require that financial firms provide
consumers access to their own financial data on deposit accounts,
credit cards, and other transaction accounts. Consumers would then be
able to provide permissions to this data safely and securely to other
financial firms. We are also exploring how to limit firms from sharing
or misusing this sensitive data.
I am encouraged by the positive reactions this rulemaking process
has elicited from across the consumer finance ecosystem, and I look
forward to continuing the rulemaking process over the coming months.
We are also focused on promoting competition and new entry in
refinance markets, including in mortgage, auto, and credit cards, and
we have made it a priority to identify ways to lower barriers to entry
and to foster innovation that addresses important market gaps.
Bipartisan Action Needed by Congress
Over the past year, the CFPB has had productive discussions with
members from both chambers and on both sides of the aisle. There are a
wide range of issues where I expect commonsense reforms can be advanced
on a bipartisan basis.
Protect the Neutrality of the Payments System
The transfer of money in commerce is at the core of a market-based
economy. Digital technology is driving greater ease for individuals and
small businesses to transfer funds in a fast and frictionless way.
Facebook's Libra proposal in 2019 was a wake-up call to regulators
around the world. While the proposal was largely scrapped, it was an
important reminder of the power and potential that tech giants hold,
and of the duties of financial regulators to carefully monitor how
large tech conglomerates and other platforms enter the payments system
and financial services.
Analysts estimate that payment apps from large tech firms are the
conduit for trillions of dollars in transactions. There is growing
concern that a small set of players, including some of the largest tech
companies, are gaining a greater foothold in the payments system.
The rise in dominance of a small group of payment platforms raises
questions about how firms can suppress, suspend, or discriminate
against certain participants over others. The CFPB has heard
considerable concern about payment apps kicking off users, or even
claiming the ability to reach into their accounts and fine users
without a clear reference to any legal infraction. For example, the
operator of a major payment network recently suggested that it could
impose fines on users for their online speech. Policymakers need to
determine whether it is appropriate for platforms to shut off a user's
account access without suspicion of fraud, money laundering, or other
illicit activity.
Public commenters also raised concerns that dominant payment
players will abuse their positions by substantially increasing fees on
small banks, merchants, and consumers.
Congress must ensure that payments systems are neutral and
nondiscriminatory, by eliminating the incentive for firms to use their
control over payments to favor their other interests. This could
require, for example, separations between payment utilities and
ancillary businesses. In the coming months, the CFPB will be sharing
more results from its study with this Committee and others in Congress.
Strengthen Financial Privacy Protections
More than 20 years ago, legislators began raising concerns about
the creation of behavioral profiles using our credit and debit card
transaction data. \2\ With the rise of e-commerce and tech platforms
that monetize user behavior through targeted advertising, these
concerns are even more acute. Making digital payments and transferring
funds online has become almost obligatory in our modern economy, and as
a result, subjecting oneself to digital surveillance has become
obligatory too.
---------------------------------------------------------------------------
\2\ See, for example, Freedom from Behavioral Profiling Act of
2000, S. 536, 107th Cong. (2001). https://www.congress.gov/bill/107th-
congress/senate-bill/536?s=1&r=6
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The CFPB has found that large tech firms are able to ingest
extremely detailed data about a user, including sensitive information.
Firms we have studied have laid the groundwork, through loose privacy
policies and expansive data retention practices, to use this data in
ways that challenge traditional notions of privacy and autonomy.
The Gramm-Leach-Bliley Act requires that consumers are provided
with a notice and a right to opt out of certain data collection and
sharing practices. I am concerned that this privacy notice is
ineffective. Privacy policies for financial services are often all-or-
nothing: consumers must choose to accept the company's terms wholesale
or decline to use the company's product. Given the importance of many
financial services to consumers' daily lives, this can create a false
choice between submitting to data harvesting or foregoing access to
critical banking services.
The financial services landscape has changed significantly in the
past two decades, and our approach to privacy must evolve as well.
While Congress is broadly looking at privacy protections across sectors
of the economy, I hope that financial privacy can be a top
consideration for this Committee. Specifically, I hope you can explore
meaningful limitations on the collection, use, and sharing of personal
financial data. The CFPB will be looking closely at ways to better
protect privacy in areas under our jurisdiction, including, for
example, the collection and distribution of personal data in credit
reporting and the use of data authorized by a consumer under the CFPB's
personal financial data rights rulemaking.
There are a number of other opportunities for bipartisan
legislative efforts, such as reforming the Appraisal Foundation,
expanding awards for whistleblowers, and protecting relationship
banking. The CFPB is eager to work with this Committee to craft
potential solutions on these and many other issues.
Thank you again for the opportunity to appear before you. I look
forward to responding to your questions.
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
FROM ROHIT CHOPRA
Q.1. Director Chopra, in the context of pending litigation
about the CFPB's structure and funding mechanisms, there has
been discussion about the value the CFPB has provided to
consumers. In addition to the value provided to consumers, the
CFPB has also provided value to the housing market through
vital safe harbors and other actions that provide regulatory
certainty. Is there anything the Bureau can share about the
value its actions, including safe harbors, regulations, and no-
action letters, have provided to the overall functioning of the
housing market?
A.1. I appreciate your support of the Consumer Financial
Protection Bureau (CFPB), and I share your view that a well-
functioning housing market is critical to our Nation's economy.
The CFPB plays an important role in ensuring the housing market
is fair, transparent, and resilient. For example, according to
a recent paper published in The Georgetown Law Journal, the
CFPB's ability-to-repay rule enhanced the mortgage market's
resilience to financial shocks by reducing consumer defaults
even in the event of a future housing bubble. \1\
---------------------------------------------------------------------------
\1\ https://www.law.georgetown.edu/georgetown-law-journal/wp-
content/uploads/sites/26/2020/03/Why-the-Ability-to-Repay-Rule-Is-
Vital-to-Financial-Stability.pdf
---------------------------------------------------------------------------
The CFPB has delivered value to the housing market in many
ways, and the agency's ongoing work in this space is vital to
sustaining a stable, functioning housing market. Some examples
include:
The CFPB provides implementation guidance and
compliance presumptions for lenders, appraisers, loan
originators, and others regarding the statutory
ability-to-repay, loan originator compensation, escrow,
and appraisals requirements contained in the Dodd-Frank
Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act). The CFPB's rulemaking in this area provides
presumptions, small entity exclusions, and
clarifications as to what constitutes compliance, which
would not have been available if the Dodd-Frank Act's
statutory provisions had gone into effect in the
absence of CFPB rulemaking. In response to comments
from the secondary mortgage market and others, the CFPB
has taken important action to preserve liquidity in the
secondary market and support ongoing consumer mortgage
lending.
Since implementation of the CFPB's rulemaking in
this area, mortgage originators and secondary market
participants have repeatedly cautioned that, without
CFPB's regulatory engagement, any reversion to the
Dodd-Frank Act's bare statutory provisions could result
in a dramatic reduction in available mortgage credit
because it would be very difficult for secondary market
participants to gauge their risk exposure to future
litigation by borrowers.
The CFPB's ongoing implementation of the Home
Mortgage Disclosure Act has substantially reduced
compliance challenges for mortgage lenders. For the
more than 30 years before the CFPB's involvement in
this area, mortgage lenders were required to make
publicly available their mortgage lending data in their
branch offices to the public, as well as to report
their data to the Federal Reserve Board. The CFPB
itself now makes the data publicly available, removing
a major compliance burden from lenders as well as
facilitating public access to this crucial data.
In implementing the Congressional directive to
combine the Truth in Lending Act (TILA) statutory
disclosure with the Real Estate Settlement Procedures
Act (RESPA) statutory disclosure, the CFPB provides
extensive and ongoing support of and guidance to the
housing market, including implementation guides that
identify disclosures associated with TILA civil
liability. These guides are directly responsive to
secondary market concerns regarding possible imputation
of TILA civil liability on RESPA provisions that lacked
private liability protections.
The CFPB provides extensive accommodations across
its mortgage rules to recognize the important role of
small lenders, particularly in rural areas. CFPB rules
provide flexibilities for smaller institutions in
balloon lending, periodic payment statements, mandatory
escrow requirements, process requirements for loss
mitigation applications, and expanded presumptions of
compliance with the ability-to-repay requirements.
I am committed to continuing the CFPB's vital, ongoing work
to protect consumers and support a well-functioning housing
market.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
FROM ROHIT CHOPRA
Q.1. In its current rulemaking for Dodd-Frank Wall Street
Reform and Consumer Protection Act (Pub. L. No. 111-203)
Section 1071, how does the Consumer Financial Protection Bureau
plan to address how vehicle finance entities and auto dealers
will be able to cooperate?
A.1. The rulemaking is ongoing and we are still in the process
of evaluating the comments and weighing the evidence. We will
be closely considering the unique facets of the auto financing
market before finalizing the rule.
Q.2. Auto dealers are not regulated by the Consumer Financial
Protection Bureau, but by the Federal Reserve. However, in
indirect auto financing, dealers often originate sales and
complete transactions. How is the Consumer Financial Protection
Bureau working with the Federal Reserve to ensure covered
vehicle finance entities are able to comply with data
collection compliance?
A.2. You are correct that the Consumer Financial Protection
Bureau (CFPB) may not exercise any rulemaking, supervisory,
enforcement, or any other authority, including any authority to
order assessments, over a motor vehicle dealer that is
predominantly engaged in the sale and servicing of motor
vehicles, the leasing and servicing of motor vehicles, or both.
The rulemaking is ongoing and we are still in the process of
evaluating the comments and weighing the evidence. We have been
working with the Federal Reserve and we will be closely
considering the unique facets of the auto financing market
before finalizing the rule.
Q.3. What is the Consumer Financial Protection Bureau doing to
protect student borrowers from companies looking to unfairly or
deceptively profit off borrower confusion around recently
announced Federal student debt cancellation?
A.3. The CFPB is engaging in a multi-agency effort to protect
borrowers from student loan scammers, including by maintaining
and amplifying resources helping borrowers to recognize red
flags, and by sharing information with partner law enforcement
agencies. The CFPB is also monitoring the marketing practices
of private student lenders that offer refinance products.
Q.4. How has the Consumer Financial Protection Bureau worked
with the United States Department of Education to hold Federal
student loan servicers accountable to providing timely,
accurate information and better service borrowers, particularly
in light of recently announced Federal student debt
cancellation?
A.4. The CFPB conducts regular supervision of many Federal
student loan servicers' compliance with Federal consumer
financial law, including whether servicers make deceptive
statements to borrowers or commit unfair or abusive acts or
practices that inhibit borrowers' access to Federal student
loan benefits. As detailed in the recent Supervisory Highlights
Student Loan Servicing Special Edition, the CFPB has cited
Federal student loan servicers both for providing inaccurate
information and outsized delays in processing. \1\ While the
CFPB exercises its authorities independently, including its
supervisory and enforcement tools, the CFPB consults regularly
with the Department of Education (ED) to ensure thorough
understanding of ED's programs and identify potential consumer
risks. In deploying its supervision and enforcement resources,
the CFPB has and will continue prioritizing reviewing servicer
interactions with borrowers regarding the availability of
student debt cancellation for both accuracy and timeliness.
---------------------------------------------------------------------------
\1\ Sept. 2022 available at https://files.consumerfinance.gov/f/
documents/cfpb-student-loan-servicing-supervisory-highlights-special-
edition-report-2022-09.pdf.
Q.5. What can I expect to see from the Consumer Financial
Protection Bureau in the coming months to ensure that low-
income student borrowers and other at-risk groups receive the
appropriate, and more importantly, correct information from
---------------------------------------------------------------------------
their Federal loan servicers?
A.5. The CFPB supervises many student loan servicers for
compliance with Federal consumer financial law, and has on
numerous occasions found unlawful acts or practices that
impeded student loan borrowers' access to relief programs and
required servicers to engage in remediation. \2\ The CFPB has
also taken enforcement action on similar issues. \3\ The
existence and nature of ongoing supervisory and enforcement
action is confidential. However, the CFPB resolves its
enforcement actions through public consent orders and regularly
shares key examination findings in Supervisory Highlights.
---------------------------------------------------------------------------
\2\ In addition to the September 2022 Supervisory Highlights,
prior supervisory findings were published in 2014 available at https://
files.consumerfinance.gov/f/201410-cfpb-supervisory-highlights-fall-
2014.pdf at 17; 2015 available at https://files.consumerfinance.gov/f/
201510-cfpb-supervisory-highlights.pdf at 23-24; 2017 available at
https://files.consumerfinance.gov/f/documents/Supervisory-Highlights-
Issue-13-Final-10.31.16.pdf at 16-17; and 2021 available at https://
files.consumerfinance.gov/f/documents/cfpb-supervisory-highlights-
issue-24-2021-06.pdf at 34-36.
\3\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-
nations-largest-student-loan-company-navient-failing-borrowers-every-
stage-repayment/; https://www.consumerfinance
.gov/about-us/newsroom/cfpb-sanctions-edfinancial-for-lying-about-
student-loan-cancellation/
---------------------------------------------------------------------------
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
FROM ROHIT CHOPRA
Q.1. The CFPB's Sec. 1033 proposal indicates that the Bureau
want all banks to have certain technical infrastructure--known
as APIs (application programming interface)--in place for
consumers to access and share their data with financial
companies. However, as of today, thousands of small community
banks and credit unions have not built this infrastructure.
Will the CFPB act to ensure that community bank customers
do not lose access to their data if the bank is unable to build
an API or data access portal, or if it takes several years to
put one in place?
A.1. I appreciate this question, given the growing concerns
about how core services providers interact with local financial
institutions.
The Consumer Financial Protection Bureau (CFPB) is
considering whether exemptions from the proposals under
consideration would be appropriate for any data providers that
would otherwise be covered data providers. However, in
determining if exemptions would be appropriate, the CFPB is
interested in whether there are ways to design the proposals
under consideration to reduce impact on covered data providers.
For example, with respect to the third-party access portal
proposal under consideration, we are seeking feedback on
whether certain covered data providers should not be subject to
the third-party access portal requirement on the rule's
compliance date and instead should be given additional time to
build a compliant third-party access portal. The CFPB seeks to
ensure that the proposals under consideration appropriately
balance benefits provided to consumers with the burden imposed
on covered data providers, including smaller covered data
providers, in a manner that is consistent with the statutory
purposes of the Dodd-Frank Wall Street Reform and Consumer
Protection Act.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR MORAN
FROM ROHIT CHOPRA
Q.1. 1033 Rulemaking--In October, the CFPB released its Small
Business Regulatory Enforcement Fairness Act outline of
proposals under consideration for its rulemaking on personal
financial data rights, as Section 1033 of the Dodd-Frank Act
requires it to do. The outline applies the requirement to make
data available to both consumers and other third parties that
the consumer authorizes.
I'm concerned about the elevated threat this poses to
consumers of sensitive data being compromised. Can you tell me
where Section 1033 says that covered entities must make data
available to third parties?
A.1. Privacy and security are a top concern for me,
particularly given the threats that our country faces from
State and non-State actors.
Section 1033(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Consumer Financial Protection Act)
generally requires data providers to make information available
to a ``consumer,'' which includes an agent, trustee, or
representative acting on behalf of an individual consumer. See
12 U.S.C. 5481(4). The Small Business Regulatory Enforcement
Fairness Act (SBREFA) Outline of Proposals released by the
Consumer Financial Protection Bureau (CFPB) in October explains
that the agency is considering how to ensure that a third party
acting for the consumer with respect to data access treats
consumer data appropriately.
Q.2. Large data aggregators hold a significant portion of
American consumers' financial data. However, the CFPB's outline
does not address the Bureau's ability to examine and supervise
data aggregators to ensure consumers' information is kept
securely.
A November report from the Treasury also pointed out that
these entities ``are not subject to supervision of the CFPB's
information security and general data practices.''
How can consumers be assured their personal data is safe if
the Bureau does not have authority to supervise these third
parties for compliance?
A.2. The United States will not make a successful transition to
open banking if consumers cannot be assured that their personal
data is safe and secure. Congress assigned certain data
protection requirements, such as the Safeguards framework, to
other Federal banking agencies and the Federal Trade
Commission. We are actively working on ways to address your
concern.
Q.3. It is critical that policymakers, industry, and
stakeholders understand the ecosystem, then delineate the roles
and responsibilities of each party. Better defined, yet
flexible, rules would improve the relationships between the
parties and outcomes for consumers.
As technology changes, it is critical that there is a
common, flexible approach that promotes transparent, informed
consent, adequate disclosure, sufficient control, and robust
security.
The major focus should be on how data aggregation can
improve financial wellness for consumers (track alternative
data to improve credit scores, manage finances, etc.).
Regulatory clarity may ease adoption, but not consumer
utilization, which can be achieved by balancing thoughtful
guidance/regs with market forces and consumer needs and wants.
Privacy and data control requirements are a further
complicating factor. A State patchwork would only increase
impediments.
Lessons learned internationally--with a registration
process in place in Europe with PSD2, financial institutions
have mostly seen it as a compliance issue, thus it has not been
widely adopted. Rather than embracing opportunities, financial
institutions have done the minimum required to meet
obligations. Open Banking regulation via PSD2 lacks any
technical framework, therefore, there is fragmentation across
markets.
Does the Bureau agree that the six tenets/principles above
should guide the upcoming 1033 rulemaking process?
A.3. Generally speaking, yes. Of course, the details of this
will require significant analysis and stakeholder engagement,
which we are currently undertaking.
Q.4. Bureau's Account Level Card Database--The CFPB, for over a
decade, has been collecting vast amounts of consumer data on a
regular basis from banks that issue credit cards. Monthly,
these banks provide detailed information on each credit card
customer's account.
How does the Bureau use the consumer information it gathers
via the account level data collection regime?
A.4. Since 2016, the CFPB has not collected collection loan-
level credit card data on an ongoing basis. From 2012 through
2016, the CFPB collected account-level data maintained by nine
credit card issuers. The CFPB also obtained account-level data
from the OCC. The CFPB never received data containing any
direct personal identifiers nor captured data about individual
purchases. \1\
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\1\ https://files.consumerfinance.gov/f/documents/bcfp-sources-
uses-of-data.pdf
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The Board of Governors of the Federal Reserve System
(Federal Reserve Board) collects data through Reporting Form FR
``Y-14M'' from bank holding companies that have total
consolidated assets exceeding $50 billion. \2\ These ``Y-14''
data are used to support the Federal Reserve Board's
supervisory stress test models. The CFPB is one of several
Government agencies with whom the Federal Reserve Board shares
Y-14 data.
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\2\ See Bd. of Governors. of the Fed. Reserve Sys., Report Forms
FR Y-14M, https://www.federalreserve.gov/apps/reportforms/
reportdetail.aspx?sOoYJ+5BzDYnbIw+
U9pka3sMtCMopzoV (for more information on the Y-14M collection).
---------------------------------------------------------------------------
The CFPB has used credit card loan-level data for market
monitoring, including the preparation of a biennial report to
Congress on the credit card market and to inform decisions
about priorities for supervisory examinations. It has also used
the data for a number of working papers prepared by CFPB
researchers, as well as for research that has informed
rulemakings.
Q.5. Why does the Bureau need detailed account-level
information, as opposed to using sampling data? (For example,
the Food and Drug Administration and the Department of
Agriculture protect drug and food safety without examining
every pill or pound of beef).
A.5. The CFPB uses a 40 percent sample of de-identified
account-level Y-14 data obtained from the Federal Reserve
Board.
Q.6. What would be the impact on this program if data
submissions were made periodically, rather than monthly?
A.6. The frequency of submissions in the Y-14 data collection
is determined by the Federal Reserve Board to support the
Federal Reserve Board's supervisory stress test models. The
monthly data collection improves the CFPB's ability to perform
its risk-monitoring function by providing more timely data.
Q.7. What CFPB rulemaking or enforcement activities have been
based exclusively or principally on data from the account-level
credit card database?
A.7. The account-level database has been a data source for CFPB
activities including market monitoring, research, and
rulemaking. For example, a study conducted by CFPB economists
in connection with the Debt Collection Practices rule used
account-level data to analyze the impact of State data
collection laws on access to credit, thereby helping to assess
the impact of the CFPB's own debt collection rules.
Q.8. Why is this aggregate data used rather than information
obtained through the examination process, information requests,
or compulsory process requests?
A.8. The Y-14 data are already provided to the Federal Reserve
Board. The CFPB uses these data, rather than developing its own
duplicative collection processes, for efficiency purposes.
Using Y-14 data reduces costs to industry and to the CFPB. On
occasion, the CFPB also uses information requests to supplement
the Y-14 data that it receives from the Federal Reserve Board.
Q.9. How does the Bureau protect the security and privacy of
the consumer information in this database, for example, when it
has provided access to the database to outside academic
researchers in the U.S. and abroad?
A.9. Privacy and security are top of mind for us. The CFPB
protects this account-level information by secure access
control procedures maintained in accordance with the CFPB's
data policies. These procedures apply regardless of whether the
user is a CFPB employee or an academic researcher working at
the CFPB pursuant to an Intergovernmental Personnel Act (IPA)
agreement. The CFPB does not have any IPA agreement with any
researcher outside the United States.
Q.10. UDAAP--The incorporation of discrimination into the
unfairness doctrine suggests that the Bureau is attempting to
broaden Federal regulatory prohibitions on discrimination. The
examination manual does not have the same status of a
regulation, but may be considered supervisory guidance. Under
the CFPB's statement on supervisory guidance, it does not have
the force and effect of law, and the Bureau does not take
enforcement action based on supervisory guidance. As a result,
the Bureau is seemingly attempting to broaden Federal
regulatory prohibitions on discrimination with respect to
consumer financial products and services beyond those already
in place for lending/real estate secured. How can institutions
be expected to build a framework to demonstrate absence of
discrimination in products/services unrelated to lending when
they do not ask required information as they do for lending
products?
A.10. I appreciate your concern about this issue, and I share
your commitment to ensuring fair enforcement of the law. It is
important to underscore that the CFPB is not attempting to
enforce a prohibition that does not already exist in Federal
law.
The Consumer Financial Protection Act's (CFPA) prohibition
on unfair acts and practices applies equally to all consumer
harm that meets the statutory prongs--there is no exception in
law for discriminatory conduct. For many years, companies have
used a variety of methods to ensure that they comply with
Federal and State prohibitions on unfair acts or practices. One
of the most important ways of doing this is to assess consumer
complaints and feedback, as well as insights from employees and
managers. There is also an array of qualitative and
quantitative data that firms use to track their own business
performance, and these data may also help them spot systemic
problems. The CFPB is not seeking to impose new obligations on
supervised entities. We expect that most, if not all,
supervised entities have long had systems in place designed to
aid in compliance with the prohibitions set forth by Congress
in the CFPA.
Q.11. Artificial Intelligence/Machine Learning--Some observers
have expressed concerns and raised questions about risks of
Artificial Intelligence and Machine Learning technologies
resulting in unpredictable behavior or reinforcing biases.
However, AI/ML technologies, correctly applied, can be used to
reduce bias. This occurs when AI/ML is responsibly deployed by
regulated financial services companies and implemented with
strong controls/testing, rigorous risk management and
meaningful objectives:
The potential risks associated with using AI are not unique
to AI, but inherent to an effective model risk management
framework. Banks already account for these risks and are
examined and supervised in a manner that ensure banks are
addressing these risks.
Heavily regulated and supervised banks adhere to legal and
compliance measures, including ECOA and Model Risk Management
(SR 11-7), and all financial services providers should have a
similar oversight structure in place. Doing so could help
preserve and advance the significant benefits that these
technologies can provide to consumers, such as greater access
to safe and responsible credit, better pricing, and reduction
of service costs.
The current lack of consistency in the way financial
services providers define terms related to AI/ML reduces
transparency for consumers and regulators. One potential
solution is SR 11-7, which serves as a foundational governing
standard for financial services companies, and can serve as a
blueprint for legislative proposals.
Do you agree, that the shared goals of consistent consumer
protections and outcomes, reduced risks and errors, and
improved fraud prevention and AML/BSA reporting can be
supported by public policies that promote flexibility and
innovation?
A.11. In general, yes. Historically, many financial regulations
have been complicated and prescriptive, rather than outcome-
focused. At the CFPB, we are attempting to shift away from this
approach and toward simplicity and bright lines.
Q.12. That providing clarity on the appropriate levels of
transparency, explainability, and accountability in lending
decisions can address potential negative consumer impacts such
as model bias, discrimination, and inconsistent explanations?
A.12. In general, yes. The CFPB has endeavored to clearly
communicate how existing law applies to emerging technologies.
For example, we have issued guidance that helps firms ensure
they are staying on the right side of the law.
Q.13. That public policies which incentivize transparency and
mitigate bias through consistent rules and usage risk standards
can carefully balance filling regulatory gaps without creating
impediments to the ability to meet consumers expectations and
needs?
A.13. In general, yes.
Q.14. Remittance Fees--We may not always see eye-to-eye on what
you classify as a ``junk fee'', but one hidden fee that we may
agree on is the marked-up exchange rates for international
remittance transactions. I'm particularly concerned by how
these fees impact our men and women in uniform serving abroad.
I am not in favor of setting rates, but I do believe in
disclosing rates.
What has the CFPB done on this type of price transparency
to help our troops around the world better understand the
exchange rates they are paying when digitally transferring
money to pay for housing and durable goods?
A.14. I share your concern about the impacts of fees and lack
of transparency on military families, especially those serving
abroad.
The CFPB wants a remittance market that offers fast, fair,
competitive, and transparent transactions for all consumers,
including servicemembers. To facilitate price transparency for
servicemembers, as well as other consumers that send remittance
transfers, the Remittance Rule generally requires all
remittance transfer providers to disclose the exchange rate and
fees that apply to a transaction and provides remittance
transfer providers with model disclosures that they could use.
The model disclosures were tested with consumers to help ensure
and facilitate consumer understanding of the key components of
a remittance transfer, including, as applicable, the exchange
rate that applies to a transfer.
The CFPB has also taken actions to ensure remittance
providers are compliant with the law. Most recently, the CFPB
took enforcement actions against Servicio UniTeller \3\ in
December 2022 and Choice Money Transfer \4\ in October 2022,
both of which allegedly violated Regulation E. Moreover, in
April 2022, the CFPB brought a joint enforcement action with
the Attorney General of New York against one of the largest
remittance providers, known as MoneyGram. \5\ MoneyGram is a
repeat offender, however, having been previously sanctioned by
the Federal Trade Commission in 2009 and 2018. The CFPB has
also taken similar enforcement action against Trans-Fast
Remittance, LLC, \6\ in August 2020, and Envios de Valores La
Nacional \7\ in December 2020.
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\3\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-
servicio-uniteller-to-refund-fees-and-pay-penalty-for-failing-to-
follow-remittance-rules/
\4\ https://www.consumerfinance.gov/enforcement/actions/choice-
money-transfer/
\5\ https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-ny-
attorney-general-sue-repeat-offender-moneygram-for-leaving-families-
high-and-dry/
\6\ https://www.consumerfinance.gov/enforcement/actions/trans-
fast-remittance-llc/
\7\ https://www.consumerfinance.gov/enforcement/actions/envios-de-
valores-la-nacional-corp/
Q.15. Has the CFPB proactively worked with the Department of
---------------------------------------------------------------------------
Defense on this issue? If not, why not?
A.15. Yes. The CFPB regularly meets with representatives from
the Department of Defense (DoD) to discuss all issues involving
consumer protection policy, outreach, and educational
initiatives for servicemembers (including remittance
transfers). CFPB's Office of Servicemember Affairs (OSA)
routinely coordinates with DoD's Office of Financial Readiness
on consumer financial protection issues. OSA and the Office of
Enforcement also convene quarterly meetings with the Service
Chiefs of the Offices of the Judge Advocates General, the DOJ's
Office of Civil Rights, and Consumer Protection Branch, legal
assistance attorneys at military installations, and professors
from each of the three military JAG schools.
The CFPB works closely on policy with the DoD for
compliance and transparency. As part of its rulemaking to amend
the Remittance Rule in 2020, CFPB staff met with DoD staff in
light of public comments received from industry. We were able
to ensure that the CFPB's Remittance Rule did not adversely
affect servicemembers given the DoD's requirement that on-base
credit unions offer remittances at an exchange rate ``no more
favorable'' than the base's Military Banking Facility.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR DAINES
FROM ROHIT CHOPRA
Q.1. During your testimony before the Senate Banking Committee
on December 15, 2022, you stated in response to my question
about the March 2022 amendment to the CFPB's examination manual
that ``This is not disparate impact. Senator Toomey has claimed
this many times. And it's just not true.''
The facts do not support this claim. In the press release
announcing the update, the CFPB stated that ``consumers can be
harmed by discrimination of whether it is intentional'' and
that CFPB examiners now consider ``discriminatory outcomes.''
What is your definition of disparate impact?
A.1. I appreciate this question. I use the legal definition of
``disparate impact.'' Disparate impact is a longstanding legal
doctrine under various civil rights laws recognized by Federal
courts and used by regulators, agencies, and others for nearly
five decades. It is used to prove illegal discrimination under
numerous laws, including the Fair Housing Act, Title VII of the
Civil Rights Act of 1964, and the Equal Credit Opportunity Act,
particularly when a policy purports to be neutral regarding the
characteristics protected by those laws.
Disparate impact is a wholly separate legal doctrine from
unfair acts or practices under the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Consumer Financial
Protection Act), which are assessed based on the prongs of the
statutory unfairness standard.
Q.2. Will the CFPB examine for discriminatory outcomes
regardless of intention under UDAAP? If so, how does that
differ from disparate-impact liability in your view?
A.2. Consistent with the Consumer Financial Protection Act's
unfair, deceptive, or abusive acts and practices (UDAAP)
prohibition, Consumer Financial Protection Bureau (CFPB)
examiners will continue to look for any practices that cause or
risk causing substantial injury to consumers. As noted above,
disparate impact is a wholly separate legal doctrine; the CFPB
will rely on the statutory standards set out by Congress in the
Consumer Financial Protection Act, 12 U.S.C. 5531, when
assessing whether practices are unfair to consumers.
Q.3. Director Chopra, as you referenced in your Semiannual
report your agency has been working for quite some time now to
issue a rule requiring financial institutions to allow
consumers to access their financial data and if they wish,
authorize it to be shared with others. A consumer's ability to
access and share their data with whomever they wish seems to be
a fundamental right and would foster competition within the
financial services industry.
What progress have you made towards issuing this rule and
when can we expect it to be issued?
A.3. I completely agree with your sentiment and appreciate the
need to complete this long overdue rulemaking.
In October 2022, the CFPB outlined options to strengthen
consumers' access to, and control over, their financial data as
a first step before issuing a proposed data rights rule that
would implement section 1033 of the Consumer Financial
Protection Act. The document released is an outline of
proposals and alternatives under consideration for the CFPB's
data rights rulemaking. The rulemaking process will include
panel convenings to seek feedback from small entities on the
proposals under consideration. Later, the panel will prepare a
report on the input received from the small entities, and the
CFPB will consider the input as it develops a proposed rule.
The CFPB will then publish a Notice of Proposed Rulemaking
(NPRM), solicit and consider comments on the NPRM, and issue a
final rule by 2024.
Q.4. Director Chopra, your efforts to issue a rule under Dodd-
Frank 1033 will allow consumers to access and share their
financial data. This could have a tremendous impact on
consumers' ability to fully understand their total financial
health, including what assets they have, what debt they're
responsible for, and their sources of income and expenses.
Small businesses in the U.S. have a similar need that has been
intensified by current economic circumstances.
Should small business owners, especially sole
proprietorships, have similar access to their financial
information?
A.4. Small businesses, especially sole proprietorships, also
face similar needs as households when it comes to navigating
the financial marketplace. The CFPB believes that the
competition benefits of data rights for small businesses are
likely significant. The CFPB's Proposals Under Consideration
would implement section 1033(a) of the Consumer Financial
Protection Act. Section 1033(a) applies to information
concerning ``the consumer financial product or service that the
consumer obtained from [ ] a covered person.'' The Consumer
Financial Protection Act defines ``consumer'' as ``an
individual, or an agent, trustee, or representative acting on
behalf of an individual.''
Q.5. What can the agency do to help small business owners gain
access to their financial information?
A.5. The pandemic was a stark reminder about the need to do
more to support small business owners. The CFPB has multiple
workstreams to increase transparency with regard to financial
information. Consistent with its authority under section 1071
of the Consumer Financial Protection Act, the CFPB is
undergoing a rulemaking that would require financial
institutions to collect and report to the CFPB data on
applications for credit for small businesses, including those
that are owned by women or minorities. The CFPB has also
initiated the Small Business Regulatory Enforcement Fairness
Act (SBREFA) process to consider proposals under section
1033(a) of the Consumer Financial Protection Act. We note that
section 1033(a) requires that information be made available
``to a consumer'' concerning ``the consumer financial product
or service that the consumer obtained from [ . . . ] a covered
person.''
Q.6. In October, your agency announced its Small Business
Advisory Review Panel for Required Rulemaking on Personal
Financial Data Rights. As part of that effort, your agency
shared an outline of proposals regarding what a future Dodd-
Frank 1033 rule may look like. The proposal recommended that
the rule require financial institutions to only allow consumers
to access and share their bank account and credit card data.
In November, the Federal Reserve Bank of New York's Center
for Microeconomic Data issued its Quarterly Report on Household
Debt and Credit. The Report showed household debt increasing by
$351 billion (2.2 percent) to $16.51 trillion. Mortgage
balances rose by $282 billion and auto loan balances increased
by $22 billion in the third quarter. In total, nonhousing
balances grew by $66 billion.
It seems that consumer access to debt information would be
very important to helping consumers manage or reduce their debt
and help foster greater competition within these industries.
If the CFPB's 1033 rule initially focuses on only savings
and credit card data, how will the agency look to expand the
types of financial information that consumers can access and
share in the future?
A.6. The CFPB intends to evaluate how to proceed with regard to
other data providers in the future. This coverage enables use
cases such as transaction underwriting, payment services,
comparison shopping for financial products and services that
best fit the consumer's deposit and transaction patterns,
overdraft and other fee avoidance, and personal financial
management. Specifically, these use cases rely on data from
consumers' asset and credit card accounts, and this coverage
would ensure that consumers are able to provide access to data
from these accounts to third parties that provide these
products and services. This coverage also addresses some of the
most significant areas of potential consumer risk, given the
significant potential for abuse of consumers' payment data in
particular. At the same time, from the perspective of
feasibility of industry implementation, this coverage would
leverage, to the greatest extent presently possible, existing
industry infrastructure for consumer-authorized financial data
sharing.
In addition, the Outline of Proposals specifically asks
stakeholders for their feedback on whether the CFPB should
consider alternative approaches to product coverage in the
initial rule. The CFPB is accepting comments from the public on
that Outline of Proposals and will carefully consider all
feedback received.
Additional Material Supplied for the Record
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