    [House Hearing, 118 Congress]
    [From the U.S. Government Publishing Office]

                      THE SEMI-ANNUAL REPORT OF THE BUREAU
                        OF CONSUMER FINANCIAL PROTECTION

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

                                    HEARING

                                   before the

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION
                                   __________

                                 JUNE 13, 2024
                                   __________

                               Serial No. 118-96

           Printed for the use of the Committee on Financial Services

                   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                www.govinfo.gov
                                    ______

                       U.S. GOVERNMENT PUBLISHING OFFICE

    56-523 PDF                 WASHINGTON : 2026

                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                   PATRICK McHENRY, North Carolina, Chairman

    FRENCH HILL, Arkansas, Vice          MAXINE WATERS, California, Ranking
      Chairman                             Member
    FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice
    PETE SESSIONS, Texas                   Ranking Member
    BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
    BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
    BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
    ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
    ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
    ROGER WILLIAMS, Texas                AL GREEN, Texas
    TOM EMMER, Minnesota                 EMANUEL CLEAVER, Missouri
    BARRY LOUDERMILK, Georgia            JAMES A. HIMES, Connecticut
    ALEXANDER X. MOONEY, West Virginia   BILL FOSTER, Illinois
    WARREN DAVIDSON, Ohio                JOYCE BEATTY, Ohio
    JOHN W. ROSE, Tennessee              JUAN VARGAS, California
    BRYAN STEIL, Wisconsin               JOSH GOTTHEIMER, New Jersey
    WILLIAM R. TIMMONS, IV, South        VICENTE GONZALEZ, Texas
      Carolina                           SEAN CASTEN, Illinois
    RALPH NORMAN, South Carolina         AYANNA PRESSLEY, Massachusetts
    DANIEL MEUSER, Pennsylvania          STEVEN HORSFORD, Nevada
    SCOTT FITZGERALD, Wisconsin          RASHIDA TLAIB, Michigan
    ANDREW R. GARBARINO, New York        RITCHIE TORRES, New York
    YOUNG KIM, California                NIKEMA WILLIAMS, Georgia
    BYRON DONALDS, Florida               WILEY NICKEL, North Carolina
    MIKE FLOOD, Nebraska                 BRITTANY PETTERSEN, Colorado
    MICHAEL LAWLER, New York
    ZACHARY NUNN, Iowa
    MONICA DE LA CRUZ, Texas
    ERIN HOUCHIN, Indiana
    ANDREW OGLES, Tennessee
                        Matthew Hoffmann, Staff Director

                             C  O  N  T  E  N  T  S

                                   ----------

                            Thursday, June 13, 2024

                                                                       Page

                               OPENING STATEMENTS

    Hon. Patrick T. McHenry, Chairman of the Committee on Financial
      Services, a U.S. Representative from North Carolina............     1
    Hon. Maxine Waters, Ranking Member of the Committee on Financial
      Services, a U.S. Representative from California................     2

                                   STATEMENTS

    Hon. Andy Barr, Chairman of the Subcommittee on Financial
      Institutions and Monetary Policy, a U.S. Representative from
      Kentucky.......................................................     4
    Hon. Bill Foster, Ranking Member of the Subcommittee on Financial
      Institutions and Monetary Policy, a U.S. Representative from
      Illinois.......................................................     4

                                   WITNESSES

    Hon. Rohit Chopra, Director, Consumer Financial Protection Bureau     5
        Prepared Statement...........................................     7

                                    APPENDIX

                  ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

    Hon. Andy Barr:
        Navy Federal Credit Union....................................    74
    Hon. French Hill:
        Consumer Financial Protection Bureau (CFPB)..................    75
    Hon. French Hill and Hon. Bill Huizenga:
        Can the Fed Fund the CFPB....................................    78
    Hon. Maxine Waters:
        Americans for Financial Reform...............................    85

                     RESPONSES TO QUESTIONS FOR THE RECORD

    Written responses to questions for the record from Hon. Rohit
      Chopra.........................................................
        Hon. Blaine Luetkemeyer......................................    91
        Hon. Gregory Meeks...........................................    98
        Hon. William Timmons.........................................   100
        Hon. Monica De La Cruz.......................................   102
        Hon. Scott Fizgerald.........................................   103
        Hon. John Rose...............................................   108
        Hon. Nydia Velazquez.........................................   111
        Hon. Ann Wagner..............................................   113
        Hon. Mike Flood..............................................   115
        Hon. Andrew Ogles............................................   116
        Hon. Wiley Nickel............................................   121
        Hon. French Hill.............................................   122
        Hon. Joyce Beatty............................................   124
        Hon. Brad Sherman............................................   127
        Hon. Daniel Meuser...........................................   130
        Hon. Zachary Nunn............................................   132
        Hon. Young Kim...............................................   135

                      THE SEMI-ANNUAL REPORT OF THE BUREAU
                        OF CONSUMER FINANCIAL PROTECTION

                                  ----------

                            Thursday, June 13, 2024

                         U.S. House of Representatives,
                               Committee on Financial Services,
                                                        Washington, DC.

        The committee met, pursuant to notice, at 10:45 a.m., in
    room 2128, Rayburn House Office Building, Hon. Patrick T.
    McHenry [chairman of the committee] presiding.
        Present: Representatives McHenry, Lucas, Sessions, Posey,
    Luetkemeyer, Huizenga, Wagner, Barr, Williams of Texas, Hill,
    Loudermilk, Davidson, Rose, Steil, Timmons, Meuser, Fitzgerald,
    Garbarino, Kim, Donalds, Flood, Lawler, Nunn, De La Cruz,
    Ogles, Waters, Velazquez, Sherman, Meeks, Scott, Lynch, Green,
    Cleaver, Himes, Foster, Beatty, Vargas, Gottheimer, Gonzalez,
    Casten, Pressley, Torres, Horsford, Tlaib, Garcia, and
    Pettersen.
        Chairman McHenry. The committee will come to order.
        Without objection, the chair is authorized to declare
    recess of the committee at any time.
        This hearing is titled ``The Semi-Annual Report of the
    Bureau of Consumer Financial Protection.''
        Without objection, all members will have 5 legislative days
    within which to submit extraneous material to the chair for
    inclusion in the record.
        I will now recognize myself for 4 minutes to give an
    opening statement.

     OPENING STATEMENT OF HON. PATRICK T. MCHENRY, CHAIRMAN OF THE
      COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
                             NORTH CAROLINA

        Last month, the Supreme Court upheld the funding structure
    of the Consumer Financial Protection Bureau created by Congress
    in the Dodd-Frank Act. My Democratic colleagues quickly called
    it a victory. Mr. Chopra, you say the Bureau will now be
    ``firing on all cylinders.'' Unfortunately, for my friends
    across the aisle, I am not sure if they fully understand what
    the Court's ruling means, and this may not be the one that they
    think it is.
        The opinion stated Congress has the power to determine or
    create novel funding mechanisms for Federal agencies, referring
    to Congress' power of the purse. I think that is a good thing.
    This also solidifies that Congress has the power to change a
    funding stream. Republicans have a legislative solution to make
    the Bureau more transparent and accountable to the American
    people. This is something we should all be in favor of, so I
    encourage my Democratic colleagues to hold off on their victory
    lap. Instead, they should work with Republicans, with the
    Consumer Financial Protection Bureau (CFPB) on the
    appropriation cycle and enact commonsense reforms to rein in
    the Agency. I can guarantee you, if the political shoe is on
    the other foot in the future, you will wish you had worked with
    us now. I think civility here would be a welcome and good
    thing.
        We are already seeing the harm a radicalized CFPB can
    inflict. Director Chopra, under your leadership, the so-called
    independent Agency has become, in my view, an arm of President
    Biden's political operation. Data facts, economics, and sound
    analysis take a backseat to politically favorable talking
    points. Even the Washington Post has called the numbers
    ``fuzzy'' surrounding how much consumers would actually save in
    so-called junk fees, if they were cut. You are taking your eye
    off the ball on consumer financial protection and are instead
    chasing a shiny political object in an election year. We see
    how this ends. It is never a good outcome for our financial
    system or the American people.
        While shirking your responsibility to consumer protection,
    you have also painted entire swaths of the financial services
    sector as bad actors. I want to remind you, Director Chopra,
    these are not all nameless, faceless institutions. They are
    made up of hardworking employees, many of whom are neighbors
    and members of the communities we represent. The Biden
    Administration's inflammatory rhetoric does nothing to root out
    actual fraudsters and bad actors, but it does sow distrust and
    fear among the very people who rely on the services provided by
    these financial institutions.
        Speaking of bad actors, yesterday, the committee held a
    hearing to better understand the toxic workplace culture at the
    Federal Deposit Insurance Corporation, the failed leadership of
    Chairman Gruenberg. Director Chopra, you are a member of the
    Federal Deposit Insurance Corporation (FDIC) Board of
    Directors. You also played a role in forcing out Mr.
    Gruenberg's predecessor, who, by all accounts was working to
    address the abusive behavior within the FDIC and trying to
    address and help employees. It is also alarming that you have
    not directly commented on Chairman Gruenberg's mistreatment of
    his staff and the failure to address the misconduct at all
    levels of the Agency. It is safe to assume that if this were a
    private sector financial institution, you would have quickly
    called for the removal of its leadership. Instead, we see
    partisanship on full display. Once again, I urge you to stop
    putting politics ahead of people and work with and help improve
    the financial services marketplace.
        I will now recognize the ranking member of the full
    committee, the gentlewoman from California, for 4 minutes for
    an opening statement.

    OPENING STATEMENT OF HON. MAXINE WATERS, RANKING MEMBER OF THE
      COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
                               CALIFORNIA

        Ms. Waters. Thank you very much, Mr. Chairman. First, let
    me say to Director Rohit Chopra, thank you for your patience
    this morning. I know that you have been waiting for about 45
    minutes. I am very pleased that you took the time to not only
    recognize many of the members that you work with, but I also
    want to thank Mr. McHenry. Despite the fact that he waited, he
    decided to go ahead and get the meeting started, and I am very
    pleased about that, and I hope that the other members will show
    up. They are being held up by Mr. Trump, who decided to come
    over and hold a meeting, and that is what is happening this
    morning.
        So I am pleased to welcome you back, Mr. Chopra. After 14
    years of attacks from congressional Republicans and the
    industry, last month the Supreme Court sided with consumers and
    affirmed what I and committee Democrats have been saying all
    along: the CFPB is constitutional and here to stay. Now, never
    in a million years did I think I would be thanking Justice
    Clarence Thomas or applauding his ultra-conservative court, but
    they made the right decision to put consumers first by
    upholding the constitutionality of the CFPB and rejecting the
    baseless attacks led by greedy payday lenders, extreme Make
    America Great Again (MAGA) Republicans, and a convicted felon
    and former President. Even a conservative Supreme Court was
    able to see right through the privilege challenges to the
    CFPB's funding structure.
        While my colleagues on the other side of the aisle still
    choose to remain willfully ignorant about this, the
    Constitution is clear that Congress can fund the executive
    grant, including the CFPB, the Federal Reserve, and other
    agencies, however it likes and has done so since the Nation's
    founding. Now, I am pleased that the Agency can continue its
    work as the only Federal watchdog for our Nation's consumers in
    the financial marketplace.
        Under the leadership of Director Chopra, the CFPB is
    combating excessive and illegal junk fees, fighting against
    housing discrimination and redlining, and holding mega banks
    accountable for breaking the law and harming consumers. In
    addition, this week, the CFPB released a proposal that would
    ban medical debt from credit reports. If finalized, this rule
    will relieve medical debt for more than 15 million Americans
    with medical bills and ensure that health issues no longer mean
    families have to endure financial hardship due to lower credit
    scores. I applaud the CFPB for this proposal and for its work
    to cut access to credit card late fees and reduce the typical
    fee from $32 to $8. Additionally, the CFPB has returned an
    astounding $20.7 billion to 205 million consumers harmed by
    financial institutions since we created Dodd-Frank. Given the
    successful track record, it is no surprise that 82 percent of
    Americans, including 77 percent of Republicans, support the
    Agency.
        However, despite all of this great work and the recent
    Supreme Court ruling, Republicans have made clear that their
    effort to undermine and eliminate the Agency will continue.
    There is a long-term strategy by radical extremists to not just
    challenge and undermine the CFPB, but also critical Federal
    regulators like the Federal Reserve, which are also funded
    outside of the annual appropriations, as well as the
    independent funding of Social Security and Medicare. The very
    first financial services resolution Republicans brought to the
    House floor demonizes Social Security, Medicare, and it has
    been so-called socialist programs that are destroying America.
    The assiduous Project 2025 similarly calls for eliminating CFPB
    and ending the Federal Reserve (Fed), Social Security, and
    Medicare as we know it. Rest assured, committed Democrats will
    never ever stop fighting to block these harmful and misguidance
    attacks, and when it comes to consumers, we will continue to
    craft legislation to build on the historic efforts of the CFPB.
        I thank you very much for the time, and I yield back.
        Chairman McHenry. Well, thank you. I would note for the
    record that the announcement of this morning schedule had
    almost every Democratic member of the committee here before 10
    a.m., which I would mark is a record for this Congress, and so
    there is a legislative benefit to apparently the former
    President's schedule. Unfortunately I could not take advantage
    of it because, well, I was the only Republican, so anyway.
        Ms. Waters. Thank you for recognizing that we were here.
        [Laughter.]
        Chairman McHenry. If only this would be a regular
    occurrence with us being on time.
        I will now recognize the chairman of the Subcommittee on
    Financial Institutions and Monetary Policy for 1 minute, Mr.
    Barr.

      STAEMENT OF HON. ANDY BARR, CHAIRMAN OF THE SUBCOMMITTEE ON
          FINANCIAL INSTITUTIONS AND MONETARY POLICY, A U.S.
                      REPRESENTATIVE FROM KENTUCKY

        Mr. Barr. Thank you, Mr. Chairman. Director Chopra, good to
    see you again. You continue to inject uncertainty into markets,
    take partisan actions that harm consumers, and show disdain to
    Congress and industry. You unfairly mislead and propagandize to
    vilify businesses and their employees through charged rhetoric
    accompanied by enforcement threats without adjudication. You
    act unilaterally and arbitrarily, often outside any statutory
    mandate routinely, without engaging in notice-and-comment
    rulemaking in violation of the Administrative Procedures Act,
    and engage in extortionary civil investigative demands devoid
    of any due process where you act as judge, jury, and
    executioner.
        CFPB's analytical work under your tenure has lost
    credibility and increasingly amounts to junk economics. The
    CFPB is opaque under your tenure. Recently, you even refused to
    provide a witness for a hearing in the subcommittee that I
    chaired. Your current goal is to supply talking points for the
    President and his reelection campaign, all while denying
    Americans access to the credit they desperately need at a time
    of inflation.
        Chairman McHenry. The gentleman's time has expired. I will
    now recognize the ranking member of the Financial Institutions
    Subcommittee, Mr. Foster, for 1 minute.

         STATEMENT OF HON. BILL FOSTER, RANKING MEMBER OF THE
     SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND MONETARY POLICY, A
                   U.S. REPRESENTATIVE FROM ILLINOIS

        Mr. Foster. Thank you, Mr. Chairman and Director Chopra,
    and I have to say I concur with the chairman that Congress
    does, in fact, work far better when Democrats show up and
    Republicans take a walk.
        Since this committee has helped create the CFPB in 2010,
    the Bureau has effectively fulfilled its mission to protect
    consumers from unfair, deceptive, and abusive practices in
    financial markets, and despite being supported by 82 percent of
    Americans, the Bureau has come under continual attack from
    those wishing to undermine its mission. Just last month, the
    Supreme Court rightly sided with the CFPB against a misguided
    attack on its funding structure. In fact, the hyper partisan,
    poison-filled appropriations process that we are seeing in
    Congress this week is a perfect example of why the CFPB is
    appropriately shielded from the appropriations process, and
    this decision by the Supreme Court prevents harmful disruptions
    to the Bureau's work and preserves countless protections that
    it provides for everyday Americans.
        The Bureau's work is felt across the country, including in
    my State of Illinois. as technology progresses, time and again,
    the CFPB has responded to new and emerging challenges stemming
    from new scams, new financial products, and rapid changes to
    the financial system. So thank you again for joining us, and I
    yield back.
        Chairman McHenry. Today we welcome the testimony of Hon.
    Rohit Chopra, director of the Consumer Financial Protection
    Bureau. Director Chopra, thank you for being here. You will
    have 5 minutes to give an oral presentation.
        Without objection, your written statement will be made part
    of the record.
        You are now recognized for 5 minutes.

     STATEMENT OF HON. ROHIT CHOPRA, DIRECTOR, CONSUMER FINANCIAL
                           PROTECTION BUREAU

        Mr. Chopra. Thank you, Chairman McHenry, Ranking Member
    Waters, and members of the committee, thank you for holding
    this hearing.
        Since its creation, the CFPB has returned $20.7 billion to
    consumers through our law enforcement and supervision, and we
    have created unquantifiable returns for the over 205 million
    Americans and honest businesses harmed by the illegal practices
    that we have stopped. We are currently on track to save people
    $20 billion in junk fees every year, and we also expect to
    process over 2 million complaints from Americans this year.
    Since my last report, we have advanced a number of key
    initiatives on credit cards, on medical debt, artificial
    intelligence, open banking, and more. My written testimony and
    the CFPB's semiannual report details much of this work.
        Today, though, I want to highlight the pressing need for
    the Financial Services Committee and the CFPB to address the
    protection of personal data and financial privacy in an
    increasingly digital and algorithmic marketplace. The U.S. has
    to lead when it comes to a competitive and innovative market of
    the future, and at the same time this cannot be at the expense
    of unchecked surveillance like we have seen in China and other
    markets. I see this as a critical issue with high stakes for
    our economy, our national security, and our liberty.
        For over 50 years, the House Financial Services Committee
    has played a major role to protect data in our society. The
    Fair Credit Reporting Act is one of America's only data
    protection laws that covers all background reports assembled
    about Americans for use and sale by third parties. The Fair
    Credit Reporting Act (FCRA) includes meaningful restrictions to
    prevent abuse and misuse of data. Section 1033 of the Dodd-
    Frank Act provides consumers with the right to access and
    control their personal data, and the CFPB takes very seriously
    our mandate when it comes to these laws on privacy and data
    protection. We are progressing toward finalizing open banking
    rules to develop data-sharing standards that are secure and
    have privacy protections when people transfer their personal
    financial data to competing companies.
        We finalized a key part of the framework last week, which
    will set the stage for finalizing the rest of the rule this
    fall. We are also moving forward to propose a rule under the
    Fair Credit Reporting Act to restrict uses of certain sensitive
    data by so-called data brokers, who are assembling dossiers
    about each of us without our consent or permission. We are
    pursuing this as part of a broader government effort, a
    bipartisan effort to protect our national security and our
    servicemembers from countries of concern that might seek to
    purchase and exploit sensitive data on Americans. We see how
    this is not just for fraud, but this is also to undermine our
    country.
        While the CFPB is taking important steps on protecting
    data, it is critical that House Financial Services acts, too.
    In my discussions with members on both sides of the aisle here,
    there is clear interest in doing more to protect privacy,
    ranging from the intrusive communications related to trigger
    leads when applying for mortgages or addressing concerns about
    the privacy of our sensitive payment transaction data. Big Tech
    giants are increasingly entering financial services and
    harvesting personal data, and since my last appearance, there
    has been public reports that large financial firms, ranging
    from PayPal to JPMorgan Chase, are developing plans to fuel
    more targeting and advertising using their data. These plans to
    potentially monetize sensitive financial transaction data are a
    reminder that the U.S. is slowly lurching toward more financial
    surveillance and even financial censorship.
        We are eager to work with this committee and all of you to
    do more to protect against abuse and misuse of data, including
    by enshrining more protections into law. We also believe there
    are more opportunities to advance legislation to accelerate
    open and decentralized banking in our country that also further
    protects people's most sensitive data. So I do think there is
    so much more we can do together to tackle this problem. I am
    really encouraged by all of the efforts that we have been doing
    together, and I would like to continue to work on that with
    you. Thank you. I look forward to your questions.

        [Prepared statement of Mr. Chopra follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman McHenry. Well, thank you, Director Chopra. I will
    now recognize myself for 5 minutes for questions.
        I want to begin with data privacy. This is something that
    you spent time on as director of the Bureau. It is something
    that we in Congress have spent some time on, the last few
    Congresses, on trying to update our data privacy standards for
    financial services, so let us start there. When we discussed
    our data privacy bill at the beginning of this Congress and
    passed it out of committee, we focused on Gramm-Leach-Bliley.
    Speak to the portfolio of data privacy laws that you enforce
    and how you do that.
        Mr. Chopra. Yes. So I would think about the range of
    privacy laws that are not just financial in nature. The Fair
    Credit Reporting Act is not just about the credit reports we
    think about. It is also about all the other data that is
    collected about us and sold. You also put into law Section
    1033. That is about how consumers have control over their data
    and how they can permission it and protect it. There are also
    key data security standards that the laws that you oversee have
    important roles to play.
        So, Mr. Chairman, the CFPB is very, very eager to make sure
    we are enforcing this properly and that we are developing the
    rules that are fit for the times of artificial intelligence and
    more intrusive data collection.
        Chairman McHenry. Okay. So you spoke specifically in your
    opener about bad actors internationally harvesting Americans'
    financial data through unregulated or loosely regulated means.
    Explain.
        Mr. Chopra. Well, when this committee 50 years ago was
    involved in putting into place protections, they were worried
    about these companies collecting data and sometimes rumors
    about us for sale, so the answer was the Fair Credit Reporting
    Act, but we see there are new types of data brokers that may
    not see themselves as having to comply with that. I think we
    all need to do work together to make sure that they know they
    have to respect those data protection.
        Chairman McHenry. There are a lot of controversial things
    that the Bureau does. It is uncontroversial that you are the
    repository of data, financial data protection, and there is no
    controversy around your enforcement of existing laws. So let us
    drill down on FCRA, Gramm-Leach-Bliley, and 1033. Gramm-Leach-
    Bliley standard from the 1990s, it was much more about the
    financial use of data among affiliates within a corporate
    structure. We have a bill to update those data privacy
    standards modeled in large part out of California, and we have
    had a set of questions in exchange about secondary use of that
    data, but how would you in a measured way update the Gramm-
    Leach-Bliley data standards?
        Mr. Chopra. I think we should accept that notice that we
    get all the time is not really effective when it comes to
    having meaningful control. I would urge you all to think about
    some commonsense permissible purposes or restrictions that
    really draw the line of how that data can be in some way shared
    or reused or monetized. In some ways, it is similar to what was
    put into place in the Fair Credit Reporting Act as well.
        Chairman McHenry. Okay. You mentioned trigger leads. Why do
    you mention trigger leads as it relates to data protection?
        Mr. Chopra. Well, it is a privacy issue. I think that when
    you apply for a mortgage loan, sometimes you then get inundated
    with calls sometimes from sketchy players. I do not think most
    people think that when they apply for something there is going
    to be a deluge that everybody knows about it, and mortgage
    lenders feel that their customers say to them did you tell
    everyone. This is a privacy issue, too, in addition to one
    about fairness.
        Chairman McHenry. Okay. Now, 1033. I have a concern that if
    your regs are put in place, your proposed regs, that this
    really entrenches incumbents and the value of incumbents with
    financial data. How do you address that?
        Mr. Chopra. I think what we want to do is make sure that
    you cannot have a bait-and-switch. You cannot say I am offering
    you an auto loan, really to harvest it and sell for other
    purpose. So what we are trying to do, Mr. Chairman, is find out
    with respect to secondary uses, product optimizations, how do
    we get that line right so that it does not really entrench
    anyone, but still respects people's privacy. The bait-and-
    switches that we see, we should have no tolerance.
        Chairman McHenry. Okay. Do you have a timeline for this
    rule?
        Mr. Chopra. We are going to finalize it this fall. My goal
    is October.
        Chairman McHenry. Okay. With that, thank you. I know there
    are other specific questions members have, but thank you for
    addressing data privacy in particular. I will now recognize the
    ranking member, the gentlelady from California, Ms. Waters.
        Ms. Waters. Thank you very much, Mr. Chairman. I would like
    to, again, thank Director Chopra for the fantastic job that you
    are doing and the leadership that you are providing, and the
    way the consumers now have a real voice with your leadership. I
    want to talk about one more issue that I think is so important
    to all of the people of this country, and that is what you are
    moving to do on medical debt. I understand that you have moved
    to get started with a rule on medical debt. Will you explain to
    us what you are doing?
        Mr. Chopra. Yes. So under the Fair Credit Reporting Act,
    Congress put into place a prohibition when it comes to medical
    information, but there has been a tweak in the rule from many
    years ago that has really allowed, in many cases, unverified
    medical bills to be permeating people's credit reports. What we
    have seen, Congresswoman Waters, is that the accuracy issues
    are so serious on those medical bills. We have a situation
    where people are facing a total surprise that something is on
    their credit report, they cannot rapidly fix it, and it really
    can jeopardize their ability to get that loan or to pass some
    background check. So we have looked at this issue for years.
    There is not even much predictive power of these medical bills.
    We have not proposed getting rid of medical credit cards or
    other medical loans, just these bills that are often stuck in
    an insurance company doom loop. We are going to be looking for
    feedback on this, but I think this will be a positive step in
    direct line with what Congress wanted of prohibiting this
    medical information on credit reports.
        Ms. Waters. Let me just go back to another concern that I
    have, and this is about late fees and junk fee. Well, I can
    tell you how concerned I am about it. Why do you not just tell
    us exactly what you are doing about junk fees?
        Mr. Chopra. Well, there is an all-of-government effort to
    combat this creep of fees that has really permeated throughout
    the economy. This is not something that is really a negotiated
    price. It is often not upfront. So we have taken a series of
    steps to make sure that existing congressional prohibitions,
    like in credit cards and in truth in lending, are being adhered
    to. At the end of the day, we think markets work best when
    people can see the prices upfront, compare it, and people
    offering the best service and price can win out. The more we
    shift this upfront, the better. I know there has been
    legislation passed by the House when it comes to things like
    hotels and tickets. We do need to do more to make our markets
    work free of these junk fees.
        Ms. Waters. Thank you very much. You have made it a
    priority also to hold large financial institutions accountable
    for their repeated violations of the law. In a speech, you
    said, ``Corporate recidivism has become normalized and
    calculated as the cost of doing business,'' and I cannot agree
    with you more. I appreciate the approach you decided to take to
    rein in repeated misbehavior by nonbank firms that callously
    violate the law and harm consumers. Can you, again, further
    help us out by discussing the rule you issued to implement a
    public registry for nonbank repeated offenders and how it will
    help CFPB rein in bad practices in the marketplace?
        Mr. Chopra. Well, I think it is a problem that when a small
    business or small company gets in trouble, they face being
    totally wiped out, but for the same exact conduct, a very large
    player really can just pay a fine and move on. There has to be
    some equal justice. When you have the same misconduct, there
    should be a similar sanction. You cannot have a situation where
    small businesses just get the hammer and everyone else is sort
    of getting a light touch. We have put into place a rule that
    will allow law enforcement to coordinate and stop repeat
    offenses before they go on. We have seen scammers set up shop
    in one State, get caught, move to another State. I think this
    is a needed effort to make sure we do end this practice of
    constant rinse/repeat offenses.
        Ms. Waters. Thank you so much. Of course we have seen banks
    like Wells Fargo repeatedly break the law, and then with
    regional bank failures last year, we saw how repeated
    supervisory warnings were ignored by Silicon Valley Bank, and
    more and more and more. Thank you for your work.
        Chairman McHenry. I will now recognize the gentleman from
    Kentucky, Mr. Barr, for 5 minutes.
        Mr. Barr. Director, I am looking at a survey right now.
    Seven out of 10 consumers rank good fraud protection as their
    top consideration when choosing a financial service provider,
    and it stands to reason because in 2023, total global fraud
    costs reached almost a half a trillion dollars, including
    payments, check, and credit card fraud. This is clearly a major
    risk to our financial system institutions and American
    consumers. Unfortunately, your regulatory efforts will actually
    decrease financial institutions' ability to provide meaningful
    fraud protection by making it more costly to provide these
    services. For example, your flawed credit card late fee
    overdraft and the credit card reporting rules or guidance on
    remittance transfers, impeding a financial institution's
    ability to charge consumers for a service they provide, is your
    attempt to make financial institutions public utilities and not
    free market businesses.
        Do you recognize, Director Chopra, that fraud detection and
    prevention is very, very important, number one. Number two, and
    I know you care about consumers, do you recognize that the
    ``junk fee agenda'' will actually hurt consumers by reducing
    fraud prevention?
        Mr. Chopra. So let me be very clear. What you are saying is
    not accurate in my view, respectfully. We have done so much to
    make sure that we can do more to detect and deter fraud. I
    think fraud, when it comes to identity theft, when it comes to
    the use of generative AI, is going to be an increasing issue,
    and even old school check fraud is increasing.
        Mr. Barr. I agree. Director, reclaiming my time. I agree
    that AI and all of these other technological innovations can
    help with fraud prevention, but do you actually talk to the
    financial service providers that you oversee about the junk fee
    agenda and how that is going to reduce their ability to invest
    in fraud protection? Do you actually talk to them about this,
    the regulated entities that you oversee?
        Mr. Chopra. Very, very frequently.
        Mr. Barr. Well, they tell us that you do not listen because
    what they are telling us is that your junk fee agenda is going
    to limit their ability to prevent fraud, and I want you to take
    a look at that. I think you need to take a look at that because
    if you do not, it is all junk economics.
        Mr. Chopra. Well, we are doing a lot more. I am sorry.
        Mr. Barr. Second question. Let me move on because I want to
    talk about data that is supposed to undergird your
    administrative decision making. Under your leadership, the data
    collection efforts and cost-benefit analysis have simply lost
    credibility. The Bureau has played fast and loose with the data
    you rely on, ultimately leading to harmful rulemakings that
    rely on junk economics. For example, the Bureau's so-called
    analysis of the deterrence effects of late fees is largely
    unjustified speculation that favors political results you seek.
    The overdraft rule ignores market trends and innovation and
    instead cites data that is more than decades old.
        In the credit card late fee rule, your calculation of the
    impact to annual percentage rates changed significantly between
    the release of the proposed and final rules, relying on a mere
    assumption from a previous academic paper rather than any
    credible quantitative analysis. The mortgage closing costs,
    request for information (RFI), cites only two data points.
    Shockingly, for the credit header provision of the FCRA
    rulemaking outline, you are not even appealing to data at all.
    So Mr. Chopra, with so many examples of misuse or complete
    avoidance of data and increasing use of unjustified conclusions
    from what can only be loosely called analysis, how can the
    public or Congress trust the rulemakings or the administrative
    decisions that you promulgate?
        Mr. Chopra. Well, some of it is really a balance. We try
    and make sure that we are using existing data that is already
    there because we often get feedback, including from you, about
    doing too many collections. So we will rely and look at old
    studies as well as new studies to see changes in the market. I
    would say empiricism is a foundational part of the CFPB's work
    because that is a lens in how we can make the best possible
    decisions. I agree, sometimes we will not always have the
    newest and freshest in fast-moving markets, but it is also a
    balance about making sure we are not engaging in too much
    burden as well.
        Mr. Barr. You have to do a lot better job because you just
    do not have credibility. The data is not there to support any
    of what you are doing.
        Mr. Chopra. I would respectfully disagree.
        Mr. Barr. I know you disagree with that. I disagree with
    you about that. The Bureau should want rigorous cost-benefit
    analysis to defend the Bureau's decisions. This is in the
    interest of the director's office. It is in the interest of the
    Bureau to have defensible data, and you do not have it. Final
    question, Director Chopra. Who decides if a civil investigative
    demand appeal is approved or denied?
        Mr. Chopra. With Criminal Investigation Divisions (CIDs),
    sometimes they go to a district court. Sometimes they can go to
    appeal to the director. Oftentimes, it is negotiated before it
    goes through that appeal process.
        Mr. Barr. Yes. So my time has expired, but this is the
    problem. You are the judge, jury, and executioner, and that is
    why people do not see the process as due process.
        Chairman McHenry. The gentleman is time has expired.
        Mr. Barr. I yield.
        Chairman McHenry. The gentlewoman from New York, Ms.
    Velazquez, now recognized for 5 minutes.
        Ms. Velazquez. Thank you, Mr. Chairman. Director Chopra,
    welcome, and thank you for being here.
        Earlier this week, the World Bank upgraded its outlook for
    the global economy, estimating that it will expand by 2.6
    percent this year on the strength of sustained growth in the
    United States: not Russia, in the United States. The Agency
    expects the U.S. economy to expand by 2.5 percent in 2024. All
    this is happening thanks to the economic policies President
    Biden and agencies like the CFPB are taking. Director Chopra, I
    am grateful for your work of putting over $20 billion back in
    the pockets of working families. As the ranking member of the
    Small Business Committee, I am particularly grateful for
    consistently communicating the importance of spurring
    competition and making opportunities available to small
    businesses and new entrants.
        I also appreciate that you have committed the CFPB to
    ensuring we have the data to make sure all Americans have the
    opportunity to access credit. For too long, we have
    marginalized huge numbers of our country because we lack clear
    data on lending. These policies will keep the U.S. a country
    where all small businesses can succeed. When you are creating
    rules, do you ever tailor them with smaller institutions in
    mind?
        Mr. Chopra. Yes, and under my leadership, we have
    routinely, in many ways, proposed exemptions for them.
        Ms. Velazquez. Is it not true that over the last couple of
    years, you actually exempted smaller institutions from some of
    your requirements, like the Section 1071 rule, to make sure
    they had the flexibility to serve their communities and grow?
        Mr. Chopra. Yes. We exempted thousands of institutions in
    some of our rules.
        Ms. Velazquez. Have you not also provided smaller
    institutions with more time to comply with a new rule than
    their larger counterparts?
        Mr. Chopra. Yes, substantially more time.
        Ms. Velazquez. Is it not also a fact that you have
    intentionally focused the Bureau's enforcement activities on
    larger repeat offenders and avoided going after smaller, less-
    resourced businesses?
        Mr. Chopra. Yes. I inherited an enforcement docket that I
    think was too heavily focused on small players, and we have
    instead shifted to players engaged in nationwide market-wide
    harm.
        Ms. Velazquez. Thank you. From what I have seen of your
    work, the CFPB has incorporated the concerns of small
    businesses and their unique needs throughout its work,
    specifically when it comes to the final rule on credit card
    late fees. I understand that it only applies to the top 30 or
    35 issuers. Is that not correct?
        Mr. Chopra. That is correct.
        Ms. Velazquez. And that financial institutions under $10
    billion in assets are completely exempt, which includes small
    banks and virtually, all credit unions. Is that not also
    correct?
        Mr. Chopra. That is right, and we see small banks and
    credit unions wanting to provide them tools to gain more share
    as they are offering lower rates on average and they are not
    building business models on back-end fees.
        Ms. Velazquez. I thank you for your thoughtful work on
    behalf of consumers and smaller institutions. Director Chopra,
    you and I have talked extensively about the need to enhance
    Federal disclosure requirements for small business financing.
    Increasingly, we have seen States becoming more active on
    commercial financial disclosures. Seven States have already
    passed laws requiring disclosures for small business borrowers,
    and seven additional States are debating similar measures.
    However, not all disclosures are created equal with some
    enacted laws requiring Annual Percentage Rate (APR) disclosures
    and others do not. What is the practical impact of this
    patchwork of requirements, both on commercial lenders and small
    business borrowers?
        Mr. Chopra. One of the things that is important for the
    committee to recognize is many small businesses actually use
    both consumer credit, especially the smallest businesses, in
    addition to small business loans. I think comparability and
    standardization of how one can compare apples to apples is key,
    and I do encourage you to continue pushing for clear small
    business loan disclosures.
        Ms. Velazquez. Thank you. Mr. Chairman, I yield back.
        Chairman McHenry. The gentlelady yields back. I will now
    recognize the gentleman from Missouri, Mr. Luetkemeyer, for 5
    minutes.
        Mr. Luetkemeyer. Thank you, Mr. Chairman. Good morning, Mr.
    Chopra. You made a lot of comments a minute ago about data
    protection, and I think it is one of the most serious issues we
    have facing us today. My comment would be, if you are really
    serious about data protection, I hope that you work with us
    with regards to us being able to rein in beneficial ownership
    and the rulemaking that goes with it. Originally, it was only
    four data points. Now it is 52 data points that we are looking
    at. That really endangers a lot of information on our citizens
    and businesses unnecessarily. This is where you can help us. If
    we can rein this in and get it back to where the rule
    originally was, we would sure appreciate your help on that.
        Mr. Chopra. Some financial institutions and others have
    raised this with me. It is part of a Financial Crimes
    Enforcement Network (FinCEN) rulemaking, and I am actually
    happy to talk about that with you.
        Mr. Luetkemeyer. I look forward to it. One of the things
    that we talk about here is junk fees. That word really riles me
    up because it is not a legally enforceable term. It is
    something you guys have made up, but one of the things that is
    included in junk fees, in your definition anyway, is late fees.
    I have here a Cato Institute letter from Nicholas Anthony, 101
    late fees charged by the government. Have you looked into any
    government late fees at all?
        Mr. Chopra. Yes. Actually, I think there is a need to do a
    wholesale review of some of the fees that are being charged,
    even by government. There has been ongoing discussions about
    how to make sure that they are in line with what Congress
    wanted, that they are sensible, that we have a good policy
    around that, so I would really support looking at a lot of
    those fees.
        Mr. Luetkemeyer. Mr. Chairman, I would like to introduce
    for the record, without objection, the letter.
        Chairman McHenry. Without objection.

        [The information referred to was not submitted prior to
    printing.]

        Mr. Luetkemeyer. Thank you, also title insurance. Director
    Chopra, Congress explicitly omitted the business of insurance
    from CFPB statutory authority under Dodd-Frank. In fact, the
    business of insurance was explicitly excluded from the
    jurisdiction of CFPB because it is effectively regulated at
    State level. You have confirmed under oath and on the record
    before this committee that CFPB has no authority to regulate
    the business of insurance. Do you stand by that?
        Mr. Chopra. Correct. The business of insurance is in the
    Federal Trade Commission (FTC) Act, the Consumer Financial
    Protection Act (CFPA). It is in the McCarran-Ferguson Act. It
    describes a certain set of activities related to it.
        Mr. Luetkemeyer. So why are you asking for information with
    regards to title insurance fees and trying to get in that
    business?
        Mr. Chopra. Well, just so you know, we do regulate aspects
    of insurance. Certainly, the Real Estate Settlement Procedures
    Act, the CFPB, I think, for years has taken enforcement actions
    related to title. We have important roles when it comes to
    mortgage insurance. We also have a role in homeowner's
    insurance. So I think the business of insurance really relates
    to some capital and liquidity issues, but do know I am very
    aware about the restrictions we have, and we are trying to be
    very mindful about where we do have explicit authority.
        Mr. Luetkemeyer. Well, it would appear to me that there is
    a severe encroachment there on the insurance folks when you are
    looking at this, at title insurance. I do not see any reason
    for the CFPB to involve itself.
        Mr. Chopra. Well, the Real Estate Settlement Procedures Act
    specifically goes through how things are disclosed, including
    title insurance. It also talks about kickbacks.
        Mr. Luetkemeyer. If it is correctly disclosed, where is
    your authority?
        Mr. Chopra. Well, I am happy to share with you, we have a
    range of authority as it relates to insurance in the mortgage
    market. Again, as it relates to the business insurance that the
    State regulators oversee, we respect their role completely.
        Mr. Luetkemeyer. Okay, very good. You talked a minute ago
    about credit cards for medical payments, and I wrote a letter
    to you some time ago. In fact, it was almost a year ago,
    actually, back in October 2023, and I got a letter back that
    did not answer my questions with regards to that. I am very
    concerned. It is a good way for some people to pay their bills.
    It is a regulated product, and yet you are trying to restrict
    that, from what I understand, and the questions in my letter
    were not answered. So let us try and go through them very
    quickly. Please indicate where the term ``medical payment
    product'' is used anywhere in statutory law.
        Mr. Chopra. Let me just clarify. The rule we have proposed
    as it relates to credit reporting and medical debt does not
    include medical credit cards. So medical credit cards are a
    fairly more advanced innovation of recent years where there is
    point-of-sale loans or credit card brokering at the healthcare
    facility. We have been studying this market because it has been
    growing quite quickly, and it has been a source of some
    significant consumer complaints. We have not taken any sort of
    specific action on it, but I think we do want to understand
    when a patient is----
        Mr. Luetkemeyer. What is your authority to do that?
        Mr. Chopra. Under the Truth in Lending Act.
        Mr. Luetkemeyer. Okay. To regulate medical product, medical
    payment product?
        Mr. Chopra. No. So Congress in 1968 set the parameters for
    extensions of credit in the Truth in Lending Act and did assign
    authority to enforce that to the CFPB. So even if you are
    getting a third-party medical loan, regardless of where it is
    offered----
        Mr. Luetkemeyer. Thank you. My time has expired. I yield
    back, Mr. Chairman.
        Chairman McHenry. The gentleman from California, Mr.
    Sherman, is recognized for 5 minutes.
        Mr. Sherman. Mr. Chopra, thank you for all your Agency
    does. They do not give me enough time to go through the whole
    list of everything you have accomplished. I do hope that you
    are successful with limiting late fees on credit cards, and I
    know that is held up in the Court, but this is a chance to save
    $10 billion annually for American consumers. Of course, with
    today's computers, the cost that the bank incurs dealing with
    the issue, I mean, I remember in the 60s, the 70s, people, a
    human being would have to look at your late fee and then decide
    what to do. Human beings are not involved in determining what
    to do if my credit card payment comes in late.
        Second, I want to thank you for your prompt response and
    look forward to working with you on the issue of getting your
    payment in by a particular hour because we in California are
    told your bill is due June 30. So if at 2:30 p.m. on June 30,
    you try to pay, you get a late fee. In fact, today, especially
    with automated systems, people think if it is due June 30th,
    they can watch the 11:00 news and still get their payment in on
    time, and then instead, they get a late fee.
        I want to pick up on what the ranking member of the Small
    Business Committee pointed out. How important it is that you
    craft your regulations for small and community-based financial
    institutions, and I do want to say you are quoted as calling
    title insurance a junk fee, and you are shaking your head. You
    would not call that a junk fee, neither would I. Now, Senator
    Kennedy, with whom I have worked with well on a few things, has
    asserted that the CFPB is not following the law because this
    year, most recent year, the Federal Reserve has revenue but
    does not have earnings, and I think the senator may have it all
    wrong. It is true that due to higher interest rates, a smaller
    Fed portfolio, the Fed has not had extra money to transfer to
    the U.S. Treasury in a particular year, but Congress certainly
    did not expect that your operation would shut down or
    repopulate based on whether the Fed is making money in a
    particular year. That is why we use the word ``earnings,'' but
    Senator Kennedy thinks that we use the word ``net earnings.''
        No, net earnings is found elsewhere in the Federal Reserve
    Act, meaning that anyone looking at that act knows that there
    is a difference between net earnings, which is net profits and
    earnings, which is revenue. Of course, the senator seems to
    lose track of the fact that the Fed has made a lot of money in
    prior years, and there is nothing in the bill that says that
    your budget has to come from earnings in a particular year.
        I do want to focus on manufactured identities. You hosted
    an academic research meeting on auto lending research in the
    first half of 2023. Manufactured identities cost the auto
    lending industry almost $2 billion. That is up substantially.
    Will you consider studying different ways to prevent the fraud
    from manufacturer-synthetic identities?
        Mr. Chopra. Yes. Industry and the regulators need to be
    thinking with Congress about future ways of doing identity
    verification. I think our way of doing it now is expensive, and
    it also does not deter fraud.
        Mr. Sherman. I will also point out that our colleague, Mr.
    Foster, has the concept of digital identity for all Americans.
    That makes an awful lot of sense. Credit header data is used to
    combat fraud and to comply with the Know Your Customer
    requirements. People on this committee know how important those
    requirements are to our society and to me personally, but if we
    called a credit header data report a ``consumer report,'' that
    would interfere with the process. Can we provide that credit
    header data is not a consumer report when used to comply with
    the Know Your Customer?
        Mr. Chopra. Well, compared to others, it is sort of a
    short-form consumer report, but I take the point. It is
    important for financial institutions to be able to use certain
    information to combat fraud, and we are going to make sure we
    can keep that going.
        Mr. Sherman. Thank you.
        Chairman McHenry. The gentleman time has expired. The
    gentleman from Michigan, Mr. Huizenga, is now recognized for 5
    minutes.
        Mr. Huizenga. Thank you, Mr. Chairman. I would like to just
    start with submitting an article for the record from Law and
    Liberty, ``Can the Fed Fund the CFPB?''
        Chairman McHenry. Without objection.

        [The information referred to can be found in the appendix.]

        Mr. Huizenga. So the analysis from my Certified Public
    Accountant (CPA) friend from California, let us just say that
    is not a universal view of how the CFPB can or cannot be funded
    through those Federal funds.
        Mr. Chopra, I want to talk a little bit about the complaint
    data base. I am assuming it would not surprise you if I told
    you that the complaint data base has increased nearly fivefold
    since 2022. I mean, earlier you just said, I think--I am
    sorry--I think it was 2 million complaints that you have. You
    are aware of that, correct?
        Mr. Chopra. I do not know if it is exactly fivefold, but we
    have seen quite an increase.
        Mr. Huizenga. Okay. Our data indicates fivefold or
    thereabouts. Would you be surprised, however, to hear that the
    duplicative narratives, when it comes to those complaints, are
    somewhat of a regular occurrence in the data base?
        Mr. Chopra. Yes. We do have this issue, for example, when
    someone has a mortgage servicing issue. They may file it
    against the lender or the servicer or when there is multiple
    parties involved, but we also want to make sure that we are
    seeing how different users are using the system so that we can
    better control it.
        Mr. Huizenga. Okay. So what I am hearing, I think you are
    trying to parse to say, well, it might be really the same
    complaint there or the same person, so that is why they are
    using the same language. According to third party and then you
    were, I think, acknowledging at the end there that, well, you
    are trying to figure it out.
        Mr. Chopra. Yes. We are trying to see if there are some
    parties that are filing multiple. We are always policing.
        Mr. Huizenga. Well, let us explore that a little bit.
    According to third-party analysis that we have received, it
    appears that some are using the CFPB's data base to discharge
    legitimate debt that they owe. That would be a concern. In
    fact, there are videos online that promise results if they
    follow certain steps, including using your data base, that
    there is going to be debt relief. For example, you have some
    narratives that are literally word for word, character for
    character being repeated thousands of times. In fact, the top
    narrative in the complaints this past year was repeated over
    8,000 times. So I am assuming you cannot view this as a
    coincidence.
        Mr. Chopra. Yes. Yes. We have to figure out to the extent
    that there are algorithms being used or AI being used or
    providers who are seeking to dispute that relief.
        Mr. Huizenga. Yes. I think that trail of breadcrumbs is
    pretty clear.
        Mr. Chopra. Yes. Yes, and this has been an issue for many
    years that we have to be always attuned to, and that is why
    when we forward it for----
        Mr. Huizenga. I am so sorry. I have 2 minutes. I need to
    move on because I also need to touch on the FDIC. I know the
    chairman had done this. The independent report that had gone
    out, you did not mention that in your written opening, but do
    you agree with the findings?
        Mr. Chopra. Yes. I think it is very important that the
    recommendations be effectuated quickly.
        Mr. Huizenga. All right. So as the head of an Agency
    yourself, you agree, as the report said, culture starts at the
    top?
        Mr. Chopra. Well, certainly I think leadership, the board
    is----
        Mr. Huizenga. Okay. That is all right. I am looking for
    short answers. As a director of the FDIC, do you believe that
    you have a responsibility to ensure that there is a working
    environment that is free from discrimination, sexual
    misconduct, and harassment?
        Mr. Chopra. Yes. The law delegates to the board the
    responsibility.
        Mr. Huizenga. Okay. Let us explore that a little bit.
    Yesterday, Director McKernan indicated that although the FDIC
    is ``run by a board, most of the decision making is actually
    done by the chair.'' I assume that has been your experience,
    but I am curious. How much of the day-to-day operations are you
    involved in?
        Mr. Chopra. I am not, but I try to make sure I understand
    all of the things that are appropriate for the board and
    certainly this issue.
        Mr. Huizenga. Sorry. I have 50 seconds left. Based on the
    report and the widely acknowledged problems outlined by the
    Cleary Gottlieb report, are you prepared to play a more active
    role in making sure the culture is fixed at the FDIC?
        Mr. Chopra. Yes, and since the report, I have been
    increasingly engaged in making sure that we are----
        Mr. Huizenga. Great. Now, yesterday, some of my colleagues
    on the other side of the aisle stated that, ``Female leadership
    was needed at the FDIC.'' Now, we have talked about this before
    in committee and private, your active role in forcing out the
    last female chair of the FDIC.
        Mr. Chopra. She actually resigned.
        Mr. Huizenga. She resigned under a tremendous amount of
    pressure, sir, a tremendous amount of pressure. You talked to
    her privately. You talked to her publicly. It is a tremendous
    amount of pressure that you helped apply.
        Mr. Chopra. I do not agree.
        Mr. Huizenga. How would you respond to my colleagues who
    suggest--how would you suggest--my time. How would you respond
    to my colleagues who suggest female leadership is needed?
        Mr. Chopra. Well, at the end of the day, we want diverse
    leadership so everyone feels included and valued.
        Chairman McHenry. The gentleman's time has expired.
        Mr. Chopra. That is very important.
        Mr. Huizenga. I yield back.
        Chairman McHenry. I will now recognize the gentleman from
    New York, Mr. Meeks, for 5 minutes.
        Mr. Meeks. Thank you, Mr. Chairman. I want to start by
    saying, Mr. Director, how pleased I am by the Supreme Court's
    recent decision to uphold the funding structure of the CFPB.
    The CFPB has a long track record of success, helping hundreds
    of millions of people, constituents in both red and blue
    States, you know, and it causes them to be made whole. I hope
    that these types of funding challenges are now behind us so
    that the CFPB and you, Mr. Director, can remain focused on
    doing the good work of delivering consumer relief for the
    people, and that is why we created this Bureau, for the
    consumer, the only one that did not have a voice here in
    Congress.
        Now, the CFPB has a wide variety of rulemakings underway,
    and I want to try to touch on two--hopefully, I have the time
    to do that--one, the proposals under consideration related to
    the Fair Credit Reporting Act. I appreciate your engagement on
    the issue of protecting consumers from identity theft. The
    impacts of this can be devastating, and I know we all want to
    make sure our constituents and loved ones are strongly
    protected from bad actors.
        In a recent response letter to me and several of my
    colleagues, you stressed that ``The Bureau takes seriously the
    need for financial institutions to be able to prevent identity
    theft, fraud, and money laundering,'' and that you will not
    issue a rule that will prevent financial institutions from
    meeting the requirements of the Bank Secrecy Act. So I thought
    this was very good, so let me just make sure. I want to confirm
    that when you issue the proposed rule, it will not include
    restrictions that make it more difficult for banks to use their
    state-of-the-art tools to combat identity fraud and comply with
    anti-money laundering laws. That is correct?
        Mr. Chopra. Yes. We are still going through the process of
    developing a proposed rule, but certainly fraud detection,
    verifying identity is just so critical to how the banking
    system works, and I know you know this well. We are seeing all
    sorts of entities trying to harvest data about people for
    illegitimate uses, stalkerware, national security issues, but
    when it comes to reasonable fraud detection, we want to make
    sure they can continue.
        Mr. Meeks. That is correct, and I thank you for that. Let
    me just follow up on that one real quick. How does the CFPB
    plan to tailor the rulemaking to distinguish between companies
    that only collect consumer data versus those that sell consumer
    data?
        Mr. Chopra. Yes. So we are working on this in the scope of
    the Fair Credit Reporting Act, and I just want to raise, as
    Chairman McHenry and I were discussing, there is a need to
    update a lot of our data protection laws. I understand, the
    CFPB, we are going to administer our rules, but we are dealing
    with a statute that is old. I think it is time to constantly be
    thinking about ways that you all can be updating it as well,
    especially for the digital age and where we have fundamentally
    different threats.
        Mr. Meeks. Thank you for that. The second area is that the
    Bureau has said its proposed rule under Section 1033 would
    grant consumers more control over their financial data and
    protect it from misuse, discourage junk fees, and give
    consumers power to walk away from bad service. Now, I am very
    excited, actually, about that prospect because I hear that even
    at my own home, so this is good.
        Under the proposed rule, data accessed from banks through
    data aggregators for primary use would be allowed, and because
    incumbent banks already have the consumer's data being
    considered in the rulemaking, they would not be subject to the
    limitations for assessing data that newer and smaller firms
    would be subject to. Given the fact that incumbent banks and
    other institutions already hold years of accumulated consumer
    data considered in the rulemaking, I am concerned that the
    limitations introduced by the proposed rule could mean that
    larger, more traditional incumbents will have a large
    competitive advantage compared to innovative fintechs, credit
    unions, and smaller banks. How would a rule issue ensure that
    newcomers and smaller players can compete on a level playing
    field?
        Mr. Chopra. Well, that is exactly the goal. You will be
    able to take all of your data with that incumbent bank,
    permission it securely and safely to any bank, fintech,
    whatever it may be of your choice. This is a huge way of
    unlocking the hold that sometimes an incumbent has over you,
    and it is a slow way to ultimately get to faster switching.
    Consumers are going to be better off if they can quickly switch
    without going through lots and lots of paperwork and
    bureaucracy, and that is exactly what we are trying to achieve.
        Mr. Meeks. Thank you for that.
        Chairman McHenry. I will recognize the gentleman from
    Georgia, Mr. Loudermilk, for 5 minutes.
        Mr. Loudermilk. Well, thank you, Mr. Chairman. Director
    Chopra, thank you for being here.
        In October of last year, 2023, the CFPB and the Department
    of Justice jointly warned lenders that denying lines of credit
    to borrowers based on the borrower's immigration status may be
    a violation of the Equal Credit Opportunity Act. Specifically,
    you warned that immigration status could be used as a proxy for
    protected characteristics and lead to civil rights violations.
    Now, I am concerned with this overall guidance. Others are
    concerned that it is just vague. I think it could have a
    chilling effect on certain sound risk-based lending practices,
    which could leave institutions with little choice but to lend
    to borrowers who are unlawfully present in the United States.
        Does the Bureau still stand by this October 12 joint
    guidance on immigration status in lending?
        Mr. Chopra. Well, I am happy to clarify. This guidance is
    very clear that you absolutely can use immigration status when
    you are thinking about----
        Mr. Loudermilk. You cannot?
        Mr. Chopra. You can.
        Mr. Loudermilk. You can?
        Mr. Chopra. It is very clear that you can. I think what we
    are trying to also warn about, you may have seen the
    enforcement action against Citigroup for discriminating against
    Armenian Americans. So national origin discrimination is
    illegal, so the guidance----
        Mr. Loudermilk. That is different than immigration status.
        Mr. Chopra. Oh yes. You cannot use national origin, but you
    can use immigration status, and what we are trying to say is
    almost exactly what you are saying. If it is a part of a risk
    determination, that is fine. By the way, it did not have
    anything to do with unlawful immigration. It had to do with
    even immigration status green card versus naturalized citizen.
    It is much broader. So I hope we can do more to clarify that
    and make sure it is clear. The guidance does say you may use
    immigration status.
        Mr. Loudermilk. So based on what you are telling me here,
    it definitely needs to be clarified because lenders out there
    are looking at is the CFPB trying to force lenders to lend to
    illegals.
        Mr. Chopra. No, we are not trying to force lending to
    anyone, and I think we have gotten some questions about this,
    and we are going to try and continue to work with institutions
    who have questions, but overall, we have actually received some
    positive feedback from institutions about this.
        Mr. Loudermilk. Can you clarify this to ensure that lenders
    can use whether or not somebody is here legally----
        Mr. Chopra. Well, it is written in the guidance, so we will
    figure out----
        Mr. Loudermilk. Right.
        Mr. Chopra. I am happy to talk to you further, and
    especially, if you hear an institution that has specific
    concerns, we would be happy to meet with them at that----
        Mr. Loudermilk. Let me just make sure we clarify because a
    lot of times things are said in committee, but by the time
    those who are here testifying get back to their organizations,
    things change. Is it unreasonable to assume that if someone
    because they are not clear on this regulation and we have
    seen--are we in an era to where there is not a perceived
    partnership between regulators and lenders or financial
    institutions. They see you guys as opponents because of the way
    that things have been operating. Taking that approach and with
    vagueness of a rule, they feel like that they have to make
    loans to those who are not here legally. You do not have to be
    a naturalized citizen to buy property, but if you are not here
    illegally, you are subjected to deportation. Do you agree that
    adds additional risk to a lender if they lend to someone who
    could be deported, and if they are, how do they recoup that?
        Mr. Chopra. Yes. We never tell institutions who they have
    to lend to or that they have to lend to someone. What is
    prohibited under Federal law and where we have found issues is
    discrimination based on religion or discrimination based on
    national origin. That is codified in statute. So there is
    immigration status. What the guidance tried to articulate is
    just be wary that you are not engaging in certain types of
    prohibited discrimination, but you can use immigration status
    in your risk determination. What you said upfront, I think that
    is what the guidance is getting at.
        Mr. Loudermilk. Well, I think it definitely needs to be
    clear and I will argue the point that you may not say that you
    are forcing a business to loan or act in a way, but through
    rules and through enforcement actions, indeed, not just you,
    but many regulators actually do.
        Mr. Chopra. Well, respectfully, I think the issue you are
    concerned about, many of those individuals cannot even be
    authenticated under Bank Secrecy Act. So I think I am happy to
    talk with you further.
        Mr. Loudermilk. All right. Thank you. I yield back.
        Chairman McHenry. The gentleman yields back. The gentleman
    from Georgia, Mr. Scott, is now recognized for 5 minutes.
        Mr. Scott. Thank you, Mr. Chairman. Excuse my cold. I have
    been on this committee 22 years, and no one has greater respect
    for my Republican colleagues than I do, to tell you the truth,
    but as the good Lord told David in the book of Psalms, the man
    I was named after in the Bible, he said this to him, ``Ye shall
    know the truth, and the truth shall set you free.'' Here is the
    truth. In 2023 alone, the CFPB resolved lawsuits that required
    law breakers to pay consumers over $3 billion in compensation
    and $500 million in civil penalties. Under your leadership,
    Director Chopra, your leadership, the CFPB bill has held
    financial institutions responsible for engaging in predatory
    practices, ensuring fair treatment of consumers when they open
    accounts. Listen to this one very carefully: just in this past
    year as of May 2024 and also in 2023 alone, the CFPB resolved
    lawsuits that required law breakers to pay consumers $3 billion
    in compensation and $500 million in civil penalties.
        You have an outstanding record, and not only your record,
    but the record of President Biden and your staff, and please
    tell them that we respect that. The truth is here, and that is
    what I wanted to get clear in the very beginning. No ill
    feelings to my Republicans. They have to do what they have to
    do, but I wanted to make sure that we spoke the truth for the
    American people.
        Here is what I am concerned about, this repeatism. I want
    you to talk about that and let us know what you are doing with
    that because thanks to this little deal right here, these scam
    artists are doing a job on our American people and they are
    repeating it, and they look at it as a cost of doing business,
    and they will go in another part of the country and repeat the
    same thing. This is the issue before you today. Take a few
    moments and share with the American people how you are
    protecting them from these scam artists who do it repeatedly.
        Mr. Chopra. I think it is a huge problem when someone can
    defraud people in one part of the country, get caught, and then
    set up shop elsewhere and almost do the same thing just with
    different names. We are going to do our part. We are looking
    more beyond fines, individual liability, more restrictions. We
    are setting up a registry to deter repeat offenders to have
    better law enforcement coordination. I think I would also urge
    all of you, and Senator Shelby, when he was on the Banking
    Committee, also raised concerns about the unfairness of the
    system when some people are held to account and others get off
    scot-free. I do want to urge you all to rethink on whether we
    should enhance some of the criminal liability provisions for
    some of these outright frauds.
        Mr. Scott. Also I was here, as I mentioned, when Congress
    gave the CFPB the authority to establish a registry of nonbank
    offenders in the Consumer Financial Protection Act. Tell us why
    it is very important to include nonbank financial companies in
    any repeat offender rule.
        Mr. Chopra. Well, we already have a list of insured banks
    and credit unions. It is a finite list where we know a lot, but
    when it comes to the tens of thousands or more of others, we
    have much less visibility.
        Mr. Scott. Thank you, Director.
        Chairman McHenry. The gentlewoman from Missouri, Mrs.
    Wagner, is now recognized for 5 minutes.
        Mrs. Wagner. Thank you, Mr. Chairman. Good morning,
    Director Chopra. Yes, let us talk some truth, and let us do it
    quickly with brief answers because I have a lot of questions
    here.
        Do you believe, sir, financial institutions should engage
    in risk-based pricing when making loans to their customers?
        Mr. Chopra. I do not think we should force it, but I think
    they often do because it is appropriate----
        Mrs. Wagner. Should they or should they not risk-based
    pricing when making loans? A simple ``yes'' or ``no.''
        Mr. Chopra. Again, I am trying to answer. It is not to
    order them, but it is appropriate for them to be able to
    measure risk.
        Mrs. Wagner. Yes, they have to measure risk in order to
    give a loan. Good. The credit card late fees and overdraft
    rules will make it harder for lenders to price loans according
    to the risk involved. Why is the CFPB writing rules that erode
    the fundamental principle of risk-based pricing?
        Mr. Chopra. Actually, will not it encourage better risk-
    based pricing? I am not sure why making late fees in line with
    the congressional prohibition would undermine risk-based
    pricing. In fact, risk-based pricing, they have the data they
    need to price it more effectively, so I actually do not follow
    at all----
        Mrs. Wagner. Then answer this ``yes'' or ``no.'' Yes or no,
    is there a strong likelihood that by drastically reducing the
    fee for paying late, this rule will actually encourage more
    consumers to pay their credit card bill late?
        Mr. Chopra. Well, I hope you are aware that----
        Mrs. Wagner. The answer is ``yes'' or ``no.''
        Mr. Chopra. No because credit card----
        Mrs. Wagner. Okay. Really?
        Mr. Chopra [continuing]. companies have the ability to
    raise your interest rates if you are late. They have the
    ability to----
        Mrs. Wagner. It will not encourage more consumers to pay
    their credit card late? Really?
        Mr. Chopra. No, no, no. You are forcing me to say ``yes''
    or ``no'' and not allowing me to clarify, so I would like to
    get----
        Mrs. Wagner. I am going to clarify.
        Mr. Chopra. Feel free.
        Mrs. Wagner. Really? If the point of the late fee rule is
    to reduce the penalty from $32 to $8, will it not be cheaper
    for the consumer to pay late?
        Mr. Chopra. No. So you are allowed to charge a late fee in
    excess of $8. The financial institution needs to show their
    math. The CARD Act bans unreasonable late fees. We are using an
    old formula to help them do that. They will still be able, do
    not worry, to punish their customers for paying late.
        Mrs. Wagner. All right. Let us talk about CFPB's most
    recent CARD Act Report. It defines the term ``persistent debt''
    as a consumer paying more for interest and fees on a loan than
    they are paying toward the principal in a given calendar year.
    Given that the credit card late fees rule will undoubtedly
    result in more consumers paying late--we are dropping it from
    32 bucks to 8 bucks--and, therefore, getting deeper into debt,
    is it not true that your late fee rulemaking will cause
    persistent debt to increase?
        Mr. Chopra. Well, I guess I would say this. Would you not
    think that if a financial institution then raised the minimum
    payment, that person would then pay more, but they would be
    less likely to be in persistent debt? So the response is
    different----
        Mrs. Wagner. Director, your own rule indicates that more
    card holders will pay late. Your rule indicates that more card
    payers will be late.
        Mr. Chopra. I think you are taking that out of context, but
    certainly, we want to make sure that the congressional
    prohibition, respectfully, that bans unreasonable fees has
    fidelity.
        Mrs. Wagner. Will you commit to measure the impact of the
    proposed rule on persistent debt and then require that the rule
    be rescinded if it does?
        Mr. Chopra. Well, it would be illegal for us to require a
    rescission in that way, but certainly in our biannual CARD Act
    Reports, we will always seek to study all of these things
    that----
        Mrs. Wagner. You are encouraging persistent debt----
        Mr. Chopra. We are not. We are actually encouraging common
    sense.
        Mrs. Wagner [continuing]. and encouraging people to pay
    late, Director Chopra.
        Mr. Chopra. We are encouraging common sense.
        Mrs. Wagner. Well, let us go further. As part of the fee
    schedule charged by the CFPB for a Freedom of Information Act
    (FOIA) request, the CFPB charges $23 per 15 minutes or $92 per
    hour. A professional staff conducts a search for information,
    which may be a rate set by the Office of Management and Budget.
    Ninety-two dollars per hour to search for documents seems
    pretty darn high and very similar in concept to your definition
    of junk fee, which, again, you define as one in which the fee
    exceeds the CFPB's cost of searching and therefore leads to
    profit for the CFPB. Will the CFPB take action to examine this
    junk fee and reduce the amount charged for FOIA requests
    instead of profiting off of hardworking Americans who are
    simply seeking to learn about how government decisions are made
    within the opaque CFPB?
        Mr. Chopra. Yes, I actually think those have only been
    charged 2 or 3 times in the past few years. It is very rare,
    but I will look at that.
        Mrs. Wagner. It is not very rare, sir.
        Mrs. Kim [presiding]. The gentlewoman's time is up.
        Mr. Chopra. I do not think actually----
        Mrs. Kim. Director Chopra, you can respond to Mrs. Wagner's
    questions in writing.
        Mrs. Wagner. I yield back.
        Mr. Chopra. I think it goes to the Treasury.
        Mrs. Kim. Time is up.
        Mrs. Kim. I would like to now recognize the gentleman from
    Missouri, Mr. Cleaver, for 5 minutes.
        Mr. Cleaver. Thank you, Madam Chair. Mr. Director, thank
    you very much for being here today and for your accessibility.
    I appreciate it very much. I do realize that the Agency you
    head is not a regulatory Agency, but I and a few others have
    been involved with this American company, Credit Union, Navy
    Federal. I know that you also are aware of what I think should
    be an embarrassment to the Federal Government and to them, for
    that matter.
        They approved, as you may recall, 75 percent of all white
    borrowers and 50 percent of black and brown borrowers, and the
    minorities had the same income as the majority, and the
    disparity is just embarrassing. I know that this is not a
    period in our history when we like to talk about bigotry, but
    here, even in 2024, bigotry is still around, and it poisons our
    past and it terrorizes our future. So, I am still very
    concerned about what is happening.
        A number of us have met with the Navy Federal Credit Union,
    which, by the way, is the largest credit union on planet Earth,
    and they are larger than probably almost any bank that we are
    doing business with, except probably the top 10. It bothers me
    a lot because I wish that you could be involved based on the
    statements you issued. It is my strong and irreversible belief
    that you were right in the statement you gave to the final rule
    implementing the Community Reinvestment Act. You said it is
    time for State legislators to accelerate efforts to ensure
    certain nonbank entities have community reinvestment-like
    requirements, particularly in sectors where there are
    significant public subsidies or support for business
    activities. Credit unions are exempt. Bankers have been
    demanding that they be included since I have been here, which
    is 20 years.
        What say you on the whole issue about coming up with some
    kind of similar process to Community Reinvestment Act (CRA)
    that would be used in credit unions like Navy Federal?
        Mr. Chopra. Well, let me just say I want to be careful. We
    do have enforcement authority over large credit unions, so I
    want to be mindful. More generally, it is very hurtful to
    people when they think that even in serving in the military,
    working hard, serving their country that they still may face
    discrimination. So we take this very seriously.
        With respect to CRA, we have seen many States enact CRA for
    certain nonbanks. Banks are required to do it, but many of
    those institutions that are not banks are getting a lot of
    direct or indirect benefits. The majority of mortgage lending
    is now outside of banks, and so we should really look hard,
    whether by Congress or continued by the States. The banking
    lobby is no fan of the CFPB, but I think they would also agree
    that we should have stronger CRA requirements for other
    mortgage lenders that enjoy those benefits.
        Mr. Cleaver. I am 100 percent certain that they would agree
    with what you just said based on my history with them. I just
    want to make sure that everyone understands that this is not a
    theory. We have the proof. Fifty percent of the black and brown
    borrowers who apply for loans were turned down with the same
    income and debt-to-income ratios as the whites, who had 75
    percent more. Thank you very much, Madam Chair. I yield back.
        Mrs. Kim. Thank you. I now recognize the gentleman from
    Tennessee, Mr. Rose, for 5 minutes.
        Mr. Rose. Thank you, and thanks to Chair McHenry and
    Ranking Member Waters for holding this hearing, and, Director
    Chopra, thank you for your time and for being here with us
    today.
        Director Chopra, one of my top priorities this Congress, as
    I think you are aware, is dealing with the issue of abusive
    mortgage trigger leads. I am curious, both from consumers and
    industry, how much have you heard and how much has the CFPB
    heard about this issue and what are their concerns?
        Mr. Chopra. It is one of the top three or four issues I
    hear from mortgage lenders. They feel that they are working
    with a borrower to close a mortgage, but then all of a sudden
    that borrower gets dozens or hundreds of communications. The
    borrower thinks that the mortgage lender outed them in some
    way, and it creates a lot of friction, and many of the offers
    they are getting are sketchy at best.
        Mr. Rose. Thank you. Director Chopra, as you might be
    aware, Representative Torres and I have introduced the
    Homebuyers Privacy Protection Act. This bipartisan bill would
    limit the sale of mortgage trigger leads to financial
    institutions and financial technology companies that have a
    preexisting relationship with customers. The bill would also
    give consumers the option to opt-in for trigger leads if they
    choose to. Would you agree that based on the complaints that
    you have just characterized from industry and consumers, is it
    time for Congress to legislate protection for homebuyers on
    this issue?
        Mr. Chopra. Yes, I really support the goal of this, and, in
    fact, this is another example of what I talked about in my
    opening remarks about even these trigger leads feel like
    privacy intrusions. This is a financial privacy issue. It
    directly relates to the Fair Credit Reporting Act, and we are
    really happy to work on both sides with you to figure out how
    we get some solutions. We are also working to see if there is
    any solution we can help to advance this issue, but it is
    always better when Congress can act.
        Mr. Rose. Well, thank you. I agree with that perspective,
    and thank you for your insights there, and hopefully, we can on
    a bipartisan basis move that issue along.
        I want to shift gears a little, Director Chopra. Two days
    ago, you proposed a ban that would remove medical debt
    information from credit reports. In your statement on the
    proposed rule, you highlighted that medical debt is ``taken on
    unexpectedly in a time of crisis.'' It is my understanding that
    the structure of this proposed rule would mean that medical
    debt information is defined as including elective procedures.
    To be clear, Director Chopra, if someone, for example, had an
    elective tattoo removal procedure and had failed to make their
    payments for that procedure, it would not show up on their
    credit report under this proposed rule?
        Mr. Chopra. So actually, we really talked to a lot of
    people in the healthcare industry about this, so I want to make
    sure we are using precise language. ``Elective'' can still be
    medically necessary. It just means that it is scheduled as
    opposed to an emergency surgery. I think you are sort of
    referring to non-medically necessary or discretionary cosmetic.
    We actually looked at how that industry is structured, and we
    do not find that medical bills on credit reports really exist
    there because they are not insured and paid by insurance, and
    they tend to be paid upfront or financed separately. So we are
    not really sure that is something that would occur. I
    appreciate the point, though, and I think if you want to submit
    a comment to make sure that we think about that differently, I
    am very open to that, but we do not really see that as an issue
    right now.
        Mr. Rose. Okay. Well, thank you for the clarification, and
    we may take you up on that because I guess I would have a
    concern for non-emergency elective procedures in that----
        Mr. Chopra. Yes. It is many ways in which we see medical
    financing or people being paid upfront in a way that is not
    sent to insurance because those types of things are not covered
    by insurance.
        Mr. Rose. So your view is that if it is not medically
    necessary and, therefore, not probably covered by insurance----
        Mr. Chopra. Well, I guess I would put it this way. You
    know, when you use a credit card or other type of loan, the
    FCRA actually prohibits medical information on credit reports,
    so I think we are trying to adhere to that with some degree of
    fidelity.
        Mr. Rose. Okay. Thank you for that. Well, pardon me. In the
    remaining time, I would like to shift gears now and talk about
    the Civil Penalties Fund. Between 2012 and 2022, the Consumer
    Protection Financial Bureau collected $1.3 billion, last year
    alone 1.9 billion. Can you explain how in 1 year the CFPB has
    collected more fines than in the past 10 in 5 seconds?
        Mr. Chopra. I do not think that is true. Well, I think we
    have allocated quite a bit. In my tenure, we have collected
    several billion in fines, but we have allocated it to victims
    pursuant to the statute.
        Mr. Rose. Thank you, and I yield back.
        Mrs. Kim. The gentleman's time is up. I would like to
    recognize the gentlewoman from Ohio, Mrs. Beatty, for 5
    minutes.
        Mrs. Beatty. Thank you, Madam Chair. To Chair McHenry and
    Ranking Member Waters, thank you for holding this hearing. Let
    me first say thank you, Director Chopra, for being here, and it
    is always good to see you here and to listen to you as you
    explain all of the issues that we are addressing.
        Let me just make this comment first in light, Madam Chair,
    of how this hearing opened. It opened with saying, ``If this
    were a private sector meeting, what would happen?'' Well, let
    me also say this. If this were a private sector board meeting
    with board members on this side and board members here, we
    would not have had a director who has, over the time of his
    Agency, delivered $20.7 billion, to have waited. Certainly, in
    a private sector meeting, since the chairman opened with ``if
    this were a private sector, what would happen,'' we would not
    have been sitting here as board members in a private sector
    meeting waiting while other board members, Republicans, were
    meeting with Mr. Trump, someone who has been indicted with over
    some 88 charges.
        Then, Madam Chairman, it even got worse, and I am only
    bringing this up because I think words matter. When we have
    another chair of the subcommittee of jurisdiction here to use
    words like ``extortionist'' and to say that this director was
    the judge and jury and accused him of things that are not
    actually factual, that kind of grits at me, and to also
    question the credibility and to say that this director had no
    credibility. Now, that came from a member. I do not know what
    it was based on. I was always taught when you do scholarly work
    or you say scholarly things, you have to have some citation.
        Well, let me just say what the U.S. Government
    Accountability Office said after doing their review, and this
    is a review of April 19, 2024. In their review, they said a lot
    of things that are direct opposite of credibility. They felt
    that their work was done well. It was fair. They gave
    recommendations. Most of the recommendations had been adhered
    to. So I think if we are going to talk about someone's
    credibility, we should have citations for that.
        So I just wanted to say that for the record because we have
    a lot of people who watch these hearings that have not watched
    previously, have no history of the great work that this
    organization does. I also want to applaud you, Director Chopra,
    for how you have dismantled the attacks on you with intellect
    and with character, and I think you set the example of when
    witnesses come in that you do not buy into the attacks, but you
    simply told the truth. When you agreed with Republican
    statements, you said it.
        So I think that is worth being noted because it was also
    said that you were only here to do speech writing for the
    President and try to imply that. I know all of his speech
    writers, I know his communications directors, and let me just
    say I think you are amazing, but that is not something that I
    know you do. So I just needed to say that more to the people
    who are watching because sometimes you watch and you only see
    one segment, so I wanted to bring some fairness and balance.
        Now, with that, let me just say that I echo many of my
    colleagues in saying how thrilled we were with the Supreme
    Court decision, and now you can get back to the work of
    protecting the American consumers from harmful financial
    practices and putting money back into their pockets. Again,
    thank you, and thank you for continuing the work because I do
    not think $20.7 billion is anything to sneeze at.
        I would also like to thank you for your opening remarks on
    1033, so let me start with that 1033 open banking rule. I want
    to commend you for advancing 1033 to ensure that personal
    financial data rights are protected so that consumers can shop
    and switch to better or more affordable financial solutions. I
    also want to thank our ranking member because she has to put
    this at the forefront.
        Mrs. Kim. With all due respect----
        Mrs. Beatty. So my time is up.
        Mrs. Kim [continuing]. the gentlewoman's time is up. Mr.
    Chopra, would you please respond to Mrs. Beatty's question in
    writing?
        Mr. Chopra. Yes.
        Mrs. Kim. Okay. Thank you.
        Mrs. Kim. I now recognize myself for 5 minutes of
    questioning, and Mr. Chopra, it is really good to see you again
    here before our committee.
        I know in your written testimony you tout the tens of
    billions of dollars that CFPB has returned to consumers, but,
    again, you fail to mention how persistent inflation has caused
    harm to consumers, especially for those lower-income families
    that are having trouble meeting ends meet. I am going to refer
    to New York Fed report recently. According to that report,
    about a third of balances associated with maxed-out borrowers
    have hit a delinquency in the last year, and these are the
    borrowers using 90 percent or more of their credit limit. So
    can you point to any enforcement actions that are actually
    helping maxed-out borrowers that are at risk of default?
        Mr. Chopra. Yes. Actually, many of those borrowers have low
    credit balances and are getting up to it, and they are often
    some of the people who are the lowest income people in our
    society. They are the ones where just a little bit of extra
    unfair fees or a little bit of a scam really can send them into
    a financial panic. So I closely monitor this data, and I really
    appreciate all the work being done to focus on them. I know you
    were a big part in fighting junk fees and leading legislation
    on that, so I want to thank you, Congresswoman Kim, for that.
    Really, we have to be focused on how those low-income people
    are getting by, so I really appreciate the question.
        Mrs. Kim. Sure. Are you saying that some of the maxed-out
    borrowers are actually getting some money back to consumers in
    that way?
        Mr. Chopra. Most of the redress that is administered is
    done by the companies themselves. So we typically order
    redress, and we do know that the types of cases we have been
    pursuing, they are not ones that are really focused on the
    highest income. They are the ones who are often the most
    vulnerable consumers. So we have looked at things in the
    automobile area, in the credit card area. Often, those are the
    ones that I think are the consumers you are asking about, but
    we do not really do a matching in that way because there are
    some privacy issues around----
        Mrs. Kim. I am just pointing it out because I want the CFPB
    to really focus on addressing the root causes of indebtedness
    and the high cost of living, but let us switch gears to another
    matter.
        It is our understanding that your subject matter experts
    are collaborating on issues that includes Big Tech in finance,
    artificial intelligence, and more with the EU through the
    informal dialog. You know that I sent you a letter regarding
    that informal dialog, and our committee staff have told me that
    they finally had a briefing after about 8 months of requesting
    it. I am glad you did it, but can you commit to providing
    minutes of the meetings that you and your staff are having with
    the European Commission officials as well as the list of
    subject matter experts involved in your foreign policy dialog?
        Mr. Chopra. I apologize for the delay. I think it is
    because those meetings did not really occur until much later.
    There was one or two meetings with me and European Commission
    officials. I participated in something related to financial
    literacy. I think, Congresswoman Kim----
        Mrs. Kim. Okay. Then let me reclaim my time.
        Mr. Chopra. Well, I just want to say I think we have
    posted----
        Mrs. Kim. Yes.
        Mr. Chopra [continuing]. the information publicly, but I
    will go ahead and check to see what we have posted, but I think
    we want to----
        Mrs. Kim. I just want to get your commitment that you will
    not export or embrace the EU laws in the form of U.S. financial
    consumer regulations. Can I get your commitment on that?
        Mr. Chopra. That we will not export U.S.----
        Mrs. Kim. Yes, I----
        Mr. Chopra. I mean I actually think the way the U.S. does
    things, we should not be cutting and paste China, we should not
    be cutting and paste Europe. If anything, I think we should
    be----
        Mrs. Kim. I will take that as your commitment that you are
    not going to export any----
        Mr. Chopra [continuing]. promoting a lot of the way that
    the U.S. promotes competition and privacy.
        Mrs. Kim. Okay. Thank you. The CFPB also released
    interpretive guidance related to buy now, pay later loans on
    May 23 of this year, but I am deeply concerned that this is
    another example of the Bureau exerting its authority by
    effectuating a substantial policy change through interpretation
    or enforcement. So do you agree that a substantive policy
    change in how the Bureau regulates an entire class of financial
    products requires a formal Administrative Procedure Act (APA)
    rulemaking, and can you commit to using formal rulemaking for
    any change in the Bureau's approach to buy now, pay later?
        Mr. Chopra. So my predecessor, Director Kraninger, started
    the Advisory Opinion Program to provide interpretations. I
    think a lot of companies want to know how does the existing law
    apply and what should they expect. So we went through a process
    to do that, and I think it was welcomed by many, but I am happy
    to talk to you further about it, and it is also up for comment.
        Mrs. Kim. I want to be respectful. My time is up, too. So
    let me now recognize the gentleman from California, Mr. Vargas,
    for your 5 minutes of questioning.
        Mr. Vargas. Thank you very much, Madam Chair. I appreciate
    the opportunity. I want to thank the ranking member also.
    Director Chopra, it is a pleasure to see you again here.
        When I first got on this committee, it was Dodd-Frank that
    was the problem according to my colleagues on this side, and
    they said how illegal it was, how terrible it was. Now, of
    course, I listen to them, and it is the gold standard, you
    know. They say, we do not need anything beyond Dodd-Frank. It
    is the gold standard. Then they started picking on you. In
    fact, I was going to ask you a couple of tough questions here.
    One, do you remember all the insults that you received because
    of the funding aspect of CFPB? That is a question, sir. Do you
    remember some of them?
        Mr. Chopra. I certainly remember some of the harsh things
    said to me, yes.
        Mr. Vargas. In fact, I found it interesting because it
    seemed to me, as the Court said clearly, that the funding is
    well within the appropriations clause of the Constitution, in
    fact, fits clearly within it. They had to go forum shopping to
    the Fifth Circuit to find a circuit that would say it was
    illegal because this was so right down the middle. In fact, it
    is interesting. Seven of the justices in a very conservative
    court decided this was right down the middle. This was not even
    a hard decision for them.
        Mr. Chopra. Yes. Justice Thomas' opinion really spells out
    how this is completely consistent with the Constitution. Those
    pauses, though, had a real harm to consumers, though. Many of
    our litigations, many of our work just stopped, and justice
    delayed is often justice denied, but we are going to keep going
    to make sure those consumers get their redress.
        Mr. Vargas. Well, in fact, since you mentioned it, let me
    ask you this. It was claimed by the other side that you have no
    credibility. The CFPB, what is your approval rating?
        Mr. Chopra. I do not know, but I think we serve consumers
    in every single neck of the woods of this country.
        Mr. Vargas. Well, I can tell you because I have looked it
    up. It hovers around 78 or 80 percent, sometimes even higher.
    Do you know what our approval rate is? Again, you are not under
    oath, but you have to tell the truth.
        Mr. Chopra. I do not.
        Mr. Vargas. Do you think it is higher or lower than that?
        Mr. Chopra. I do believe it is higher because our----
        Mr. Vargas. You think that ours is higher? Our approval
    rating is higher? What have you been smoking today? Ours is not
    higher. That is the only time I have ever disagreed with you.
    You know, ours is very low. It is about 13 percent, about 13
    percent. So when we question your credibility or the
    credibility of the Bureau, it is ridiculous. It really is
    utterly ridiculous. I mean, it reminds me of 1994 when they
    brought the tobacco people up, and they said, hey, nicotine, is
    it addictive? Oh no, it is great stuff, you know. You got to
    give it to your kids. It is the same thing with these junk
    fees, with these late fees, and I hear my friends, oh, that is
    good for consumers. They love the late fees. They love all
    these junk fees. Do consumers love the late fees? Do they love
    the junk fees?
        Mr. Chopra. I think consumers are sick and tired of
    surprise or unfair fees that are creeping across the economy,
    and it really hurts those who can least afford it.
        Mr. Vargas. Of course, and, in fact, we get complaints
    about that all the time, and we give praise all the time for
    your work now, but I do want to talk about one thing
    specifically now that I got that off my chest because I
    listened to all the BS all these years about the funding, it is
    illegal. It this hair on fire, and, of course, the Supreme
    Court did not even break a sweat and said, hey, guys, it is
    right down the middle. This thing is easy. This is not a tough
    one.
        I do want to ask about remittances. I do think that there
    is problems with remittances. I do think there are a lot of
    hidden fees there. People work very hard to send that money
    oftentimes to families that are impoverished, and this is a way
    out of poverty for them, and I think it is very unfair the way
    the system is set up. Could you speak to that? I know we have
    been working a little bit, but we need to do more.
        Mr. Chopra. I agree we need much more cheaper and faster
    and safer remittances. We have taken a number of enforcement
    actions against those who have violated the law. There is often
    marketing that says it is free, but, in fact, the exchange rate
    is being manipulated. It is very hard. I would like to see more
    and the banking industry participate in some of the Fed's
    programs to help people send money. This is also an important
    national security issue as well.
        Mr. Vargas. I agree. My time is almost up, but again, I
    wanted to thank you. I think you have done a hell of a job. I
    think you have done a really good job now that you have the
    ability to go forward without all the nonsense about the
    illegality of the things that we passed. By the way, it is not
    you. You do not set up the funding mechanism. We did. You know,
    we were attacking you when we were the ones that did it, but I
    do hope you go forward quickly because we have delayed justice.
    Thank you. With that, I yield back.
        Mrs. Kim. Thank you. I now recognize the gentleman from
    Wisconsin, Mr. Steil, for 5 minutes.
        Mr. Steil. Thank you very much, Chairwoman. I thank our
    coach of the Republican baseball team for his graciousness in
    letting me jump him in line today.
        Mr. Williams of Texas. Winning coach.
        Mr. Steil. I am supporting your win. Mr. Chopra, I have
    significant concerns as it relates to data privacy at the CFPB,
    and last year, the CFPB had a major data breach of 250,000
    consumers. I have an article from The Wall Street Journal dated
    April 19, 2023 that describes a CFPB employee taking consumers'
    confidential information and emailing it to a personal account.
    The headline is, ``CFPB Says Staffer Sent 250,000 Consumers'
    Data to Personal Account.''
        I ask unanimous consent to insert that into the record.
        Mrs. Kim. Without objection.

        [The information referred to was not submitted prior to
    printing.]

        Mr. Steil. This individual also stole confidential
    supervisory information on 45 banks, which could be market
    moving. The CFPB has a pilot program as it relates to auto
    loans, and the CFPB, under this proposal that you are moving
    forward with, is looking to collect over 120 data points from
    around 4,000 auto lenders. Some of the data points include
    borrower's income, credit score, zip codes, how much they paid
    for their car, and their interest rate. If implemented in full,
    as you are potentially proposing to do, it will cause
    significant data collection efforts with major compliance
    costs, but importantly, with privacy concerns. There are about
    100 million car loans in the United States, so that means your
    project threatens the privacy of millions of families, and the
    Bureau does not have a good track record on protecting our
    data.
        You claim that the data you are using is anonymized. You
    claim that, but as recently as last month, you admitted that
    anonymized data can be re-identified. Can you give the American
    public 100-percent confidence that in the collection efforts
    that you are making, when that data comes to the CFPB, that
    their personal and private information will be protected?
        Mr. Chopra. Yes. Well, we solicited comment on this. I
    think we got a question from Congressman Barr about----
        Mr. Steil. I got you. We can come back to the broader
    issue, but what I am asking you writ large is, and this
    question, I think, is really important and why we should have
    this dialog is, can you guarantee the American people that if
    you collect this information, that their information, including
    their income, their zip code, the car they purchase will be
    secure? You do not have a good track record of this.
        Mr. Chopra. Well, we take very serious----
        Mr. Steil. I understand you take it seriously, but can you
    tell the American people with 100-percent confidence that you
    will protect it?
        Mr. Chopra. I would love to answer the question. We want to
    make sure that when we collect any data, we are doing so in
    ways that eliminates or dramatically reduces, wherever
    possible, any chance of any data protection issue. We are
    heightening our ability to assess that because it is true with
    more algorithms, more AI, those consumers'----
        Mr. Steil. I got you. So in other words, you are
    heightening it, but you cannot guarantee the American people
    that there is not going to be a breach.
        Mr. Chopra. We have not done the data. We have not done it,
    so----
        Mr. Steil. Right, but we have incidents where 250,000 data
    points were sent----
        Mr. Chopra. We have not done the auto data collection you
    have mentioned, so----
        Mr. Steil. Yes, but I hope you see the concern the American
    public should have and then let us look at the auto dealer side
    of this equation. So you would agree that the CFPB requests
    dealers' zip codes. Say an individual goes and buys a car in
    Delavan, Wisconsin, zip code 53115. There is only one Ford
    dealer, there is only one Chevy dealer, and so you can
    unanonymize that data, but if you go back and we look at U.S.
    Code 12.5519, you do not have the authority to regulate auto
    dealers. In effect, you are really operating in this proposed
    rule as a backdoor mechanism to actually regulate auto dealers
    because in any given zip code, you can actually identify where
    the auto loan is made, correct?
        Mr. Chopra. This is not a proposed rule. We are trying to
    survey the market of a $1.6 trillion market. I do not know if
    we will proceed with it. We do not have authority to bring
    enforcement actions against auto dealers. So I want to do
    everything I can to assuage your concern about this, but we
    have not done this auto data collection. It is the biggest
    market for which there is not much information about trends
    other than some credit reporting data, so we are happy to take
    your concerns. We do not even know if we are doing it, but that
    is why----
        Mr. Steil. I hope you understand the concern, I think the
    concern that millions of Americans would have because the track
    record of the CFPB along with a number of Federal Government
    agencies is abysmal as it relates to data privacy. If you are
    in the----
        Mr. Chopra. Well, I take that very seriously.
        Mr. Steil. I hope you do because you cannot guarantee that
    this information will not go public, and it holds 100 million
    Americans' information.
        Mr. Chopra. We do not collect personally identifiable
    information in these things, but I take your concern very
    seriously.
        Mr. Steil. I appreciate your time, Director.
        Mr. Chopra. Thank you.
        Mr. Steil. Madam Chair, I yield back.
        Mrs. Kim. Thank you. Wow. Thank you, Director Chopra, for
    sitting with us for almost 2-and-a-half hours. I think it is
    time that we take about 5-minute break.
        Mr. Chopra. Five minutes?
        Mrs. Kim. Yes. Hopefully, that will be enough for you to
    take a bathroom break. For the members, we will resume with the
    hearing in about 5 minutes.
        [Recess.]
        Mr. Hill [presiding.] The committee is back in session, and
    I call on the gentleman from Illinois, Mr. Casten, for 5
    minutes.
        Mr. Casten. Thank you, Mr. Hill. Director Chopra, always
    lovely to see you here. Several of us are upset, but I do just
    want to apologize for the delay. We had a 40-minute delay and
    did not start the official business of the House because my
    colleagues were all at a political event off the Hill. It is
    disrespectful, but you deserve better. I do not know what they
    spoke about there, but I strongly suspect it was not about
    endorsing and celebrating and effectuating the rule of law that
    was passed by an independent judiciary. I say that because
    while I think we are all happy about the recent ruling by the
    Supreme Court protecting your funding.
        I do not want to rest on my laurels. I want to read you a
    quote. The Heritage Foundation's Project 2025, that aims to be
    the blueprint for the next government should the Republicans
    take over, says, ``Provided the Supreme Court affirms the Fifth
    Circuit holding in Community Financial Services of America, the
    next conservative President should order the immediate
    dissolution of the CFPB. Until this can be accomplished,
    however''--obviously it did not happen--``Congress should
    require that no CFPB funds are spent on enforcement actions
    that are not based on a rulemaking that complies with the
    Administrative Procedures Act.'' Can you speak to what would
    happen to consumer protection in this country if Congress were
    to carry that out?
        Mr. Chopra. Well, I think eliminating the CFPB would be
    chaos. I think the mortgage market would suffer. I think all of
    the innovative companies that rely on a sound marketplace and,
    most importantly, the consumers in every part of the country
    would then be greeted with more unlawful practices. That does
    not just harm them; That harms the whole marketplace.
        Mr. Casten. We are always grateful for your consumer
    protection, and I wish it was not so partisan.
        I want to shift to a separate issue, hopefully, not
    partisan. In October 2023, at a Brookings Institution speech,
    you talked about tech firms blurring the lines between payments
    and commerce, engaging in bank-like activities while not
    actually being regulated as banks, and the sort of broader sort
    of need to maintain a separation between commerce and banking.
    There has recently been a number of large brokerage firms, one
    in particular, that are talking about entering the credit card
    space where they are both issuing brokerage accounts. You have
    a brokerage account, they issue a credit card space. I guess I
    am wondering, are you paying attention to this, and do you have
    any concerns that we should be vigilant against it?
        Mr. Chopra. Well, certainly they are not exempt from the
    consumer financial protection laws, but you are right. There
    are a lot of issues now with firms that are entering consumer
    products. Right now, there is a very chaotic and disturbing
    situation where people cannot access their funds. It needs to
    be clear whether you have an insured account or not, and often
    the blurring between Big Tech firms and banking, I think, is
    actually really causing some confusion and issues that Congress
    and the CFPB really need to address.
        Mr. Casten. Okay. So I want to get a little bit specific.
    Robinhood Financial. You know, we have talked about this
    before. Alex Kearns was a constituent who took his life after
    being falsely told that he was upside down on an options trade,
    and I think his note said that he does not know why he was
    allowed to trade options when he only had $5,000 to his name.
    Robinhood is now talking about issuing these credit cards to
    their gold members who can trade on margin. I think the obvious
    concern that raises is if you are getting the data that you
    would have as a credit card firm that can identify people who
    are prone to risky behaviors and you are selling something that
    is attractive to people with risky behaviors, do you have the
    tools to protect that in advance, or do you have to wait for
    some violation that you can pursue a compliance action
    against----
        Mr. Chopra. Yes, I do not think we can. I think that for
    broker-dealers or brokerages securities, they have to follow
    securities laws and inasmuch that they are doing consumer
    lending, given our current status of privacy and protection of
    financial data. It is pretty weak when it comes to that type of
    sharing. So I do not think we would have the tools to really
    stop it in advance.
        Mr. Casten. So you are saying that wall between commerce
    and banking can be breached?
        Mr. Chopra. Has eroded.
        Mr. Casten. And it is not until you are violating the
    spirit of those laws that you can deter----
        Mr. Chopra. Yes. I think I would need to check under the
    securities laws about whether there could be some limitations,
    but my understanding is that data if it is disclosed in that
    notice, it can be transferred back and forth.
        Mr. Casten. Maybe we have some work to do legislatively
    because----
        Mr. Chopra. We do, yes.
        Mr. Casten [continuing]. it troubles me given some of the
    past behaviors if we are chasing on the back end. Well, thank
    you for your time. We will follow up offline, and I yield back.
        Mr. Hill. The gentleman yields back. It is a pleasure to
    call on the winning coach for the House baseball contest
    between Republicans and Democrats in continuous play since
    1909. Roger Williams is recognized for 5 minutes.
        Mr. Williams of Texas. Thank you, Chairman, and thank you,
    Director, for being here today. You and I have reminded each
    other I am a car dealer, so I have a lot of interest in this
    today. So good to see you.
        I have concerns regarding your plans to establish a nonbank
    registry for so-called repeat offenders, and I am concerned how
    you plan to use the information obtained and put it in this
    registry. The registry appears to be a misguided effort
    designed to increase the CFPB's supervisory and enforcement
    powers by leveraging State laws and orders over which the CFPB,
    frankly, has no authority. Additional supervision by the CFPB
    is unnecessary. It harms consumer protection efforts and wastes
    the Agency's resources. So the proposed registry is a solution
    in search of a problem.
        Now, my question would be, Director, how do you justify the
    need for additional CFPB supervision when State agencies
    already have robust enforcement mechanisms and why are you
    trying to do the States' jobs for them when your Agency has no
    such authority?
        Mr. Chopra. Yes. So we are not doing additional
    supervision. Consumer financial protection asks us to register
    nonbank companies. So I think that was originally contemplated
    as registering auto or payday or whatever it may be in the
    nonbank sector. We have taken a much more humble approach and
    focused on the frauds and scams and repeat offenders. So all we
    are saying is that if there is a public enforcement order, that
    has to be reported to the CFPB. This is going to allow law
    enforcement to really cooperate together to be able to see if
    there is misconduct, criminal behavior moving from State to
    State, and I think it will help us stop that. We are not really
    creating new supervision. We do not enforce State law. States
    enforce State law, but I do think this is important law
    enforcement cooperation, and we have seen this in many other
    contexts.
        Mr. Williams of Texas. In January, the CFPB proposed a
    price cap on overdraft fees. Overdraft services are very
    popular, as we all know. A recent survey found that more than
    two-thirds of consumers find that their bank's overdraft
    services are valuable. In that same study, 8 out of 10
    consumers who have paid an overdraft fee were glad that their
    bank covered their overdraft instead of rejecting the payment.
    So overdraft is a tool that allows consumers, and has for a
    long time, flexibility during times of emergencies or tough
    financial situations. Should you move forward with these
    regulations, however, many banks will be forced to stop
    overdraft fee services to their consumers.
        So a question, Director. Why is the Bureau trying to
    regulate this product to death, disproportionately impacting
    those who have limited access to alternative liquidity options?
    Furthermore, what are the sources of short-term liquidity do
    you expect consumers to use if they do not have this overdraft
    fee?
        Mr. Chopra. Respectfully, and you know I like you on this,
    but it is not right that there is a price cap. What we have
    proposed is that if large banks--we have exempted all the small
    ones--if the large banks want to make money on overdraft loans,
    they should disclose it just like they would disclose a credit
    card or another loan. That will allow consumers to compare. We
    have essentially created an exemption if they are charging a
    reasonable amount below an industry average. That will allow
    them to make choices: Are they going to offer it as a
    convenience, or are they going to offer it as a loan? We
    revisited a 1969 interpretation on this, and I think we think
    this brings more competition, more choice, and the ability for
    people to really look at a credit card, or a line of credit, or
    an overdraft loan to be able to compare what is best for them.
        Mr. Williams of Texas. Okay. In the time I have left, there
    are nearly 900 pages in the final rule on Dodd-Frank. Section
    1071 is inherently overwhelming. Small businesses lending is
    already a complex environment with many different channels and
    types of credit. The rule that is finalized creates confusion
    for lenders across the board who are critical lifeline for our
    Nation's small businesses, much like mine. In addition to
    creating confusion with respect to the collection and reporting
    of the data, the rule itself lacks substantial information
    about how the data will be used once it is reported and what
    safeguards will be put in place by the Bureau.
        Director, under your leadership, you have gone after Big
    Tech for their data practices. What about the Bureau's data
    practices? How will the Bureau ensure transparency for small
    businesses regarding the use and protection of their data?
        Mr. Chopra. This is much delayed. We are not going to see
    reporting for a while, but certainly, with respect to how that
    data is handled, I am actually really happy to talk to you more
    about how we are thinking of making sure that we can protect
    it. We know that small business is totally different than
    mortgages, and we are going to have to pay real close attention
    to how we handle this.
        Mr. Williams of Texas. Yes. Small business is very stressed
    right now. I yield my time back. Thank you.
        Mr. Chopra. Thank you, sir.
        Mr. Hill. The gentleman yields back. The gentlewoman from
    Texas, Ms. Garcia, is recognized for 5 minutes.
        Ms. Garcia. Thank you, Mr. Chairman, and thank you,
    Director Chopra, for joining us today. I just want to make it
    clear that we Democrats were here because we believe in your
    Agency, we applaud the Supreme Court decision, and we love the
    work that you are doing. So thank you so much for being there
    to stand up for consumers. For me, I want to just particularly
    thank you for the work that you have done with the Think
    Finance, the Texas online lender. You returned back $384
    million. Even for Texas that is not chump change.
        Think Finance has illegally collected loans that were void
    under Texas State laws that govern interest rate caps and
    lender licensing requirements. The company misrepresented to
    consumers that they were owed money on these loans, made
    electronic withdrawals from their bank accounts, and even sent
    them demanding letters. I think more people need to understand
    you are the only Federal Agency created with a sole purpose of
    protecting consumers and for the record, I googled it. You have
    a 79 percent approval rating, and yes, Congress has a dismal 13
    percent. So your credibility is high, the public does love you,
    and you are doing the work that your mission statement has
    demanded.
        I have a few other questions, but I will submit them in
    writing because I was concerned with you not having enough time
    to clarify the question from one of my colleagues about whether
    or not immigration status can be considered when reviewing an
    application for credit. You said something about national
    origin. You said something about immigration status, and for
    everyone that is listening, can we just be clear on what the
    guidance did say and did not say?
        Mr. Chopra. Yes. Immigration status cannot be used as some
    sort of pretext to discriminate against people illegally. We
    are really worried when someone uses a type of characteristic
    to discriminate against a whole protected class as a ruse. So
    what the guidance made clear is that national origin
    discrimination is one of many protected classes that is illegal
    to discriminate against under Federal law. While the guidance
    does not say you have to lend to a certain person or not, when
    you use immigration status in a way that is pretextual to
    discriminate against a certain group of people that is
    protected under law, that is illegal. I think we want to make
    sure that lenders are doing it in a careful risk-based way and
    not just a way to exclude a whole category of people that are
    protected under Federal law.
        Ms. Garcia. So their application should be reviewed just
    like any other consumer?
        Mr. Chopra. Correct. You should not be----
        Ms. Garcia. They cannot simply look at it and say, oh no,
    they are not U.S. citizens, we are not even going to look at
    it?
        Mr. Chopra. Yes. It is one of many factors, and it should
    be done with care so as to not be so broad that it just
    automatically disqualifies a whole group of people who have
    protections under Federal discrimination----
        Ms. Garcia. Right. I think the words that you all use in
    the guidance is the creditors rights regarding repayment,
    unnecessary or overbroad reliance.
        Mr. Chopra. That is exactly right.
        Ms. Garcia. All right. So if anyone were to suggest that
    you said that it was okay to consider immigration status, would
    they be correct?
        Mr. Chopra. Well, you can use immigration status. You
    cannot use it in a way that is so overbroad that it ends up
    discriminating against people based on a protected
    characteristic under the Equal Credit Opportunity Act. That is
    what the Justice Department and the CFPB tried to articulate,
    and it is true that there are some cases where people will use
    or look or assess different characteristics. It cannot be done
    in a discriminatory way against a protected class.
        Ms. Garcia. Well, thank you for that. Now, I will just ask
    you another quick one. The rule related to remittances, or was
    it a guidance? I forget.
        Mr. Chopra. Yes.
        Ms. Garcia. Could you just briefly tell us what that says?
        Mr. Chopra. Well, we are really worried when remittance
    companies claim that they are offering something that is free,
    but in reality, it has real costs, including through how they
    deal with the currency exchange rate spread. So it is really
    important that consumers be able to know the costs of how they
    are going to pay a remittance. We need to do more to offer a
    competitive, cheap way, especially using digital technology.
        Ms. Garcia. Right. Well, the other item that I have on my
    list is when you talk about the fraud toward seniors. We need
    to go----
        Mr. Hill. The gentlewoman's time has expired.
        Ms. Garcia [continuing]. Federal home insurance. Thank you.
        Mr. Hill. The gentlewoman yields back. Please be responsive
    to her question in writing, Director.
        Mr. Hill. Director, I am yielding myself 5 minutes for
    questions. Thank you for being here before us to answer the
    committee's questions. We always are grateful for your visits
    annually, or more frequently as needed.
        Can you provide for the record to me in writing, not try to
    rattle it off, under your statutes that you are responsible for
    as delegated to you by Dodd-Frank, which ones go through Office
    of Management and Budget (OMB) review, or can you testify today
    that all regulatory rulemaking proposals issued by the CFPB do
    not go through the OMB----
        Mr. Chopra. There are aspects----
        Mr. Hill. It is a mix, is it not?
        Mr. Chopra. Yes, there is a mix. There are aspects of our
    rules that do go through, I believe, the Office of Information
    and Regulatory Affairs within OMB. I cannot say exactly----
        Mr. Hill. Would you just submit for the record----
        Mr. Chopra. Yes, sure.
        Mr. Hill [continuing]. educate me on----
        Mr. Chopra. Sure.
        Mr. Hill [continuing]. what does and what does not as it
    relates specifically to your Agency?
        Mr. Chopra. Sure. Sure.
        Mr. Hill. Because that is I think important for our work.
    It allows us to be a better judge of APA compliance by the
    agencies under our----
        Mr. Chopra. Of course.
        Mr. Hill [continuing]. oversight jurisdiction.
        Mr. Hill. CFPB, you would consider an independent Agency?
        Mr. Chopra. Yes. Our enforcement supervision is really
    totally independent. We go through a process to make sure that
    there is not any unnecessary interference in our enforcement.
        Mr. Hill. Yes. So that is why I wonder if it has been
    appropriate for you to associate yourself by coordinating 4 or
    5 months out from an election with the White House for a press
    rollout of a new proposal on medical debt. You think that is in
    keeping with your role as an independent regulatory Agency?
        Mr. Chopra. Well, it is certainly consistent with my
    predecessors. One of the things that has been a better part of
    what we have been doing is coordinating broadly with other
    agencies. For example, some of the work we are doing on data
    protection is not just going to impact consumers. There is some
    real national security equities there, so a lot of what we do
    is in coordination, and actually, we are required under our
    statute to be in coordination. Let me just say, Congressman
    Hill, I will stand with any of you who wants to join me in
    celebrating the successes of the CFPB and what we are doing for
    consumers.
        Mr. Hill. Thank you, Director. Always smooth in your
    answers. One of the ways that the CFPB was insulated in a big
    picture way, of course, has been debated here recently and gone
    before the Court about the way the Agency is funded. Can you
    state for the record how Dodd-Frank directs that the CFPB
    should be funded on an annual basis?
        Mr. Chopra. The CFPB is a unit of the Federal Reserve
    System, so we are funded a very similar way that the Federal
    Reserve Board of Governors, except we are not able to set our
    budget. I can request to the Federal Reserve Board transfers
    from the Federal Reserve System in the same way they transfer
    moneys from the Federal Reserve banks to fund their operations.
        Mr. Hill. But you do set that amount. They do not set the
    amount, right?
        Mr. Chopra. Actually, Congress sets the cap on that, and we
    have stayed below that cap.
        Mr. Hill. What is that cap?
        Mr. Chopra. We have been going through budgeting for the
    future, but I believe that it is set in statute and then there
    is an index called the Employment Cost Index, ECI. Maybe that
    is the wrong acronym.
        Mr. Hill. But is it a cap of a percentage of what, the
    Federal Reserve's earnings?
        Mr. Chopra. It is basically a hard number that is adjusted
    by that index year by year, so it does not vary based on other
    performance. It is sort of a set number with a cost inflator.
        Mr. Hill. When was the last time the Fed showed a net
    profit? Do you know that number?
        Mr. Chopra. Yes. So the nonprofits and government agencies,
    they do not report profit and loss in the way a private sector
    company would.
        Mr. Hill. No, but they report positive or negative cash-
    flow. So when was the last time that----
        Mr. Chopra. Actually, cash-flow is a totally different
    indicator.
        Mr. Hill. Okay. When was the last time there was a net
    positive result from the Federal Reserve, the last time they
    generated positive earnings?
        Mr. Chopra. So I think the Federal Reserve Act would call
    it excess earnings.
        Mr. Hill. Okay. When was the last time they had excess
    earnings?
        Mr. Chopra. I believe that in early 2023 or late 2022. I
    cannot remember the exact one.
        Mr. Hill. Yes.
        Mr. Chopra. Again, that uses different terminology.
        Mr. Hill. That is true. That is true. September 2022. So
    good analysis on your part, but since then, the Fed has
    actually had a deficit in earnings of $172 billion.
        Mr. Chopra. No, that is not true. If you look at their
    audited financial statements, again, just like in the private
    sector, nonprofits use different accounting terminology.
        Mr. Hill. Yes, but we are not debating that today.
        Mr. Chopra. I am happy to supply you their audited
    financial----
        Mr. Hill. I get it. I read it. I know what it says, and I
    know it is running a deficit, and, therefore, instead of
    sending money to the Treasury, they are crediting a contra
    account at the Treasury. My point is that when you ask for
    funding, you are asking for that on top of their losses.
        I yield back. Mr. Davidson, I recognize you--from Ohio--for
    5 minutes.
        Mr. Chopra. Thank you, sir.
        Mr. Davidson. I thank the chairman. Director, I thank you
    for your work, especially on privacy. We have had clear
    disagreements on all sorts of policy matters, not to be
    unexpected given the nature of the appointments and all that. I
    have really been encouraged by your commitment to privacy, and
    I hope that we can make that truly bipartisan.
        We have had important wins on the Fourth Amendment's Not
    For Sale. We got very much the spirit of what you are talking
    about with data brokers and their abuse of the Fair Credit
    Reporting Act with that, and it was 123 Republicans and 96
    Democrats. It was one of the things that broke differently than
    pure partisan lines, and so I hope you continue to be a voice
    for that. As you know, we are working on the Payment Privacy
    Act. We highlighted it at your last appearance. It is very
    complementary to the 1033 process that you have been
    undertaking, and I appreciate your collaboration and feedback
    on that. I just thought I would offer you a chance to offer
    anything else about the concept of the Payment Privacy Act and
    appreciated your dialog with Chairman McHenry at the start of
    the hearing.
        Mr. Chopra. I think that being able to know all of our
    individual payments and transactions without our permission or
    really just happening in the background, I do not think this is
    just sort of a question about fairness in the economy. I think
    this has some very real questions about individual liberty and
    freedom. I am very worried about the potential for financial
    censorship and the ability for others to have more control over
    us, including by manipulating us in some ways. I think this is
    a big concern, particularly when countries of concern can get
    this information, and they do that through data brokers.
        Mr. Davidson. Yes. Thank you for that. In the financial
    services realm, we are used to things that maybe in energy and
    commerce they are not used to because apparently in the FTC, if
    you put it in the terms and conditions anywhere, you can do
    pretty much whatever you want. They do not really even have the
    wherewithal to understand what is being put in the terms and
    conditions, let alone hold companies accountable for delivering
    on those and not breaching them.
        Here in the financial services space, on the other hand,
    even if you really want to put in the terms and conditions,
    there is certain things you cannot do, and I think one of those
    has to be sharing someone's private information, their data
    without their consent, and I think that is the spirit of what I
    think you are trying to do there. I hope we can continue to
    collaborate that.
        You know, Director Chopra, the CFPB's recent larger
    participant rule proposal covering general use digital wallets
    is kind of an expansion of the space in a sense, but I do
    believe one of the most important consumer protections we could
    have is self-custody. Really, it is a protection of private
    property. They should have no fear that the government would
    take that, except the government continues to try to take that
    under both Republican and Democrat Administrations. FinCEN
    targeted that. What is your thinking on this, and why do you
    believe CFPB should be able to focus on this?
        Mr. Chopra. Yes. One of the reasons we proposed this is
    that we are seeing a lot more big tech companies, other tech
    firms entering into payments. Our jurisdiction is really
    consumer payments, the Electronic Fund Transfer Act, other
    consumer protections. We are not expanding. We just want to
    make sure that where there is already our enforcement
    jurisdiction, we have some ability to make sure that when it
    comes to fraud, privacy, and other issues there is some
    consistency between bank and nonbank. I will share with you
    that the Fair Credit Reporting Act is one of the most important
    privacy laws in the country which has real restrictions on use,
    and I hope that both sides can figure out how to do something
    as it relates to these payments.
        Mr. Davidson. Well, I share your concern and really enjoyed
    Mr. Vargas' commitment and Casten talking about remittances and
    protecting consumers in that way. When you look at digital
    assets, self-custody is really the epitome of it. It is
    permissionless peer-to-peer payments that are being protected
    in that sense. They are private, they are secure, and they are
    protected from third parties doing anything with them, and so I
    hope that we can stake that out as a common ground that we
    defend. It would be great to see bipartisan support for the
    Keep Your Coins Act as an example that would protect that.
        One area that I am concerned with, especially given the
    protection for privacy that you have espoused, is this auto
    loan data collection. I mean, you say that you are not yet
    committed to go with that when you were talking to Mr. Steil,
    and I appreciate that. Nevertheless, the pilot is underway. It
    is collecting lots of stuff. I do not know why if you buy a car
    someone needs to know not only the income things that he is
    talking about or zip code you live in, but race, gender,
    ethnicity, sexual preference, all kinds of things like that. It
    seems kind of creepy and spying. How do you reconcile that?
        Mr. Chopra. Yes. So none of the work we have been doing has
    sought to collect additional information from borrowers. It is
    already what is in the system. But----
        Mr. Meuser [presiding]. The gentleman's time has expired.
        Mr. Chopra [continuing]. you and I should talk about it
    because I think that we are not committed to proceeding with
    this, but we do want to make sure that we have some data on the
    auto loan market, which is now $1.6 trillion----
        Mr. Meuser. You can answer in writing, Director.
        Mr. Davidson. My time is expired, and I yield back.
        Mr. Meuser. The gentleman yields back. I now recognize
    myself for 5 minutes. Director Chopra, nice to see you.
        I do want to focus on some things that we have talked about
    in the past, some of the ideology, I believe, out of the CFPB
    and some examples of some overreach, and even some
    unwillingness to listen to industry feedback, which I think is
    extremely important. I continue to hear from banks, large and
    small, super regionals, community banks, that some of the
    activities and regulations that are coming out of your Agency
    are burdensome and not helpful, in fact, very duplicative at
    times, what they are already doing, just it being done
    differently.
        I want to just start with on cost-benefit analysis, which
    we have talked about in the past. It is an important part of a
    rulemaking process. It is important to understand how your
    rules hurt businesses or help and, subsequently, their
    customers. So can you walk us through a little bit about your
    rulemaking and how you take a cost-benefit analysis into
    consideration and the sort of outreach and information that you
    take in order to make the best rules possible?
        Mr. Chopra. Yes. We try, obviously, to make sure that we
    are looking analytically at any type of potential rule or
    intervention we are taking. I mean, it is not good if there are
    not more benefits.
        Now, I will share this. Sometimes we also get feedback just
    like the last question I got from Congressman Davidson do not
    collect this data because of burden. So sometimes we like to
    rely on existing data that we have or third-party data that has
    been published. So we always subject that to public comment and
    where we do get additional submissions of data, we look at that
    very carefully to see the methodology and how we would factor
    it in, but we absolutely do comply with all the requirements
    and go beyond that.
        Mr. Meuser. You must get some feedback, as I do, that your
    comment periods are not always adequate. You kind of made a
    remark regarding the timeframe for the auto industry
    requirements to be very minimal. You said 20 minutes, and I
    know you did not mean that cumulatively, but that did not seem
    like an understood response, that most of the industry
    disagreed with your figure in that case.
        Mr. Chopra. Yes, and we have made no decision on that one
    and we are going to look at what we said. What I think is
    different about auto compared to, say, what companies have to
    do under Federal law for mortgage, there is no new data
    collection requirement. I think we are trying to find a
    representative sample to get insight----
        Mr. Meuser. Again, taking feedback from----
        Mr. Chopra. We are, and we certainly subjected it to that.
        Mr. Meuser. All right. Okay. So you know, I am going to ask
    you about this. You have had some press release and tweets--I
    cannot say exactly when, but they exist--that came across as
    very kind of mean-spirited perhaps, malicious phrases, such as
    you referring to industries or sectors as cartels, as liars, as
    deceitful, sometimes in reference to entire industries, or at
    least that is how it was interpreted. Do you believe entire
    industries in the financial services marketplace should be
    tainted in this way?
        Mr. Chopra. No, we have not done that. In fact, I will say,
    though, the London Interbank Offered Rate (LIBOR) rigging and
    cartel cost all of us billions and billions of dollars. That
    was a serious offense that also had raised criminal issues. So
    yes, that was cartel-like behavior, and it was totally
    inappropriate.
        Mr. Meuser. That is not really how it came across.
        Mr. Chopra. Well, I welcome you to share that with me
    because that is what I remember.
        Mr. Meuser. Is there an industry that you think does treat
    its customers well?
        Mr. Chopra. That is what we want. We want people to compete
    on treating people well, giving them a good product at a great
    price.
        Mr. Meuser. You and your staff have referred to banks as
    being similar to a utility. Do you believe in the competitive
    marketplace of tens of thousands of banks and credit unions, or
    do you see them more as a utility that needs to be run by the
    heavy hand and high regulations, which the banks already have,
    such as utilities?
        Mr. Chopra. No, I think what we have said is it is critical
    infrastructure for the economy. So I do not think people fully
    appreciate, if the banking system is not working, nothing
    works. It is as important as the electric grid or the
    transportation network. So it is so important, which is why we
    need to make sure it is always working, always on, and when
    there are risks to the financial system, we have to safeguard
    against that.
        Mr. Meuser. My time has expired. I appreciate the
    clarification. I now recognize from New Jersey, Mr. Gottheimer,
    for 5 minutes.
        Mr. Gottheimer. Thank you, Mr. Chairman. Director, thank
    you for being here. I want to start off with some great news.
    When you were here last in front of this committee in November
    2023, you committed to investigating the revenue that financial
    institutions were making off of the outrageous congestion tax
    in New York. I am glad to let you know that the Metropolitan
    Transportation Authority (MTA) has in a flash of common sense
    put an end to the congestion tax cash grab. That is one
    investigation off your list. Thank you for your partnership in
    that effort. You can celebrate if you want, or we can do it
    later if you would like over a beer.
        Switching gears. Like you, I share the objective of
    protecting consumers from harmful practices. Are you familiar
    with crisis pregnancy centers, or CPCs?
        Mr. Chopra. Yes. I do not have deep knowledge, but I am
    aware.
        Mr. Gottheimer. CPCs offer a master class in deceptive
    anti-choice marketing, often misleading women and attempt to
    block their access to reproductive healthcare. That is why
    watchdog groups have called on our Federal Government to
    investigate these centers for deceptive marketing practices.
    Director, you understand consumer fairness perhaps better than
    anyone else in this room. Will you commit to using CFPB
    resources to look into this issue and protect consumers who
    come into contact with these centers, especially women?
        Mr. Chopra. Well, certainly, they are not a financial
    provider, so it would be out of our jurisdiction. In as much
    that there are deceptive or unlawful claims, there are agencies
    in the Federal Government who do have jurisdiction. Of course,
    we always want a marketplace where advertising claims are
    truthful.
        Mr. Gottheimer. I think in this case, I will follow up with
    you. There are some financial crossovers, and I encourage you--
    --
        Mr. Chopra. I see.
        Mr. Gottheimer [continuing]. to look at this issue and hold
    these centers accountable for deceptive practices and
    disinformation, and I will follow up with you, if that is okay.
        Mr. Chopra. Of course.
        Mr. Gottheimer. Thank you. Director, I would like to talk
    to you about coerced debt, which occurs when the abuser in a
    violent relationship obtains credit in a survivor's name
    through threat, force, or fraud. Far too often, women survivors
    are the ones targeted in these situations. Right now, a card
    holder cannot be removed from a joint credit card account
    unless both parties agree to terminate the account. Has the
    CFPB looked into solutions that help survivors take their name
    off joint accounts without penalties?
        Mr. Chopra. Yes. So we have actually completed a rulemaking
    under the Fair Credit Reporting Act regarding survivors of
    human trafficking. That is one of the best examples of coerced
    debt. We really do see this also for those who have suffered
    from domestic violence or other types of relationships, where
    they might incur debt that they did not even seek.
        One way that a bad actor can really keep control over
    someone is when they are financially paralyzed, and destroying
    their credit report with unpaid debts is another way that they
    can maintain that control. So I would really urge us all to
    think about ways the Fair Credit Reporting Act can also be used
    to stop not just abusers or protect survivors of human
    trafficking, but also those who have been subject to domestic
    violence.
        Mr. Gottheimer. That is a big issue on the domestic
    violence side. I hear often from men and women who have told me
    that they are scared to leave a relationship or they cannot
    because financially they just cannot get out from the financial
    abuse----
        Mr. Chopra. We would really like to work on this with you.
    There was a bill that came out of this committee about
    survivors of human trafficking. The CFPB implemented that rule
    pursuant to the deadline. I think we can consider more work on
    this.
        Mr. Gottheimer. I really would like to work together with
    you on this issue. We need to ensure survivors have the support
    they need to rebuild their lives, and I would be honored to
    work with you on that. According to the Federal Bureau of
    Investigation's (FBI's) 2023 Elder Fraud Report, seniors had
    more than $3.4 billion stolen from senior scammers last year.
    What is the CFPB, if I can ask, doing to crack down on this
    staggering fraud?
        Mr. Chopra. Well, elder financial exploitation has always
    been something that I have been worried about. We are looking
    to find ways to partner with industry and others to detect some
    of these scams. I am actually really worried about the use of
    generative AI here, where someone's voice can be cloned and
    they can make a call to an older adult. There is really no way
    for that older adult to distinguish it, and it can often lead
    to very serious harms. I would like to see the banking industry
    also step up when it comes to older adults who are suspiciously
    sending major wire transfers to scammers.
        Mr. Gottheimer. I agree. In fact, I am leading a bipartisan
    Empowering States to Protect Seniors from Bad Actors Act with
    my friend Representative Nunn to equip States with the support
    they need to address scams. It is a critical issue, and I
    believe this legislation will be a valuable tool in the scam
    response toolkit. Thank you so much, and I yield back.
        Mr. Meuser. The gentleman yields back. The gentlewoman from
    Texas, Ms. De La Cruz, is now recognized for 5 minutes.
        Ms. De La Cruz. Thank you, Mr. Chairman, for holding the
    hearing today, and thank you, Director Chopra, for appearing
    before us.
        The CFPB was created with a special mandate to guard
    against consumer harm. However, it seems that many of your
    rules written are specifically penalizing our small financial
    institutions that serve local communities like mine. My
    community is largely Hispanic and a rural area as well. Small
    banks and community banks are key contributors to places like
    mine. They help with economic growth and development, and like
    I said, my district stems from the border in Deep South Texas
    all the way up north to San Antonio. So our banks, of course,
    have a unique community which they serve. I am concerned about
    many of the regulations that the CFPB has written over the last
    3 years.
        Many organizations and associations have shared with you
    that Section 1071 Rule are going to hurt our small businesses,
    the small businesses that have been leading efforts in our
    community. Many people in the community are seeking capital to
    grow their businesses and do not want their racial or other
    demographic information to be part of the loan process. My
    biggest concern is that the rules that the CFPB and the other
    Federal financial regulators have drafted over the last 3 years
    were all written in a vacuum. Yet, the totality of all the
    regulation has drastically increased the compliance burden on
    the financial institutions.
        Director Chopra, is anyone at the CFPB looking at the
    cumulative impact of all of these new regulations and the
    ability of smaller financial institutions to digest them
    properly to comply?
        Mr. Chopra. Yes, we have actually received feedback on
    this, and one of the places I have been working with our staff
    on is to really look at what is the roadmap for which
    institutions, including the smallest banks are making changes.
    For example, we tried to make sure that any of the rules that
    we were required to promulgate by Congress, they are working in
    concert with others, such as the required Section 1071 Rule
    that we had to promulgate is working with any Community
    Reinvestment Act one. We are also looking at the systems and
    vendors that they are using. Often these smaller institutions
    do not have much choice when it comes to software vendors, so
    we tend to work closely with them to understand what are some
    of the things they are prioritizing and implementing.
        I take your point. We really need community financial
    institutions, small banks, small institutions all over the
    country serving people. I do not want to see a world where
    people only have three or four choices.
        Ms. De La Cruz. Director Chopra, as you just said, you are
    looking at these, having discussions. Would you commit to
    having some type of research investigation, a report to
    actually analyze how this affects the community banks before
    implementing the 1071 Rule? Can you commit with that?
        Mr. Chopra. Well, one of the things we did was we actually
    exempted a large number of institutions from it based on some
    of the concerns that you are raising. We wanted to see that it
    becomes something that we implement what Congress mandated with
    fidelity, while also growing the balance----
        Ms. De La Cruz. I am reclaiming my time here. As I speak to
    regional banks in Texas, the regional banks that are growing in
    Texas, one of the fastest-growing States, they are saying that
    they want to scale back their loan process because of how this
    is going to implement. Then my smaller banks that you have
    actually exempted are saying they do not want to grow. Why?
    Because they do not want to have to comply to this rule and all
    the mandates. They feel that it will actually hurt them.
        So what you are actually doing is you are pushing against
    the small banks and their desire to grow in communities who are
    Hispanic like mine, and you are also affecting regional banks
    to want to scale back loans to small businesses, mortgage
    lenders, real estate agents, those type of people because they
    do not want to grow anymore. So I think that this is something
    that needs to be reported on before it is actually implemented.
        Thank you, Mr. Chairman. I yield back.
        Mr. Meuser. The gentlewoman yields back. The gentlewoman
    from Massachusetts, Mrs. Pressley, is now recognized for 5
    minutes.
        Ms. Pressley. Thank you, Mr. Chair. Thank you for joining
    us, Director Chopra, and thank you for leading the Consumer
    Financial Protection Bureau in its mission to save consumers
    billions of their hard earned dollars by cracking down on junk
    fees, helping wipe out 70 percent of medical debt from consumer
    reports, and ensuring that our data is accurate and secure.
        Before I go further, I just want to take a moment for the
    record. You know, after many attacks on the CFPB, could you
    just for the record say what the Supreme Court of the United
    States (SCOTUS) ruling was?
        Mr. Chopra. In an opinion that was 7 to 2, authored by
    Justice Clarence Thomas, the Supreme Court made crystal clear
    that the CFPB's funding mechanism complies with all aspects of
    the appropriations clause. While we prevailed in this, it was a
    very costly delay. So many of our lawsuits against bad actors
    were stalled, paused, and in other cases, companies were not
    complying in the way we would expect them to.
        Ms. Pressley. Well, yes or no, for the record, is the CFPB
    constitutional according to the Supreme Court?
        Mr. Chopra. Yes.
        Ms. Pressley. Louder for the far-right folks in the back.
        Mr. Chopra. Yes.
        Ms. Pressley. Very good. All right. In a few months,
    millions of students will be returning to their college
    campuses to continue their education and start their freshman
    year, including in my district, the MA 7th, which is home to
    one of the largest concentrations of higher learning
    institutions in the country. This is an exciting time for a new
    generation of young people--two of my incredible interns join
    us today, in fact--for whom this is often their first time
    living alone, managing a budget, exploring their potential
    academic and career futures. However, many of these students
    have little or no financial experience, zero income, and a lack
    of sufficient savings cushions for emergencies. In other words,
    they are vulnerable to financial exploitation.
        The CFPB has documented numerous cases of financial abuse
    in the student loan and credit card markets. It is increasingly
    clear that students are being driven toward more expensive
    products in the student prepaid and debit account markets as
    well.
        I would like to enter for the record the College Banking
    and Credit Card Agreements Annual Report to Congress.
        Mr. Lawler [presiding.]. Without objection.

        [The information referred to was not submitted prior to
    printing.]

        Ms. Pressley. Director Chopra, the report raises concerns
    about transparency and compliance of banking products marketed
    to college students. What actions has the CFPB taken to ensure
    appropriate disclosure requirements are being met by the
    universities?
        Mr. Chopra. Well, I think this is a very, very significant
    problem that in some ways represents problems of the past. We
    saw how student lenders were giving kickbacks to colleges,
    steering them into a specific loan. We saw how credit card
    issuers were targeting on-campus in college. Congress banned
    those student loan kickbacks. They banned that on-campus
    giveaways by credit card companies. I do think we need to
    continue to make sure that not just the banks are providing the
    right disclosures, but we are really looking with the
    Department of Education about the relationships between
    colleges and banks.
        Ms. Pressley. Thank you. The report further highlights that
    the products marketed to students are often more expensive. For
    example, the debit cards marketed to students often consist of
    high overdraft fees, inactivity fees, and monthly service fees
    even though cheaper options are available, resulting in some
    students saying that they had to fast for days, use candles to
    reduce electricity costs, and even forego textbooks. This is
    unacceptable and frankly shameful, and it is all because of
    predatory and unnecessary fees charged to their accounts.
        Director Chopra, these stories are horrifying and they are
    just a small snapshot of how students are being impacted. What
    steps is the CFPB taking to protect students from being
    directed to these expensive banking products which exploit
    their financial situation and inexperience?
        Mr. Chopra. Well, we are going to continue with the
    Department of Education's rules and our rules to make sure that
    there is not predatory and exploitative practices. We want to
    make sure that every college student that is starting this
    summer knows they should also look for an account maybe before
    they come to campus. They do not have to accept what the
    college may be pushing on them and there needs to be some real
    look about whether colleges should be getting kickbacks for any
    of this.
        Ms. Pressley. Finally, Director Chopra, I am concerned by
    the report's finding that financial inducements to institutions
    of higher education from financial service providers may
    compromise the institution's ability to prioritize their
    student's financial well-being. I think we can agree that it
    poses a conflict of interest. So how is the CFPB monitoring
    these agreements and what steps are being taken to mitigate any
    conflict of interest?
        Mr. Chopra. Well, what is fortunate is many of these
    agreements are now public. The credit card agreements are
    public, we make them public, but we will also take further
    enforcement action if there is violations of law. I also think
    Congress should be thinking about reasonable limitations when
    it comes to these colleges profiting from it.
        Ms. Pressley. Thank you for your incredible work that you
    and your staff at the CFPB are doing. We appreciate your sweat
    equity and hard work immensely on behalf of consumers. I yield
    back.
        Mr. Lawler. The gentlelady yields back. The gentleman from
    Nebraska, Mr. Flood, is now recognized for 5 minutes.
        Mr. Flood. Thank you, Mr. Chairman. Scams and fraud in the
    financial system are an ever-growing threat to consumers and
    businesses with the cost reaching tens of billions. According
    to the FTC, consumers reported losing more than $10 billion to
    fraud in 2023, and that is a new benchmark. Victims of
    cybercrime registered 880,418 complaints to the FBI in 2023,
    with potential losses exceeding $12.5 billion, representing a
    22-percent increase in losses from the previous year. Mr.
    Chopra, will you commit to issuing a final rule on 1033 that
    does not discourage industry efforts to build critical tools to
    detect and prevent fraud?
        Mr. Chopra. Yes, I am totally aligned with that goal, and
    we are working to make sure that we can implement the rules to
    promote competition, protect data, but also to make sure that
    we are deterring, detecting, and stopping fraud.
        Mr. Flood. Right. Are you considering the development of
    these tools as it relates to restrictions on the secondary use
    of data?
        Mr. Chopra. This is a tough one. Secondary uses of data are
    often really difficult to police. It is hard to know what
    people are using the data for. So we know that there will be
    some who want to say they are offering a loan but really are
    just saying that and they want to use it to sell or otherwise
    share. So we are looking about all the ways in which we can
    craft the rule to make sure that there is not bait and switches
    and that there is really reasonable uses of the data that are
    not intrusive or engaging in surveillance.
        Mr. Flood. Thank you. I would like to switch gears to a
    different issue. Last year, your general counsel gave a speech,
    where he argued that the merchant exclusion within Dodd-Frank
    only applies to ``mom and pop'' merchants. Is it your view that
    the CFPB has jurisdiction over retail stores, airlines,
    electric utilities, and anyone else who sells things as long as
    they are a bigger company than a mom and pop?
        Mr. Chopra. It is not the full context. First of all, we
    absolutely do have jurisdiction over retailers, others when it
    comes to things like the Fair Credit Reporting Act, other----
        Mr. Flood. Any retailer, even a mom and pop store?
        Mr. Chopra. I think under the Fair Credit Reporting Act if
    they are a furnisher, that has not been a focus of ours in any
    way, but I would say the merchant exclusion is in the law. We
    have always adhered to that, and certainly we are not looking
    at mom and pops when it comes to our work.
        Mr. Flood. So we are having trouble understanding because I
    would like to remind you that the congressional intent was
    absolutely crystal clear as it related to this merchant
    exclusion. Senator Dodd of the Dodd-Frank fame said on the
    Senate floor, ``It was certainly always our intent not to
    include retailers and merchants under the auspices of the
    Consumer Financial Product Safety Commission. That language
    they have now offered and on which they work so hard makes that
    abundantly clear.''
        Do you take the position that Senator Dodd was mistaken
    about the clear meaning of the Dodd-Frank Act, a bill that he
    wrote with then Financial Services Committee Chair Barney
    Frank?
        Mr. Chopra. No. I think that merchant exclusion relates to
    who is an offeror of a loan or a financial provider in the
    meaning of the Consumer Financial Protection Act. I am sorry to
    get technical on it. We absolutely adhere to that. I think that
    was supposed to address a store that was offering the ability
    for someone to pay later for something to exclude it. That is
    not a loan.
        Mr. Flood. Finally, I like to close by highlighting an
    exchange I had with Acting Comptroller Hsu last month. Hsu
    said, ``Banking consists of three services that are bundled
    together: facilitating payments, making loans, and taking
    deposits. When payments becomes unbundled from that on its own,
    that is commerce, that is not banking.'' Director, do you agree
    with that description of the line between banking and commerce,
    and more so and more importantly, are payments alone commerce?
        Mr. Chopra. I need to think about that a bit more, but
    generally speaking, we think about banking as collecting
    deposits, making loans, and movement of money. I think that
    banks are really the critical component for doing all of it. I
    need to think about what that says. I think it sounds right
    roughly, but I need to put more thought on that.
        Mr. Flood. I would ask that you in your extended comments
    to this committee answer that question----
        Mr. Chopra. Sure.
        Mr. Flood [continuing]. before the deadline----
        Mr. Chopra. Of course.
        Mr. Flood [continuing]. proposed by the chair.
        Mr. Flood. With that, Mr. Chair, I yield back.
        Mr. Chopra. I am happy to discuss that with you, too.
        Mr. Flood. Thank you.
        Mr. Lawler. The gentleman yields back. The gentleman from
    Texas, Mr. Green, is now recognized for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman. I thank the ranking
    member, and of course I am always honored to have our director
    here with us. Thank you so much for what you are doing to
    protect consumers, and if I may, I would like to thank your
    staff, too. You have some very good staff members. They are
    always available to us to assist us.
        Let me start with this. The Supreme Court seems to have
    indicated that the CFPB is being properly funded, and I am
    pleased to know that you can now take a breath. I am not sure
    that the battle is over because I have an article from Politico
    styled, ``Regulating Through Blog Posts: ``Republicans Poised
    to Attack CFPB Director.'' So the battle is not over.
    Apparently, the new challenge will emanate from the Agency's
    funding, and it depends on the definition of the term
    ``earnings,'' Federal Reserve earnings. My hope is that people
    will understand that definition is one that allows for the
    earnings to mean total net income, not net profits, but that is
    a battle that you will have to continue to fight. You fight to
    protect the consumer, and then you have to fight to protect the
    Agency from my colleagues, who would like to end the Agency.
    You have quite a battle on your hands.
        Let us talk about the absence of the CFPB and what veterans
    would have to contend with because currently, you are serving
    1.3 million active duty servicemembers, 1.5 family members of
    active duty servicemembers, 770,000 members of the National
    Guard, 980,000 National Guard and Reserve family members, and
    18 million veterans. What is it that these persons in the
    absence of CFPB would have to contend with? We know that there
    are people who target them, who would take advantage of them
    when it comes to lending practices. Tell us if you would.
        Mr. Chopra. Well, one of my former colleagues, Holly
    Petraeus, used to describe some companies looking at
    servicemembers as nothing more than a dollar sign in a uniform.
    We see in the data that they are much more likely to be
    targeted for identity theft, including their money and their
    data. We enforce the Military Lending Act. Since I have taken
    office, we have brought in a number of enforcement actions to
    vindicate those servicemembers' rights. When it comes to
    veterans, many of them are subjected to frauds and scams. We
    have a dedicated Office of Servicemember Affairs that focuses
    on military connected families, and we are very proud of that
    work, and it would be a mistake to simply shut that work down.
        Mr. Green. Permit me to ask this. In the efforts to shut
    down the CFPB, have you seen or have you had presented to you
    any proposal as to what would replace it? Any legislation been
    presented to you in terms of a proposal to replace the CFPB?
        Mr. Chopra. I have heard about just elimination and
    defunding.
        Mr. Green. Elimination and defund. Sort of like with
    Obamacare, as it is called. Elimination is fairly easy, so they
    thought, but have not been able to perfect that, but never saw
    the plan to replace. Would you think that before we decide that
    we are going to eliminate this Agency that is protecting these
    millions of veterans and their family members, that we would
    have something that we would offer as a replacement?
        Mr. Chopra. It also would create chaos for mortgage lenders
    and many others who depend on the rules to make sure that they
    are lawfully originating mortgages.
        Mr. Green. I am pleased that you brought this up because,
    unfortunately, I was here when we had the downturn in 2008 and
    we discovered all of these many things that were being done to
    take advantage of persons who were seeking a mortgage. Some of
    the various instruments were just dastardly imposed upon
    consumers, so thank you for bringing that up. My belief is that
    the CFPB is necessary, and if we did not have it, we would try
    to create it, although in this climate I am confident that it
    would be impossible to create. So thank you for your service,
    and please continue to soldier on. Thank you.
        Mr. Lawler. The gentleman's time has expired. I now
    recognize myself for 5 minutes. I would just note that this
    committee did pass Mr. Barr's bill that would appropriate funds
    for the CFPB and create a commission. So the idea that somehow
    we are defunding and disbanding is false.
        Director Chopra, some of my colleagues have already raised
    concerns about the CFPB's directive to eliminate fees that
    institutions can charge, will limit access to credit for
    certain riskier individuals, and raise the costs of credit and
    services for all consumers. As of just this week, the CFPB
    initiated a rulemaking process to remove medical debt from
    credit reports. If a medical debt is owed by the consumer, how
    do you expect it to be collected?
        Mr. Chopra. Well, there are many, many medical providers
    that do not report and they do collect. I would say this. We
    have done years and years of analysis on it, and there is also
    a prohibition in the Fair Credit Reporting Act for having
    medical-related information on credit reports and we saw really
    people seizing on that exemption to often use a credit report
    to coerce people into paying debts they already paid or do not
    owe. So we have proposed and are accepting comment on how we
    might restrict some of that abuse and put it more in line with
    what Congress intended.
        Mr. Lawler. Okay. If I decided to apply for a mortgage, let
    us say, under your rule, and a lender would have no idea that I
    skipped out on my medical bills because I do not need to
    include it on my credit application, and the lender would not
    be allowed to consider the debt that I owe when determining how
    much of a mortgage I can afford, correct?
        Mr. Chopra. No, that would not be correct.
        Mr. Lawler. Why?
        Mr. Chopra. Well, it does not really prohibit any lender
    from asking about what are people's income, debts, other
    things. So again, this is really about looking at the
    accuracy----
        Mr. Lawler. So you are supposed to self-report?
        Mr. Chopra. Well, there are lots of things that are not on
    a credit report, including your food expenses, other things
    that lenders often do ask. So when it comes to a credit report,
    it was meant for a lender to see for the loans that you have
    taken out like a mortgage, credit card, auto loan, or a student
    loan how are you doing on them.
        Mr. Lawler. Right. How are you doing paying your debts,
    right?
        Mr. Chopra. Yes. So we have not----
        Mr. Lawler. So if the objective of a credit report is to
    show somebody who is going to provide you----
        Mr. Chopra. Yes, your loans.
        Mr. Lawler [continuing]. with funding----
        Mr. Chopra. Your loans.
        Mr. Lawler. Right. But if you are----
        Mr. Chopra. So we have not been opposed to excluding----
        Mr. Lawler. Right. But if you are----
        Mr. Chopra [continuing]. medical loans or medical credit
    cards.
        Mr. Lawler. Excuse me. The whole purpose of a credit
    report, right, is so that somebody knows whether or not
    somebody potentially could be a risky person to lend money to.
    So if that is the objective and you are saying, well, you do
    not need to include this, you do not need to report it, is it
    not going to create a situation where they do not have an
    accurate financial picture of a prospective borrower, and will
    that not have an impact on our credit markets?
        Mr. Chopra. Well, I guess I would ask you this. Let us say
    I just made up the fact that you owed me $10,000 and I put that
    on your credit report. When there are inaccuracies in your
    credit report, that has a huge impact on you when it is false,
    when it is already paid. What we see is compared to other types
    of loans like mortgages, or credit cards, or auto loans, where
    you actually signed up for the loan, where there is
    documentation around it, there is a lot more information to
    assure that it is accurate. On top of that, medical bills also
    go through the insurance system, so you are often left with a
    situation where things are still pending but often parked on
    your credit report and that is why many lenders actually do not
    even look at it because they know that it is not necessarily
    predictive of your performance on other loans, and that is what
    a lot of the research has shown.
        We have proposed the rule. We are eager to get feedback on
    it, if there are places we should adjust it, but we did a lot
    of work over the years to make sure that there is a strong
    empirical base for this. At the end of the day, the Fair Credit
    Reporting Act really does not permit medical information or
    your health data to be there.
        Mr. Lawler. In your example, you talk about inaccuracies on
    a credit report, but cannot consumers dispute those
    inaccuracies?
        Mr. Chopra. Yes, but how long is that going to take right
    when you are in the middle of applying for a loan? You know, it
    will take so much time to file the dispute, wait, and then you
    are in some rope-a-dope between the credit reporting agency and
    the furnisher. This is why this has systemic problems, and I
    really want to encourage you. I know people feel they have to
    oppose this, but this is pretty reasonable what we are
    proposing.
        Mr. Lawler. Yes, but as you acknowledge, there is a process
    to dispute for inaccuracies., and ultimately----
        Mr. Chopra. Yes, but there is not a process where medical
    billers----
        Mr. Lawler. Yes, sir. Reclaiming my time. Thank you. My
    time has now expired.
        The gentleman from New York, Mr. Torres, is recognized for
    5 minutes.
        Mr. Torres. Thank you. Director Chopra, I commend you for
    your decision to propose the exclusion of medical debt from
    credit reporting. Medical debt is often the consequence of the
    unforeseeable, and, therefore, it reveals next to nothing about
    the underlying credit worthiness of an individual borrower.
        America's conventional credit scoring methodology to me is
    fundamentally obsolete. Not only does it include factors that
    have no informative value like medical, it often excludes
    factors that have informative value like rental payments. If
    credit reporting were to factor in alternative data, like rent
    payments, most of the population, if not almost all of it,
    would become credit scorable. If Government-Sponsored
    Enterprises (GSEs), like the Federal Home Loan Bank of New
    York, Fannie Mae, and Freddie Mac, were to use credit scores
    that include rent payments and exclude medical debt, as
    required by law, millions of more Americans would have access
    to homeownership. Twenty thousand of my constituents in the
    Bronx in New York 15 would have access to homeownership. So for
    me, the single greatest solution to systemic racism in America
    is the creation of black and brown wealth through expanded
    access to credit and expanded access to homeownership.
        For the lowest income communities of color, there is
    nothing comparable to homeownership as a tool for broad-based
    wealth creation. I appreciate your mentioned earlier of trigger
    leads. I have serious concerns that unregulated trigger leads
    fundamentally undermine consumer protection and data privacy.
    When consumers apply for a mortgage, a credit reporting agency
    will often sell their private information without their
    knowledge and consent. Within hours of applying for a mortgage,
    consumers are often blindsided by a bombardment of
    telemarketing calls. Some of the lenders behind these calls are
    often bottom feeders, engaging in unfair and deceptive business
    practices. So, I worry that poorly regulated trigger leads are
    often an open invitation to predatory lending against
    unsuspecting borrowers.
        I am curious, would you support legislation that would
    regulate trigger leads?
        Mr. Chopra. Yes, I really have concerns about the big
    credit reporting conglomerates making money off of this,
    especially when we do not even know if these offers are really
    competitive or legitimate. You mentioned, Congressman Torres,
    that they might be bottom feeders. We do not even hear that
    much that these leads are leading to more competition, but I
    really do. I have talked to you and Congressman Rose about it.
    I think this is a key privacy issue we should work on.
        Mr. Torres. Look, I mean, I feel deregulated trigger leads,
    leads to predatory lending under the guise of choice and
    competition. Maybe the theory is that it will lead to more
    choice and competition, but the reality is that it has led to
    more exploitation.
        As you know, June is Pride Month, and so I have a few
    questions in the spirit of pride month. The Urban Institute
    released a report finding a 20-percent homeownership gap based
    on sexual orientation and gender identity. Five percent of the
    20-percent homeownership gap cannot be explained by existing
    data. As the administrator of the Home Mortgage Disclosure Act,
    CFPB is in a position to mandate the disclosure of more data so
    that researchers like the Urban Institute can ascertain the
    causes of the unexplained 5 percent homeownership gap.
        Is the CFPB willing to take action to expand the scope of
    the Home Mortgage Disclosure Act to include data relating to
    sexual orientation and gender identity?
        Mr. Chopra. Yes. We are thinking of looking more deeply in
    general at the homeownership gap and older homeowners, and
    there are certainly issues when it comes to sexual orientation
    and other factors. With respect to the Home Mortgage Disclosure
    Act, there are a number of issues that we are looking at for
    modernization of that, and that is certainly one of them. I
    think it is not slated in the very near term, but when we do an
    assessment, and we look at it, I think that is going to be
    something that we will also have to comply with Supreme Court
    precedent on this.
        Mr. Torres. The CFPB administers, not only the Home
    Mortgage Disclosure Act, but also the consumer complaints data
    base, which is an abundant source of data. Is the CFPB willing
    to expand the scope of the consumer complaint data base intake
    form to include sexual orientation and gender identity?
        Mr. Chopra. We may have done some consumer testing on
    different identification factors. I think there is always the
    balance of how to get people through and file, but I am happy
    to ask the staff about whether that has been done before.
        Mr. Torres. Just a final question on medical debt: Even if
    there is a process for disputing, do you not think we should
    get it right the first time?
        Mr. Chopra. Yes, and often when people dispute, the
    immediate answer is that it is correct without showing any
    receipts.
        Mr. Torres. But we should try for maximum accuracy at the
    very beginning of the process.
        Mr. Chopra. Actually, it is the law for those credit
    reporting conglomerates to have reasonable procedures to quote
    assure maximum possible accuracy.
        Mr. Torres. Thank you. My time has expired.
        Mr. Nunn [presiding]. Thank you. The gentleman from
    Florida, Mr. Donalds, is now recognized for 5 minutes.
        Mr. Donalds. Thank you, Chairman. Director Chopra, welcome
    back.
        Question. So the CFPB refers to Buy Now Pay Later products
    as the pay in four--number four product in which consumers
    split a retail purchase, typically $50 to $1,000, into four
    equal interest-free installments, with the first installment,
    the downpayment, due at checkout and the remaining installments
    due in 2-week intervals. Would you agree with that?
        Mr. Chopra. Yes. Generally, that is how the market is
    today.
        Mr. Donalds. Okay. So you would agree that buy now pay
    later products have a separate and distinct characteristics
    from traditional credit cards?
        Mr. Chopra. Yes. They actually are, in many ways,
    substitutes for it, but they have a different way people borrow
    and repay.
        Mr. Donalds. All right. So then why is CFPB starting to
    interpret credit card regulations to include Buy Now Pay Later
    plans?
        Mr. Chopra. It is actually how Congress wrote it. So
    Congress, when they amended the Truth in Lending Act, they
    talked about the different devices and accounts that could be
    used to draw and create loans, so what we did was we got
    actually a lot of questions. What are the existing provisions
    that apply? So a lot of the things that apply to credit cards
    do not apply to them right now, but there were some pieces of
    it as it relates to billing statements, disputes and errors,
    that did apply, and we wanted to make sure that there was some
    consistency around that.
        Mr. Donalds. Would you not agree that the primary thing
    that makes a credit card, a credit carder is interest, and a
    Buy Now Pay Later agreements are interest free?
        Mr. Chopra. Yes. So the way the Credit Card Accountability
    Responsibility and Disclosure (CARD) Act and the Truth in
    Lending Act, there is a separate part about finance charges. So
    finance charges is what often triggers, you have to show an
    annual percentage rate and other pieces. So it is true that not
    all aspects of the credit card framework do apply, but some do.
        Mr. Donalds. I would argue that without interest, none of
    the aspects of the credit card framework would apply.
        Mr. Chopra. Well, I think they do not have to disclose, for
    example, an interest rate. That is one part of it, but as it
    relates to bills and disputes, that is really common for lots
    of types of loans.
        Mr. Donalds. All right. A couple of other things. For over
    50 years, Congress under both Democrats and Republicans have
    determined that the best way to promote competition and
    consumer choice while also ensuring robust consumer protection
    is through disclosure-based laws and regulation. The CFPB has
    been initiating a series of blogs, circulars, advisory
    opinions, and rulemakings that appear designed to upend that
    disclosure-based approach to consumer protection, often by
    labeling lawful and fully disclosed bank fees as unfair or
    abusive. If consumers cannot be trusted to make their own
    decisions after receiving disclosures, do you favor government
    mandates about product features and fees?
        Mr. Chopra. Well, respectfully disclosures are not the only
    things that are required. There are some things that have to be
    disclosed, but there are other prohibitions. So like I
    mentioned in my opening testimony, in some cases, there are
    restrictions when it comes to data and permissible purposes,
    and you cannot disclose that away. We have tried our best to
    say, here is how existing law applies. Disclosures have their
    role, but I would argue, in privacy notices disclosures are not
    enough, and you have passed a number of laws over the past 50
    years that touch on disclosure and nondisclosure.
        Mr. Donalds. Yes, but we are not talking about privacy
    aspects. We are talking about fees and fee structure, and CFPB
    has--hold on, Director Chopra. CFPB has been labeling different
    fees and fee structures as misleading, abusive, et cetera. In
    that vein, is the CFPB outside of the framework that has
    existed on Capitol Hill for 50 years around disclosure being
    the way that consumers are provided information?
        Mr. Chopra. Not at all. For example, Congress banned
    certain types of fees, all technical----
        Mr. Donalds. Well, but real quick to that before you go.
    That is Congress banning the situation, not an agency making a
    promotional view of a situation that is lawful, correct?
        Mr. Chopra. It is consistent what we have done with
    congressional prohibition, so what we have done on credit cards
    is exactly in line with the congressional prohibition on
    excessive or disproportionate fees.
        Mr. Donalds. Yes, but you cannot take a congressional
    prohibition on something else.
        Mr. Chopra. No, no, no, but it is consistent----
        Mr. Donalds. Hold on, Director Chopra, and then label it as
    abusive on something that is allowed under Federal law. Now you
    are picking and choosing.
        Mr. Chopra. No, I am not. Everything we have done has been
    exactly and squarely with what the prohibitions that currently
    exist. Now, if there is a loophole that in the regulations we
    inherited, and when we do a look back to determine whether it
    made sense, that is part of the process.
        Mr. Donalds. Okay. Fair enough. Thank you, Director Chopra,
    for coming in. I yield back.
        Mr. Nunn. The gentleman yields back. The gentleman from
    Nevada, Mr. Horsford, is now recognized for 5 minutes.
        Mr. Horsford. Thank you to the chairman, to the ranking
    member, for holding this necessary hearing.
        We continue to see alarming increases in the frequency,
    sophistication, and reach of scams. Meanwhile, the complexities
    of our financial system allow many good hardworking people to
    be inadvertently harmed by incorrect or incomplete information
    being distributed. As evidenced by the stunning 1.5 million
    complaints that the CFPB received, there is a massive need for
    your Agency to continue to stand up for everyday working
    families as they attempt to navigate our financial sector. With
    an impressive 99 percent response rate from the offending
    parties, the CFPB is regularly delivering results. I want to
    thank you on behalf of my constituents and the American people.
        When it comes to financial scams or fraud, unfortunately,
    our brave servicemembers are among those who are targeted
    regularly. As we continue to debate the National Defense
    Authorization Act on the floor, I want to stay focused on the
    servicemembers at the heart of all of this and follow up with
    you on our previous discussions about your initiatives to
    protect those who are at risk, so we can keep them safe.
    Unfortunately, for my home State, the volume of complaints from
    servicemembers ranks third in the country on a per capita
    basis. Thanks to your efforts, relief is on the horizon for
    many as the CFPB has delivered an astounding $183 million in
    redress to servicemembers and to veterans.
        Director, your report pointed to increased attention toward
    innovative solutions that will make it easier for our
    servicemembers to take advantage of these programs. Can you
    please discuss some of the areas where you see more
    opportunities to streamline current methods for getting
    servicemembers the support that they have earned?
        Mr. Chopra. Well, certainly the National Defense
    Authorization Act has been able to provide lots of different
    enhancements from servicemembers on their cars, their
    mortgages, their student loans, and more. The Servicemembers
    Civil Relief Act, the Military Lending Act, which we enforce,
    have real important roles in this. Really, our Office of
    Servicemember Affairs has encouraged financial companies to
    really streamline the process so that they can automatically
    give benefits to servicemembers. We found that a lot of
    reservists and National Guard in many cases have left money on
    the table because of the bureaucracy around it.
        We also see, when it comes to repossessions of an
    automobile or foreclosure, those Servicemembers Civil Relief
    Act protections are absolutely critical, and of course the Fair
    Credit Reporting Act has special provisions for servicemembers
    when it comes to protecting against identity theft.
        Mr. Horsford. Thank you. Let me turn to the private
    identity verification process. Director, there has been a lot
    of discussion around the use of credit header data recently. It
    would be helpful if you could clarify what exactly is included
    in credit header data and what is not?
        Mr. Chopra. Yes. So credit headers are the short form of
    credit report, so it typically has your name, other names being
    used, past addresses. It will typically not include what is
    called a trade line, which is what you have been borrowing and
    whether you have been paying back. That short form credit
    report does have some sensitive data, so we are looking at its
    uses, but of course we are going to be thinking hard about how
    it is different from the rest of the credit report.
        Mr. Horsford. Thank you. Whether it be fraud protection
    services or vital public safety initiatives, it is crucial that
    you continue to examine ways that the rulemaking surrounding
    the Fair Credit Reporting Act could hinder legitimate
    businesses and I encourage you to work to mitigate unintended
    consequence.
        Mr. Chopra. Absolutely.
        Mr. Horsford. Thank you. Director, the last time we spoke a
    bit about enforcement actions to curtail the unscrupulous
    actors in the credit repair marketplace. I wanted to give you
    the remainder of the time to discuss any meaningful
    developments that you have since last November, particularly--
    --
        Mr. Chopra. Well, we were able to reach a very significant
    multibillion dollar judgment against a ring of credit repair
    scammers, Lexington Law, that has been a major step forward
    that is going to do a lot for so many people. I do really worry
    that when people have inaccuracies on their credit report, they
    go to many different ways to try and fix it and often they can
    be subject to some very unscrupulous practices, and we are
    going to continue to look and work with others to crack down on
    this.
        Mr. Horsford. Thank you for your work, and I agree with the
    exclusion of medical debt from credit reporting, and look
    forward to working with you on that as well. I yield back.
        Mr. Nunn. The gentleman yields his time. The gentleman from
    South Carolina, Mr. Timmons, is now recognized for 5 minutes.
        Mr. Timmons. Thank you, Mr. Chairman. I am going to start
    out with just the disparity in the view of the role of
    government between Republicans and Democrats. Most Republicans
    want the Federal Government and every government to do as
    little as possible to maintain the rules of the road, to have a
    military, to invest in infrastructure, to manage interstate
    commerce, and really not much else. My colleagues across the
    aisle, Democrats, they want to use the government at every
    level to reshape society in their perfect utopian image. It has
    not worked. It has been tried before, and I always tell people,
    I have one mother, I do not need another one.
        I am bringing this up because I think the wild swings in
    policies coming out of the CFPB after elections does not
    facilitate competitiveness in the global economy, it does not
    make the U.S. economy strong, and it impedes business'
    abilities to invest because they do not have clear expectations
    long term of what policies are coming out of the CFPB. I mean,
    can we agree that between 2016 and 2017, and then between 2020
    and 2021, the role of the CFPB was very different?
        Mr. Chopra. Well, under the law, it should not have been
    that different, but, yes, there has been different approaches
    by various directors.
        Mr. Timmons. You would disagree with a lot of the things
    that Mick Mulvaney did as CFPB Director. His approach is
    dissimilar.
        Mr. Chopra. Yes. I would say we have a more focused rule of
    law approach when it comes to our enforcement work. We try and
    enforce the law as you write it.
        Mr. Timmons. He would probably take a very different
    position than you would as it relates to that. He would
    probably say that you are exceeding the scope of your
    authority, and you are regulated by enforcement, and you are
    really impeding customer's ability to get access to credit
    because every time that a business is impacted by something
    from your office, those costs are passed on. Either customers
    are abandoned and denied opportunities because of the
    challenges they face, or they have increased costs because
    compliance has costs and those costs are passed on. Anyways, I
    only bring this up, and I think we can simply agree that with
    the Republican Administration, the CFPB has a different role
    than a Democrat Administration. I think we can agree on that.
        Mr. Chopra. Well, I think the way to address your concern
    is often to legislate more.
        Mr. Timmons. You are exactly right, and that is what I was
    going to bring up. Andy Barr has a bill that would create a
    commission that would appoint the CFPB Director and have
    additional accountability.
        Mr. Chopra. Why not legislate substantively on consumer
    protection? Why not actually put in----
        Mr. Timmons. We have passed, like, 45 bills this year, so I
    am trying to put small points on the board. We are not going to
    solve the problems that you seek, but I think if we found a way
    to give the director increased accountability and really
    bipartisan appointment, I mean, I think that would give the
    CFPB additional credibility. More importantly, it would stop
    these wild swings in policies that are impeding the U.S.
    businesses from competing in the global economy because while
    they are competing in the U.S. economy, they are also competing
    in the global economy. So do you agree that wild swings in
    policies between administrations impede business' ability to
    make investments and predict the future?
        Mr. Chopra. I would say that having a multi-member
    commission and I have heard criticisms of multi-member
    commission swinging as well because of their odd number. I
    believe elections have consequences, and our democratic system
    is the way things work. If you want to change consumer law,
    that is the role of Congress to pass laws and do that in the
    law of the land.
        Mr. Timmons. I hear you, but we have 6 months into an
    election and all the polls show that there is going to be a
    change in administration. If there is a change in
    administration, I would imagine that whomever is in your
    position in January is going to have a very, very different
    view of the role of the CFPB. I probably agree with that
    position more, his or her view more of the role of the CFPB,
    but I think we can all agree that the wild swings in how the
    CFPB performs its function is not conducive to U.S.
    competitiveness.
        I just really think that we have 6 months to take up Andy
    Barr's bill and to make this problem go away or we can talk
    about it in 4 years and 6 months, and we are going to have the
    same issue again. We are going to have election coming up, and
    I just think that the sooner we can stop these wild swings in
    policies, the better off we are going to be. With that, Mr.
    Chairman, I yield back. Thank you.
        Mr. Nunn. The gentleman yields back. The gentlewoman from
    Michigan, Ms. Tlaib, is now recognized for 5 minutes.
        Ms. Tlaib. Thank you so much. You enforce the law, what is
    it, $183 million you got for our veterans?
        Mr. Chopra. Yes.
        Ms. Tlaib. I mean, come on corporations, businesses, follow
    the law. Let us follow the law and it will not cost you any
    money. Now, I know you are not going to be able to say that to
    my colleague, but it is true. I mean, look at this, 39 public
    enforcement actions involved harm to servicemembers and
    veterans, including six enforcement actions of violations of
    the Military Lending Act. My God, corporate greed is all the
    rage here in our country. It is. I mean, it is not like, poof,
    the money, it is going to our residents, it is going to our
    constituents and our families. I mean, I am just looking at all
    of this, like even, which is crazy, the amount of money our
    banks were just banking off our residents, that $6.1 billion,
    you were able to literally go after these large, Big Banks,
    that some of them have business plans that over 50 percent. I
    do not know what it was like, maybe that is the credit card
    companies, over 50 percent of their business plan was
    overdrafts and fees. That is what it was. They were making
    money off of charging our residents these fees.
        I mean, it is not like you can take this money away from
    them, if they applied it under the law, correct? They were
    violating consumer law. It is not that is what you are doing.
    So if we have a new administration, this is what is going to
    happen. Nothing. Do you know how many times I sent various
    cases, Ranking Member Waters? You know how many cases I sent
    around service loan, folks with student loan issues? Oh my God,
    the loan servicers are out of whack. I mean, give me a break.
        I want to talk about bye-bye medical debt on credit
    reports. I am so incredibly happy to see that. One of the
    things that I think, Director, what really was just mind
    boggling is hearing my residents talk about the fact that they
    would have to file bankruptcy, all of these things because it
    was weighing down on them being able to access housing,
    employment, and so forth. I know this from the study that you
    all showed. When you did the study, it showed the significant
    impact on our American families across the country to have
    medical debt on their credit report, but it was really an
    inaccurate picture of someone's risk profile. It really was.
        If somebody gets sick and it gets on their credit report,
    having that weigh down as if they bought something--I am not
    very good at the car stuff--but something expensive, a luxury
    item. So Director, let us talk about that burden, and what this
    is going to do. How is it going to transform the families
    around the country, their lives?
        Mr. Chopra. Well, I think it is going to reduce so much of
    the harms, especially from inaccurate credit reporting of
    medical bills, which really, debt collectors are not able to
    really see----
        Ms. Tlaib. You got to explain that because you are really
    good at this. Explain that because people do not get it. It
    gets on their credit report, and it was incorrect.
        Mr. Chopra. Yes. I think this is the difference. There are
    so many problems when you park this medical bills there. It may
    still be being adjudicated by an insurance company, and on top
    of that, no one is seeking out to have medical debt. You borrow
    money for a car because you want to get the car to get to work.
    You borrow money to get a home. You borrow money for an
    education. You are not just sort of eager to get medical debt,
    and I think that there are so many different facets of this.
        We studied carefully the differences, and we have proposed,
    also being more in line with what Congress wanted was to
    restrict medical information on people's credit reports, and I
    think this is a reasonable intervention to stop a lot of the
    inaccuracies. I think one of your colleagues said, well, can
    they not dispute it? How long will it take to deal with that,
    and what will the harm be when you are applying for that loan?
        Ms. Tlaib. I mean, I think our chairman of our committee
    was talking about having to dispute it because, I guess, he
    actually paid his bill, and it still somehow ended up----
        Mr. Chopra. So many people pay it, just because they want
    the abuse to stop.
        Ms. Tlaib. Yes. Director, what are some of the coercive
    practices that debt collectors currently engage in, such as
    debt parking? Explain that to the American public.
        Mr. Chopra. Debt parking is where you put a debt on
    someone's credit report in the hopes that you can coerce them
    into paying to remove.
        Ms. Tlaib. You are too nice. You mean bully them.
        Mr. Chopra. Even if you do not even owe it or you have
    never even heard of it. By the way, so much of the public has
    also paid one of those debts, even if they did not owe it.
        Ms. Tlaib. It is unbelievable. Another concerning practice,
    of course, is increasing use of medical credit cards in
    financing plans. I mean, corporate greed is just coming up with
    all kinds of various inventions. Just to be clear, Director,
    this week's proposed rule does not affect debts paid to medical
    credit card issuers, does it?
        Mr. Chopra. Yes. If you pay a medical expense with a credit
    card, any type of credit card, that will be classified
    separately and is not covered.
        Ms. Tlaib. I think that is something we should actually
    look at together, but I really appreciate this. I just do not
    want my families, it is not their fault they got sick. They are
    just seeking help, and medical debt, again, should not be
    weighing down our families. Thank you so much, I yield.
        Mr. Nunn. The gentlewoman's time has expired. The gentleman
    from Texas, Mr. Sessions, is now recognized.
        Mr. Sessions. Chairman, thank you very much. Mr. Chopra,
    you are almost at the end of this visit that you have with us,
    and thank you for taking time, not just informationally to be
    with us, but I think your attitude I appreciate very, very
    much. I admit, I was here when we started, and have been gone
    for a while, so you may have received this question or have
    covered this subject. I appreciate you indulging me to try that
    again, if that is true.
        Much of business today is concerned about hacking, malware,
    a lot of fraud, theft of consumer data, theft of money, putting
    companies in the lurch as they try and work with law
    enforcement, as they try and figure out the payment of these
    things. What does your Agency, what is its role in this regard?
    What is your viewpoint and interaction, and what do you see?
        Mr. Chopra. I am really disturbed by the increase in
    ransomware that we are seeing throughout the U.S. economy. You
    do see actors overseas being able to take information that can
    then be used to access systems, and then often there is an
    extortion payment. I think it is a very challenging issue that
    we work with the Treasury and others, particularly to protect
    our financial institutions. Some of them have data on half of
    America, like the credit reporting agencies. For me, the
    Equifax data breach was a huge wake-up call because the hacking
    is not just about trying to defraud a consumer, it was used for
    statecraft purposes. So it is really protecting data, it is not
    just protecting consumers, it is really protecting our country
    too.
        Mr. Sessions. Is that in your mission or is your mission
    only to go protect consumers, not to protect what might be
    financial institutions?
        Mr. Chopra. Yes. We have certain authorities that our focus
    is on protecting consumers, but often when it comes to
    safeguarding data, and in the financial space, the Gramm-Leach-
    Bliley Act governs some of this. So we have been working more
    when it comes to understanding where the risks are, but that is
    not really our core mission, that we try and stay abreast of
    everything that is going on because it also impacts the broad
    array of fraud that is happening everywhere, and especially
    with artificial intelligence, generative AI, we expect that to
    go up. I do think we have to take some action as a Congress, or
    you all should, to make sure our defenses are there.
        Mr. Sessions. Okay. Well, what are those ideas that you
    have that we have not perhaps reached yet, because as you know,
    we are trying our very best to make it easier for companies
    that do find themselves in these circumstances to report, to
    acknowledge things. Several years back, they were soundly
    attacked for allowing these breaches to happen, and I think now
    there has been a more recognition that it may be happening to
    everybody. Oh, by the way, it happens to government also----
        Mr. Chopra. Yes.
        Mr. Sessions [continuing]. despite their best efforts to
    perhaps criticize others who have these same things. What are
    those activities that you think you see from your perspective
    that Congress should do a better job at?
        Mr. Chopra. I think when it comes to data protection, data
    security and data privacy are just two sides of the same coin.
    Right now, under the Gramm-Leach-Bliley Act, there is
    provisions for safeguarding of information, and then there is
    separately privacy disclosures. I think more limitations on
    what companies can monetize, I think that will also increase
    data security because there will be less thirst for that
    information.
        Mr. Sessions. Are you saying gather less information that
    they would have available? Go back about 15 seconds.
        Mr. Chopra. Yes. I think there are places where companies
    are engaging, and I see this in the technology sector of
    collect every single thing possible and keep it and monetize
    it.
        Mr. Sessions. But is not that what you are asking banks to
    do in some respect with some of your rulemaking?
        Mr. Chopra. No, we are actually----
        Mr. Sessions. Gather more data and information?
        Mr. Chopra. Well, there are places where Congress has asked
    us to request more, but when it respects other issues, there
    are actually laws on the books to dispose of it and make sure
    that it is deleted rather than permanently retained.
        Mr. Sessions. Thank you very much. I am going to take to
    heart what you have said and go look at it, and I will get with
    you offline then. Thank you very much, Mr. Chairman.
        Mr. Chopra. Yes. Let us meet again.
        Mr. Sessions. Thank you.
        Mr. Nunn. I thank the gentlemen from Texas. I now recognize
    myself for 5 minutes.
        Director Chopra, thank you for joining us here again today,
    and I appreciate you taking the time to come and speak to us in
    our office. During that time, I shared with you many concerns
    we had from my fellow citizens in Iowa. I shared with you that
    I have seen since the beginning of your tenure, things that are
    frustrating, including an office that seems highly politically
    motivated in both its decisions and what I see as the Agency's
    overreach and significantly having a negative impact on my
    small and community banks in States like Iowa.
        In fact, just a few weeks back, we discussed ways to
    strengthen Iowa's financial system and the overall tiered
    system. As I shared with you, what I heard before and what I
    heard as recently as yesterday is that this is not happening,
    and they are not getting the answers and responses that your
    team pledged that they would make. I find this frustrating. I
    ask again, please listen to the folks that you are dealing
    with, particularly those further down, regional and small
    banks. Your regulations are causing real injury to Iowans and
    certainly they come at a cost. So to clarify, listen, learn,
    execute. Please do not just regulate.
        Specifically, I remain concerned about Section 701 rule,
    which requires banks, particularly the smallest ones, to meet
    your 81 data field. Now, it was just discussed here we are very
    concerned about the amount of information that the financial
    institutions are collecting. Ultimately, your institution as
    well is taking more and more information and putting it into
    what I consider a treasure trove for a cyber actor to exploit.
    We will get to that in a moment.
        I would first like to talk about the 81 data fields.
    Director Chopra, do you believe each one of these data fields
    is absolutely essential if you were able to pick which 81 were
    being required from our lenders?
        Mr. Chopra. I appreciate what you are saying. I do have to
    respectfully disagree with the 81 data points point. We were
    under a court order to complete this rule by March 2023, there
    were certain data points that were required.
        Mr. Nunn. I understand, Director. My question for you is,
    do you believe each one of those 81 are critical and essential?
        Mr. Chopra. We believe that the points that are being
    collected are exactly what was in line with the congressional
    statute.
        Mr. Nunn. So they could not be scaled back in any fashion?
        Mr. Chopra. Well, they could be, but there was a provision
    in the statute that where we collected comment on, and many
    lenders----
        Mr. Nunn. Have you provided any guidance to this body on
    which ones you would like to see removed?
        Mr. Chopra. Well, the rule has been finalized.
        Mr. Nunn. Have you provided any guidance to this committee
    if any should be removed?
        Mr. Chopra. It is statute, and so Congress is the one----
        Mr. Nunn. Congress is the one in charge of statute. You are
    in charge of the implementation.
        Mr. Chopra. That is exactly what I am saying.
        Mr. Nunn. But have you provided any feedback on any of the
    81 that should be removed? I have not seen any.
        Mr. Chopra. There are not 81.
        Mr. Nunn. I am going to move to my next point. I heard
    directly from a small business owner who has written to you. I
    will use the 1071 small business rule leading specifically that
    they are a small and rural community bank with 17 full-time
    employees. The amount of training required for your 81 points
    is not without cost. Software that they do not have must be
    implemented.
        Additionally, the time involved as being part of an
    ineligible burden as a requirement of this regulation. Note to
    quote we do not have enough manpower or staff dedicated,
    required, would mean one full-time person. Even with that
    because of the regulation of Home Mortgage Disclosure Act
    (HMDA), reportable transactions not be reported, even if you
    are a non-HDMA reporter. As well, this being fully trained
    would not only be enough to be able to compile and track the 81
    data points, but also to correctly report them. There are
    penalties within the regulation for doing this incorrectly. So
    it also require a specialist or a quality control officer,
    neither of which we have within our small staff. Plus, the loan
    officers are not supposed to collect or review these 81 points
    because they might be accused of a Fair Lending Act violation.
    Costs and direct impact to folks back home.
        I want to ask specifically, how did you come up with a
    reporting threshold of 100 small business loans?
        Mr. Chopra. We actually in the final rule, compared to the
    proposal, tailored this and exempted a substantial number of
    more banks. We tried our best to create thresholds in a tiered
    way of implementation as well.
        Mr. Nunn. Director Chopra, do you believe a bank with 17
    people would be considered a lower-tiered threshold?
        Mr. Chopra. Yes. So we came up with different sizes, not--
    --
        Mr. Nunn. I appreciate that, but the reality is that your
    sizes are a one size fits all because of my 250 small banks in
    Iowa, not a single one is exempted.
        Mr. Chopra. I think we quadrupled the loan threshold for
    the exemption.
        Mr. Nunn. The impact has happened to every small bank in
    Main Street, Iowa right now, and I am concerned that between
    this rule and the beneficial ownership rule and small
    businesses are on the hook for 133 additional data points. That
    is a cost and a tax on every Iowan. With that, I hope you
    listen, Director Chopra.
        With that, I yield my time to the gentleman from Wisconsin.
    Mr. Fitzgerald is now recognized for 5 minutes.
        Mr. Fitzgerald. Thank you, Director. I know you have been
    sitting here for a while. I recently sent a letter to you
    related to the potential effect of your Fair Credit Reporting
    Act rulemaking activity related to data broker's impact on
    identity verification and Know Your Customer, KYC,
    requirements. In the reply that you guys sent back to us, CFPB
    will not issue a rule that will prevent financial institutions
    from meeting the requirements of the Bank Secrecy Act. As you
    consult with FinCEN and others on the rulemaking, will you be
    exploring use-related exemptions if financial institutions are
    using data to comply with the Bank Secrecy Act (BSA) and other
    identity verification requirements?
        Mr. Chopra. Yes. We have not proposed a rule yet, but the
    answer to your question is yes. To offer a little bit more
    color, I think the concern we have is not when financial
    institutions are using that data because they are using it for
    financial purposes. It is really when others are using it for
    unknown reasons, potentially for nefarious reasons.
        Data brokers, they are assembling background reports about
    people, and under the Fair Credit Reporting Act, there are
    certain limitations that the law provides and we are just
    trying to make sure it is keeping up with the times, but the
    answer to your question is yes.
        Mr. Fitzgerald. Okay. So brief outline of the FCRA
    rulemaking stated that CFPB is considering a proposal to
    ``clarify the extent to which credit header data constitutes a
    consumer report, which the CFPB notes would likely reduce,
    perhaps significantly, consumer reporting agencies' ability to
    sell or otherwise disclose credit header data from their
    consumer reporting data bases without a permissible purpose.''
    So do you have any idea, like you could give me a percentage on
    enforcement actions carried out by FTC or CFPB, dealt with
    based on improper use of credit header data? I mean, is this a
    big issue or not?
        Mr. Chopra. Well, I think it is more, the credit header is
    really the short form report. It does have a lot of sensitive
    information, not as sensitive as the rest. So I think what we
    are trying to do here is to make sure that the FCRA, which
    really was restricting how background reports are created, and
    I have taken a look at how this works in health, education,
    others. There is different frameworks for each.
        We are trying to determine what is the right way to make
    sure there is adequate protection of that, but again, as it
    relates to detecting fraud, we are hyper-attuned to that issue.
    When financial institutions are trying to authenticate
    identity, we want to make sure we are really cognizant of that.
        Mr. Fitzgerald. In May, you spoke at Mortgage Industry
    Conference and strongly criticized the business practices of
    companies that are providing services to help originate and
    close mortgages. It feels as if you guys have reached some
    conclusions about closing costs before you even opened up the
    request for information. Where exactly in the Federal statutes
    is CFPB given the authority to set prices for fees in the
    mortgage closing process? I guess that would be the first
    question.
        Mr. Chopra. We have a number of laws, including the Real
    Estate Settlement Procedures Act that governs some of this, but
    mortgage lenders around the country have been consistently
    complaining to the CFPB about getting ripped off when it comes
    to credit scores and credit reports. The price increases they
    are facing have been extraordinary, and I think that it is
    limiting their ability to evaluate all potential applicants.
        So we are working with them on ways that they can actually
    obtain this information in a more competitive, cost-efficient
    way because ultimately, many consumers will bear this or the
    mortgage lenders themselves will bear those costs.
        Mr. Fitzgerald. Okay. Let me sneak in one more. In the CFPB
    2017 arbitration rule, which was repealed by Congress, the
    Bureau would have required financial institutions to submit
    arbitration records to the Bureau to publish. Now the Bureau is
    proposing a rule that is substantially similar. I guess the
    question would be, why can the Bureau not follow Congress' very
    clear directive in this area?
        Mr. Chopra. We have not proposed a rule that is
    substantially similar. It is nothing like what was overturned,
    nothing at all like it. The original one restricted the use of
    those clauses. This is broadly about understanding contract
    clauses that waive rights. It is nothing alike.
        Mr. Fitzgerald. Okay. Thank you. I yield back.
        Mr. Chopra. Thank you, sir.
        Mr. Garbarino [presiding]. The gentleman yields back. I now
    recognize myself for 5 minutes of questions.
        Director, I think I am the last one to go. I am going to
    follow up a little bit on what my colleague was just talking
    about with the outline for potential FCRA rule, which included
    a rough definition of ``data broker.'' That term, for the
    purpose of the outline, included any firm that collects,
    aggregates, sells, resells, licenses, or otherwise shares
    personal information about consumers with other parties.
        Casting such a wide net runs the risk of disrupting
    innovation in financial services and classifying many entities
    as data brokers whose business does not include the selling of
    consumer data. Since consumer data protection starts with the
    preservation of consumers' rights and choices, is the Bureau
    currently considering any limitations or exceptions to the
    outline's broad definition of data broker?
        Mr. Chopra. Yes.
        Mr. Garbarino. What are they?
        Mr. Chopra. We have not proposed a rule yet. I think we
    have been trying to track really broadly how do we make sure
    that the FCRA, which protects consumer reports, and consumer
    report is somewhat broadly defined as the aggregation of
    consumer information by a third party. We are trying to see and
    look where is the data broker industry doing some of the same
    things that the consumer reporting industry, or when are they
    assembling consumer reports, so that is our approach. It is
    trying to make sure that there are not just rules for those who
    agree their consumer reporting agencies and those of which to
    sidestep.
        So I know that Congress is thinking about more privacy
    legislation. As my opening comment said, if you all want to
    weigh in on this definition, that would be better and faster.
        Mr. Garbarino. Thank you, and I just also want to follow
    up. My colleague before asked about this. I think your answer
    was yes, when dealing with the Bank Secrecy Act and know your
    client rules. To ensure the alignment with your commitment to
    members of this committee and what you said in your letter, you
    are going to consider exemptions or other safe harbors if
    financial institutions and their service providers in good
    faith, use the data for purposes of compliance with BSA
    obligations?
        Mr. Chopra. Yes. I think the concerns that we are trying to
    address are really about data brokers who are abusing or
    misusing data. I think the financial services industry has
    already accepted for decades that they have to undertake
    certain limitations when furnishing or processing data, so we
    are just trying to create a level playing field. The answer is
    yes.
        Mr. Garbarino. Yes. Your goal is not to mess with the
    things complying with Bank Secrecy Act.
        Mr. Chopra. Correct. I do not know why we would want to
    mess with that.
        Mr. Garbarino. You were being asked about medical debt
    before. You had said a lot of people do not actively choose to
    have medical debt, but the rule seems to include elective
    surgeries in its broader definitions of medical debt. Could you
    explain why elective surgery debt should not be reported under
    the rule and what about cosmetic procedures, strictly cosmetic
    procedures?
        Mr. Chopra. Yes. Just respectfully, I think our
    understanding of the term elective, they may be medically
    necessary, but it is just scheduled. I think you are referring
    to sort of discretionary cosmetic.
        Mr. Garbarino. Yes. I am not talking about a knee
    replacement.
        Mr. Chopra. Yes. Yes. Yes. Knee replacement could be
    elective, but when you are saying things that are truly that,
    we have actually looked at that marketplace. That is not
    actually where the issues in medical bills on credit reports
    are. Many of those types of procedures, those are not covered
    by insurance.
        Mr. Garbarino. I understand that.
        Mr. Chopra. They often require payment upfront, so we do
    not really see that as an issue. If that is something you want
    us to explore, to look specifically at cosmetic, we do not see
    that as an issue right now, but we are accepting comments on
    that.
        Mr. Garbarino. All right. I believe it is in the
    definition, so we are just----
        Mr. Chopra. Well, elective can be medically necessary.
        Mr. Garbarino. ``Cosmetic,'' I believe, is in the
    definition.
        Mr. Chopra. So we will take comment on it and make sure we
    are dealing with it.
        Mr. Garbarino. Okay. I just want to get a clarification on
    the 1071 final rule. There was a grace period policy statement
    that I believe gave a grace period of 12 months during which
    the CFPB would not penalize bona fide errors. With the new
    compliance dates, now that the injunction is up, does the CFPB
    intend to keep that grace period as previously promised or does
    it take a different position now that the injunction is up?
        Mr. Chopra. Yes. So we have to comply with certain aspects
    of the court. I do not want to misstate it, but I do believe,
    oh yes, we have definitely published updated compliance dates
    in accordance with the court. I need to check and get back to
    you about if there is other aspects that we have not yet
    issued. As a general matter, we are trying to make sure
    everything is consistent.
        Mr. Garbarino. Wonderful. Thank you very much. I am out of
    time.
        I would like to thank Director Chopra for his testimony
    today.
        Without objection, all members will have 5 legislative days
    to submit additional written questions for the witness to the
    chair. The questions will be forwarded to the witness for his
    response. I ask Director Chopra to respond no later than August
    1, 2024.

        [The information referred to can be found in the appendix.]

        Mr. Garbarino. This hearing is adjourned.

        [Whereupon, at 2:31 p.m., the committee was adjourned.]

                                A P P E N D I X

                                 March 6, 2024

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