january 6 attack on the capitol. watch live at 10:00 a.m. eastern on c-span3. online at c span.org. get c-span on the go. watch the day's biggest political events live or on demand any time, anywhere, on our new mobile video app. c-span now, access highlights, listen to c-span radio and discover new podcasts, all for free. download c-span now today. rohit chopra testified before congress for the first time. the senate banking committee examined the report to congress. this is an hour and 45 minutes.

>> senate committee on banking, n banking, housing, and urban >> senate committee on banking, housing and urban affairs will come to order. today we are pursuing as we have

in the past, the hybrid format. our witnesses are in person but members have the option to appear either in person or virtually, and as mr. chopra probably knows, many witnesses, i mean, many members will be here. most of them have checked in remote, and will be here, most of them, i think in person. a couple reminders when you start speaking there will be a slight delay before it's displayed on the screen. every senator knows how this works. the speaking order will be as usual by seniority, the members who have checked in by now before the gavel came down, either in person or virtually, and seniority, members arriving later, alternating between democrats and republicans. our welcome director is the newly confirmed director, you're stepping in to a vital role for the american people. it's your job as director of the consumer financial protection bureau to stand up for the hundreds of millions of

americans who don't have a corporate lobbyist, who don't have a super pac, you work for all the people who don't have a high-priced attorney fighting for them. if a company owns a fake account in their name or overcharges them on their credit card or their mistakes in the credit history, you're stepping into this role at a time when so many people feel like they don't have a voice in our economy or anyone on their side in government. you are that person for so many. your job is to prove them wrong on the side of everyone who has been preyed on or looked down on by corporate america to empower them to get their hard earned money back. your history, the history of this agency both tell me you are up to the challenge. millions of families still deal with the effects of the pandemic over the past year and a half. scammers have done what they do best, prey on people in a crisis. people masquerading as government workers, scam families out of money, promising them early access to a covid-19 vaccine even funeral expense benefits.

after the '08 crisis, we created the cfp that will stand up to the powerful companies that will stand up to a crisis. unfortunately for four years, the cfpb was held back by an administration that tried to tear down the bureau from within. now after an election where americans decisively rejected that corporate kowtowing, the biden administration's usher instead a new era of consumer protection. under the leadership of acting director dave and now under your leadership, the cfpb has gone back to work, looking at financial companies, getting people their money back. the bureau has worked to protect the rights of renters and homeowners, connected them with resources to get housing, required mortgage surfaces to make sure homeowners can get back on track with their payments. cfpb helps people with student

loans and i applaud your decision to join doj and the office of the controller, the currency to enforce fair housing and lending laws as we work to undo the legacy, the awful long legacy from black codes to jim crow to red lining and beyond. of course we know corporations and big banks and loan sharks aren't giving up and as big tech companies encroach into the consumer finance and housing markets, new threats emerge every day. look at what's happening to the tenant screening industry. renters are forced to pay out of their own pockets for screening reports that can be riddled with errors and blocked them from renting, and they get no explanation. i have asked the bureau to conduct a review, and protect renters, looking forward to hearing how we can better crack down on these companies. biases and algorithms and predatory renting, new revelation about facebook's promotion, the most extreme and divisive con tent, including vaccine lie is the latest reminder we can't trust big tech algorithms.

the last thing we need is their moving into the payment system and financial markets critical to financial futures. big tech's invasion of the financial system and their abuse of data privacy practices are so important. we must continue them. no matter the industry, the cfpb is all about empowering people. it's about giving people a tool to stand up to the big banks and the financial corporations and the big tech companies that have far too much power in this country. i know the corporate interests and their allies in this building don't like that. director chopra, you were confirmed unanimously by voice vote to be an ftc commissioner. no dissension from that, yet not one of my republican colleagues in this committee and the 50 on the senate floor, even those who

have occasionally stood up, not one of them wanted you to take this job. they don't want this job to exist. it's not about you. you shouldn't take it personally. anyone who goes after corporate interests, you all attack. every time we have one of these hearings, we hear the same made up complaints about accountability. you know how accountable this agency is. you know how many times rich cordray, how many times he came before this committee, and the dozens of times he came in front of your colleagues in the house. this agency has returned billions of dollars to consumers. what you don't like, what you don't like is that they go after your contributors and the big banks, but if you want to attack the consumer protection bureau, say what this is really all about, don't make up this fake stuff about accountability. director, i expect -- i don't expect you to be kow'd, i expect to see vigorous enforcement of consumer protection laws, consistent monitoring of fin

tech companies, crack down on big corporations which routinely and repeatedly violate orders issued by the bureau during your tenure. director chopra, i look forward to hearing about the agenda you are setting in this new era for consumer protection at this very very important agency. ranking member toomey. >> thank you, mr. chairman, welcome, mr. chopra. we're going to talk about accountability, and rather than impugning the motives of democratic colleagues who disagree with me, we'll stick with the facts in the case. during the obama administration, the cfpb was routinely a lawless anti-business unaccountable agency through restrictive policies it limited consumer choice, drove up the cost of credit, and needlessly harassed employers. unfortunately it appears the biden administration is rushing to return the cfpb to its bad old ways. in less than ten months, the biden cfpb has rescinded policies that provided regulatory clarity, returned to

enforcement actions rather than by rules, and reportedly pushed out career civil servants for political reasons and certainly refused to comply with legitimate congressional oversight requests. let's consider the biden cfpb's return to regulation by enforce. this is a completely unfair practice that occurs when agency's fail to set clear rules of the road before bringing enforcement actions for violation of these undefined rules. classic example is with the dodd-frank act. dodd-frank prohibited providers of consumer financial products from engaging in quote abusive, unquote, acts or practices, but the law's definition of this new term is so vague, it's not at all clear what it prohibits. during the cfpb's entire existence it has never bothered to issue a rule to clarify this definition. that didn't stop the obama cfbp accusing businesses into

misconduct and pressuring them into settling. the trump issued a sensible policy to curb this practice. the biden cfpb rescinded this policy and took no steps to provide regulatory clarity. instead in just his second week on the job, director chopra brought and settled an enforcement action for abusive conduct even though the cfpb has never defined the term. the cfpb relied on a novel theory of abusive conduct. cfpb alleged an abuse of market dominance, which is a foreign concept taken from european antitrust legal theories, not american consumer laws. the biden cfpb has repeatedly exceeded the bounds of its statutory authority. for example, the cfpb's overreach into housing rentals, and landlord tenant law in an effort to advance the biden administration's eviction moratorium.

in may, jointly letters were sent to land lords about the moratoriums. housing rentals and landlord tenant law are outside of cfpb's jurisdiction. by statute. the jurisdiction is limited to overseeing quote consumer financial products and services end quote which do not include housing rentals, and enforcing certain enumerated consumer laws none of which govern landlord tenant relationship. in its notice to landlords, the cfpb acknowledged its lack of jurisdiction, but didn't stop from threatening potential legal action. the letter stated neither the ftc or has determined whether you or your company is violating the law. the ftc or cfpb may take action based on law violations. it is deeply troubling that the cfpb made threats when it had no

legal authority to follow through on them because housing rentals and landlord tenant law are outside the jurisdiction. the biden cfpb has refused to comply with the legitimate requests. according to press reports, the biden has taken unusual action to push out career civil servants to replace them with political loyalists. i sent a letter seeking documents about allegations. for five months, the cfpb has sought to evade the legitimate oversight request. in june, the cfpb needed more time to respond. in july, instead of providing records, the cfpb claimed the privacy act prevented them from producing the records. after my staff challenged that the cfpb produced heavily redacted records just this month. despite the heavy redactions, at least one document referred to, and i quote, voluntary separation compensation

agreement end quote. which sounds like reports that cfpb civil servants were offered extraordinary incentives to leave their post. it makes you wonder, what does the cfpb have to hide. i could ask the same of you dr. chopra. in june, i sent you a letter about the reports of troubling personnel actions at the cfpb. my letter asked simple questions about whether you were involved in or aware of these actions. you refused to answer these questions or to respond at all. as a result, in july, every republican member of this committee, exactly half the members of this committee, sent you a letter, calling on you to answer these simple questions, and still, you refused to

provide any answer whatsoever. that is simply unacceptable. let me close by saying this, you have been the cfpb director for less than a month. there's actually still time for you to reverse course. a couple of good places to start would be to end the cfpb's unfair practice of regulation by enforcement. you could respect the cfpb's jurisdictional limits and stop stone walling legitimate congressional oversight requests. i hope you will make these changes but i'm not holding my breath. >> thank you, senator toomey. i'll introduce today's witness. roy chopra is director of the consumer pro-tex shun bureau. he joined cfpb as assistant director. then appointed the student loan ombudsman. he skerveed as a special adviser at the department of education. director, please proceed. >> chairman brown, ranking member toomey, and members of the committee, thank you for holding this hearing today.

2021 is far different than 2020. the economy is reopening, and growing again. labor demand is strong and employers have added millions of new jobs. household spending has rapidly increased and demand for housing is robust. while these macro indicators are promising, the recovery has been uneven. in many individual communities conditions remain fragile. many families continue to struggle with their mortgage and rent payments. many small businesses are facing severe challenges to make ends meet, and many neighborhoods, especially those that have been historically disadvantaged have not felt much of a recovery. american families now owe $15 trillion as of the end of the second quarter of this year. roughly $800 billion more than at the end of 2019 before the pandemic. over the course of a year, though, mortgage origination hit

historic highs at $4.6 trillion. the c.a.r.e.s act has kept rates at lower levels. we lack a complete picture about distress. many family farmers continue to confront very severe challenges. medical debt in collections continues to grow as a concern for many households. congress has tasked the cfpb with monitoring market conditions to spot risks and meet other statutory objectives. most importantly, the cfpb is carefully monitoring the mortgage market. including foreclosures and it is critical that families do not experience unnecessary hardship or illegal foreclosures or other disruptions that could impede the recovery. we are keen on understanding how

homeowners from different segments of the population are faring including military connected families, older americans, first time homeowners, communities of color, and family farmers. technological progress holds the potential for real benefits to households and the economy, particularly with respect to realtime consumer payments. in recent years, big tech companies have sought to gain greater control over the flow of money in our economy. last week the cfpb issued orders to firms such as facebook, google, apple and amazon to shed light on their payment system practices. the orders seek information on how firms harvest, track and monetize data about our spending habits. we are also seeking to understand the specific criteria that firms use to approve or to kick off participants. we will also be studying some of the practices of chinese tech giants, including we chat and ali pay. this will inform other initiatives to ensure that our evolving payments landscapes is

aligned with our national interest. the cfpb intends to use its tools to promote an equitable and inclusive recovery, and giving the existing economic conditions and these tools i expect to have a few areas of focus. first, we must find ways to create more competition in these markets. this is a key objective of the dodd-frank act. for example, i'm concerned that many americans could be paying lower rates on their mortgages and credit cards and earning higher rates on their savings. we plan to listen carefully to local financial institutions and nascent competitors on the obstacles they face when seeking to challenge incumbents, including in big tech. the cfpb will sharpen its focus on repeat offenders, repeat offenders that violate agency and court orders, harm families and law-abiding businesses alike. third, we must work to restore relationship banking in this era

of big data. too many households and businesses have no place to turn to when they need help especially when they face errors and problems in their financial lives, the inability to cut through red tape and get help in one's financial life can be a major obstacle when seeking a job or applying for credit, preserving relationship banking is critical to our nation's resilience and recovery. particularly in these times of stress. thank you again for the opportunity to appear before you, and i look forward to your questions. >> thank you, director, last week i wrote you requesting the cfpb review the tenants screening industry over the last six months. our committees looked into this and found a significant number of tenant screening reports including inaccurate information, in some cases eviction filings, companies that people haven't heard of that may not have accurate data are

stopping people from renting all over the country. these reports put low income renters at a distinct disadvantage, and black renters and brown renters and female renters often times. what risks to inaccurate reporting, inaccurate screen reports post to consumers, what steps are you -- what steps are you considering? >> tenant and employment background screening have proliferated throughout our country and false matching and false information can severely impede someone's ability to get an apartment, to get a job. in a time of economic dislocation, we need people to be able to apply for jobs, to be able to move where those jobs are available, when inaccurate screening companies block those people from opportunities that's a severe problem, and may in

many cases violate the fair credit reporting act where the cfpb has enforcement and rule making jurisdiction. it's certainly an area that i want to work on with you and other agencies who share jurisdiction because this is a place where we need to make sure people aren't being locked out of housing because of illegal practices. >> thank you. we know that since our colleague senator romney's father was secretary of hud under president nixon that we're not really closing the gap between home ownership white families, and black and brown families. what are you doing to prevent further loss of home ownership and the generational wealth for families of color. >> the most immediate priority is to pay close attention to what's happening in mortgage servicing and foreclosures. i think we saw a decade ago what it was like when so many of those servicers engaged in practices that led to wrongful foreclosures or wrongful

servicing, and that led to trillions of dollars of wealth, you know, disappearing in the broader crisis. and that widened many of the gaps, so we have to make sure that those servicing practices do not appear again, and we also need to look broadly at our markets to make sure that we are stamping out illegal discrimination, that we are looking for places to broaden participation rather than foreclose based on the color of their skin. >> thank you. director, too big to fail banks and corporations are a threat to working families and our entire economy. we have seen decades of evidence for that, wells fargo, for example, is a too big to manage institution that's broken the law over and over. they have been in front of this committee when german sat in this seat. assets prohibited by financial watchdogs from growing any larger, how is this asset cap prevented wells fargo from hurting even more consumers and what other tools might you as a member use to protect americans

in the financial system from repeat offenders. >> with respect to the asset cap, i obviously want to take a closer look. i don't have the best answers for you now, but one of the places that is going to be a priority for me is order violations and repeat offenders. i think we see kind of a two-tiered system where federal agencies go hard on small businesses, when they violate an order, they get totally shut down. larger firms, they sometimes repeat -- violate those orders or engage in repeat offenses over and over again, and that's there's a complete lack of parity in how justice is administered there. we need to make sure we are being even handed across the board, that we're focusing our efforts on these repeat violations, and using the full remedies both from the

prudential banking regulators, the cfb, and others to make sure there are real consequences for repeatedly violating the law. >> what you said about the big offenders versus the smaller guys, and what happens to them is really important that you emphasize that. thank you. just a couple more comments, as whistleblowers and reporters have shown, tech companies like facebook and google and amazon clearly don't care about anything or anyone other than their own profits. they think americans almost unanimously understand that. last week i raised concerns about facebook's efforts to get their hands on american's hard earned paycheck with digital wallets and forcing users to send and receive payments with a facebook controlled stable coin. we know that facebook has failed to contain the damage their products cause. they clearly can't be trusted with america's paychecks. director, we expect you and this

committee to share the results of the cfpb's investigation. we expect you will work to prevent big tech companies from wreaking havoc on the financial system the way they have in every other industry they get involved in. that is our expectation, and i hope that's your commitment. >> we will -- with respect to the orders we issued, the law provides us some about to make summaries of those results available to the public and to you and we will keep you updated on that. >> thank you, senator toomey. >> as i mentioned in my opening statement, the biden cfpb has reportedly taken unusual and possibly unlawful actions to push out career civil servants in order to replace them with political loyalists. mr. chopra, on june 17th, i sent you a letter asking simple questions about whether you were involved in or aware of this. this is a copy of that letter. you didn't reply. on july 13th, about a month later, every republican on this

committee, about half the members of the committee, sent you another letter calling on you to answer these questions. this is that letter. you never sent us an answer. in fact, you never responded to us at all. why didn't you answer these questions? >> so, senator, thanks for answering the question. i observed all of the protocols customary for the confirmation process. i appeared before a hearing, i answered a large number of questions for the record, and then i also agreed to appear before any dually constituted committee of the senate. at the time i was not cfpb director, of course, i was an ftc commissioner. where committees that oversaw me in that capacity asked me questions and in some cases did so in public forum. i completely answered. i also answered that i did not direct or was not involved in

those decisions. >> you did not acknowledge them. you did not answer the question as to whether you were involved. you did not answer anything about these questions. you were a nominee for a post that is under the jurisdiction of this committee. you've been in this job for three weeks or so, i think, and you still haven't answered the question. is it your view that you just decide which questions from oversight committees of congress you're going to answer and which ones you're not? >> so senator, as i said, i observed all of the protocols that have been involved in confirmation hearings. i did so on -- >> you didn't answer a written question from the committee of jurisdiction over your nomination. that is not -- i'm not aware of any protocol that says don't answer the questions when half the members of a committee ask you a question. i don't believe that that is the protocol, in fact. let me ask you this, should republicans generally expect that we'll get answers to questions in the future or will you decide, no, maybe there's a protocol somewhere that says i'm not going to answer that? >> so senator, i have appeared before congress many many times, answered hundreds, maybe even

thousands of questions from members. i take congressional oversight extremely seriously. i previously came from an agency that completely ignored congress all the time, and you have my commitment that we will work with the committee to respond and be transparent on requests from the committee wherever we can. you know -- >> wherever we can, if members of the committee ask you a question, you have an obligation to provide a response. senator brown alluded to a letter he sent you. are you going to respond to his letter or will you ignore that one too. >> we will be responsive to requests from this committee that observing all of the customary protocols, including with respect to senator brown's letter that i have yet -- >> this little hedge you keep about observant and consistent with protocols, sounds like you are waiting for a way out as you apparently were as you never responded to a simple

straightforward question, when it was posed by me, first by me, second by every single republican on the committee, and by the way the cfpb was extremely reticent to provide answers when we asked for documents that would back up their contention there's nothing untoward here. they sent redacted information such that the entire body of the communications which according to the subject line had to do with voluntary separation compensation agreements, the entire body of it is missing, which certainly makes it look as though there's something to hide. your refusal to answer the question raises the question of what it is that you have to hide. >> i have nothing to hide, senator. >> why don't you put it in writing? >> i have been briefed on some of those issues and they involve personnel issues in the executive branch. we are required to adhere to a number of laws and regulations. >> i'm not going to let you hide behind that. you could have redacted communications that redact the name and identity.

i'm not asking for confidential information about individual identifiable people. we're looking for the substance of the practice. and in fact, what we got from the cfpb is the exact opposite. the names are all there. it's the entire content of the message that was left out. i still don't understand why, if there's nothing untoward happening here, you couldn't have submitted a simple letter to us responding to our requests. >> well, with respect to the separation incentives policy, as i understand, this policy was put into place by director kraninger, and i'm trying to figure out what happened, and we will work with any inquiry from the inspector general. i know that has been requested. i have directed staff to be responsive to that but we cannot divulge things that are protected by law when it comes to employee rights. >> you know that's not what we're asking you, and you could have given -- you could have even provided that in a written answer but you chose not to. this raises serious questions about what kind of transparency

we can expect from this agency. defend him, but he has been in the job three weeks. the former acting director wro >> thank you. the director certainly doesn't need me to defend him, but he has been in this job three weeks, the former acting director wrote back and said they don't push out career employees, and my understanding is the ig is looking into this. so we will find answers. senator menendez is recognized for five minutes. >> thank you, mr. chairman. i do hope the agency will be more responsive because i got nothing under director kraninger all the years she was there, and nobody seemed to complain, i certainly hope under your leadership there will be greater responses. director in recent months, two of the largest services that manage federal student loans on behalf of the department of education announced that they would be exiting their contracts. importantly, one of the firms that will exit servicing is also in charge of managing the public service loan forgiveness program.

the last student loan servicing transfer done on this scale harm student loan borrowers? >> i have some experience to suggest that major servicing transfers can really be problematic when records have errors or when systems are not appropriately tested. i am worried about big transfers. we have seen it happen in mortgage, too. so we will be looking carefully at that, and working with the education department, working with the other regulators to make sure that to the extent there are large transfers, it's done so with fidelity. the last thing we need is for hundreds or thousands or millions of borrowers to have incorrect bills and incorrect accounts. >> let me bring to your attention why i raise this. the last time there was a student loan servicing transfer on this scale where loans were transferred from the company acs in the 2010s, it both caused and revealed millions of errors that continue to harm student loan borrowers, particularly those trying to access promised relief through the public service loan

forgiveness. a recent investigation uncovered 5 million new errors related to the transfer from acs, including instances of missing borrower payment histories, incorrect payment counts, and other widespread errors. the difference between that and now is that they have a watchdog on their side, so i want to know from you, what is the bureau doing to prepare for this transfer? >> so you may know that we have a rule in place that allows us to supervise large student loan servicers so i intend to make sure that we are engaging in adequate oversight of those entities, that we are supervising them for our laws, as well as their preparedness for some of these. i do think it's going to require us to have close cooperation with the education department, the law requires us to have an mou in place, and i'm examining whether to refresh that. >> all right. i hope that you do in order to

make sure we don't have millions of errors in this transfer and not just errors, it's consequences to the consumer. let me turn to another question, as the economy continues to recover from the covid-19 pandemic, businesses are still seeking financial lifelines, stepping up to fill these financing needs are alternative financing companies, promising easy approvals with little to no documentation requirements and funding within 24 hours. however, some of these financing companies are not transparent in their loan terms and small businesses can end up taking on debt they do not understand and cannot afford. without cost transparency, businesses cannot distinguish financial lifelines from land mines. do current small business financing closures, provide small business owners with the information they need to understand the costs of the credit product and make an informed decision about whether it fits their needs. >> certainly not always. it's not covered by the same protections that exist for household borrowers and as you know, many small business owners, especially very small enterprises, they use a mix of personal credit and small business credit, and so they

can't even make fair comparisons, some states, california, new york, have begun to introduce it. but it is a problem for many entrepreneurs. >> it's clear from fed studies that small business owners do not have the information they need to make informed decisions. so would providing small business owners with uniform term closures allow them to make more informed financial decisions? >> i think generally speaking, yes, having the ability to compare and be able to see, you know, costs clearly, generally is beneficial. there are a number of practices, though, in the small business lending arena that are actually banned when it comes to consumer lending, so-called confessions

of judgment where a borrower automatically leads guilty when they're sued. there are other practices like these where small business owners are not protected currently. >> this is why congresswoman velazquez, the chair of the small business committee in the house and i will working on a bill to extend tela to small business loans. it's time to bring some sunlight to small business credit as well. i'll follow up for the record about what the bureau is doing to protect borrowers from ensuring there's ample supervision of the student loan servicing companies, both in the context of the psl relief and beyond. there's a history here that needs some significant oversight. and we look forward to hearing your responses on that. thank you very much. >> thank you, senator menendez. senator tester from montana is recognized for five minutes. >> thank you, mr. chairman. thank you ranking member toomey.

just in reference to senator toomey's comments, i think if the accusations about replacing career folks with politicos are correct, i don't think that's responsible, and i think we do need to get back to the committee but i also need to say replacing people with politicos in this administration after what we just went through the last four years is totally ridiculous. i watched a president go after the head of the fed trying to politicize the fed, i don't know that i have heard one person stand up and say that's inappropriate on the republican side of the aisle. you did, thank you for doing that, because quite frankly, everything the last administration did was about politics all the time. and i speak to that as being somebody who's perceived as a moderate, who the president politicized everything that came down the pipe. okay. director chopra, before i get to my questions today, i want to say congratulations. i was proud to vote for your

confirmation. though i'll be honest with you, i was a little bit sad to see you leave the ftc because i thought you did a great job for american consumers at that commission, an issue that has been important to me since long before i arrived in the united states senate is accurate labeling of products that are made in the usa. unfortunately, there is a lot of work to do in this space, but i have a few folks in government that understand the importance of this more than you do. and we have even fewer now that you're here to move that ball forward. i have no doubt that you'll take this commitment to transparency to the cfpb and continue to do great work for america's consumers. i'm not sure that i can ask you a question about the importance of labeling beef with country of origin. i don't think it would be necessarily appropriate today although i have no doubt you could answer that question. but i do look forward to working with you on your new role. i can tell you that in a statement where we have seven

reservations and they do play in the financial world, i would hope that you would open up dialogue with our native american tribes to make sure what you're doing is fair and appropriate for them and for the consumer. i would say the same thing for our banks moving forward, and i would tell you that the cfpb in the past has taken a number of action on companies that have harmed our service members, our veterans, particularly in the mortgage market. i appreciate the work the bureau has done to protect those who have protected us. but there's always more to be done to stay ahead of the bad actor, so director chopra, i know the cfpb has a number of efforts in place to look out for our service members and our veterans. will you walk us through what that's going to look like under your leadership? >> yes, we're going to refresh that quite a bit. i want to make sure that our service member, veteran, and military connected families work

is a part of how we look at so many of our products but also how we enforce the law. i had a chance to discuss this a bit with the attorney general and the justice department. we need to make sure we're cooperating on the military lending act enforcement. we need to make sure we're continuing our work on the service member civil relief act with them. there are many laws that protect these families, and i'll tell you, we saw a decade ago that many of them, including people who were deployed in theater had their homes taken from them. we've seen people who have signed up for a car loan and gone to basic training and had their car repossessed illegally. there's clearly something wrong with certain actors who treat the military, and we will work using our tools but also with our partner agencies to stamp that out. we also need to make sure that the d.o.d., when it's doing its status of the force, and it's doing its own analysis, that we are understanding where there are issues when it comes to credit reporting. many of those inaccurate credit

reporting issues lead to the loss of a security clearance. all of this costs taxpayers more, and it costs those families more. >> thank you for that answer. i have long been a supporter of public student loan forgiveness programs. i think it is critically important, and we need to keep our commitment to those folks. i made it clear to the previous director and the former president trump's department of education that their administration of this program was unacceptable. as you know, the department of education was blocking the cfpb's access to the necessary information to adequately oversee and examine servicers in the program. how is it working or not working currently? >> so to be truthful, i think this program has been botched over multiple administrations. i understand the education department is taking steps to remedy those past failures.

the way in which it was -- to the extent that companies have lied or broken the law with respect to those borrowers, they need to be held accountable for that. >> sounds good. thank you very much. thank you, mr. chairman. >> thank you, senator chester. senator cortez from nevada is recognized from her office. >> thank you, mr. chairman. thank you, mr. chopra for being here. it is truly important to have leadership that sees its job as protecting people from unfair and abusive and deceptive practices and financial products. under the former president's nominee, let me ask you this. this is a concern of mine, and i talked to her constantly about this but never got results. unfortunately, under the previous nominee, we saw many firms buying only a dollar with

no redress provided to people who lost money. how will you work with staff to ensure that people who were victims of any type of infair, abusive or deceptive practices are compensated for their loss? >> the statute authorizes the bureau to seek redress, damages, civil penalties, and there are pack fors which those civil penalties are assessed, and all is reviewable by a court, of course. i think with respect to redress, we want to make sure that where a defendant is judgment proof or has already spent all the money, it's important that we assess a civil penalty, because only those matters where a civil penalty is assessed can those victims access our victim's relief fund. so we will make sure that we are applying the civil penalty factors and fidelity with the

law. to be honest, senator, there may be case where is we had to assess a $1 penalty to make sure that a judgment proof defendant we can get redress for those victims. but generally speaking, i think the penalties need to be a strong deterrent. that is what congress has made clear. and for wealthy firms, $1 penalty for egregious behavior would be inappropriate. >> thank you. i appreciate your comments. let me talk about data privacy. last week, the cfpb issued a series of orders to collect information on the business practices of large technology companies operating with payment systems in the united states. one concern i have is what data that the platforms are collecting from their payment products, and how is it being shared and used in other applications? i know you know this. consumers expect the system to work better rather than to be

sold to multiple third parties. so how are the orders to address this issue? >> you know, i think it's been over 20 years since senator shelby talked about the problems of financial surveillance and spying. we have laws in place to protect against, you know, invasions of financial privacy. the act which the cfpb administers the privacy sections. there are some open questions about how the tech companies are harvesting this data, what are they using it for, how are they monetizing it. we need to figure out what is going on, because this is not something that most financial institutions in the banking system do. they observe the protocols under the grand leach riley act. so we have asked a number of questions to ascertain what is happening with this data, how are they using it, and we look

forward to getting those responses and be able to share with the public what we learned, senator. >> wonderful. and let me just say thank you for working with me to curb the unfair practices that affect some franchise business investment. will the cfpb consider the role of government guaranteed loans to franchises in its section 1071 rule making? >> so the rule making requires the bureau to collect certain data about small business loans for a host of purposes. we do want to make sure that we're hearing from the public. there is a notice of proposed rule making to implement that statutory directive. you're right, senator, i'm very, very interested in the franchise market to the ex-tent there may be discrimination or which we need to learn more to understand how loans are being originated to franchisees. i definitely welcome the -- your

feedback, the public's feedback to make sure that we understand how that's working. you know, franchisees in this country have been beat up on for too long, and we need to make sure that we have the ingredients for success and a small business credit program that is nondiscriminatory that we fully understand is important to make that model successful. >> thank you. i couldn't agree more. thank you so much. thank you, mr. chairman. >> thank you, senator cortez. senator tillis from north carolina is recognized from his office. >> thank you, mr. chair. mr. chopra, thank you for being here. i would like for you to maybe just a moment to look around the room to members in the chamber and the senate members in the chamber. can you provide me with the person's ethnicity and race? >> so senator, i understand that may be a reference to the section 1071 notice of proposed

rule making. i understand that there is some guidelines there where a borrower has not filled out the form appropriately or completely, that it allows, i believe, in the proposal the lender to comply by making ans aertation. obviously, that is something -- we will collect comment on that. i think this is trying to stroke a balance of finding ways of lenders to comply. i have heard these concerns. i understand these concerns, and we will need to take these concerns into account when crafting any final rule. i hear you loud and clear. >> but it does sound like you may be forcing a lender to guess ethnicity and race based on appearance. it does seem like a good way to get accurate information. and you're forcing people to make assumptions about ethnicity and race. it just doesn't seem like a -- if the goal is to end

discrimination, this doesn't seem like a very good way to do it. >> i appreciate that, and i hope everyone submits feedback to our open comment period on it. again, i think there is always a struggle to figure ut how to make sure to give lenders the ability to understand their obligations and what to do in the circumstances where they may not -- someone may not be filling out a form. i'm happy to look into this further, but i understand, and i've already heard this concern in my first two weeks of the job. >> well, i hope you will. because to me, it seems fundamentally flawed. we'll be interested to see how the comments come back. mr. chopra, just moving to another subject about the bureau's past experience with midnight embargoes. it seemed like a bias process for releasing cfpb updates to minimize the chance of outside groups to reput it before the cfpb could control the

narrative. do you recognize why the practice of the midnight embargo -- [ inaudible ] >> i don't, but i'm happy to learn from it. >> why do you think it's an acceptable practice? >> i don't know. i'm saying i need to learn more about it. as i understand many times for especially complicated policies or very detailed rules, it is sometimes release sod that the news media have the ability to identify experts, find all points of view. >> it just seems to me, though, there appears to be a pattern of behavior, and perhaps you can present evidence to the contrary, that appears to me to be an embargoing of outlets that may be more prepared or more

willing to take the talking points versus a critical assessment for all takers in the media. so i think it is something i would like for you to look at and maybe you can demonstrate patterns of behavior contrary to the perception many of us have on the midnight embargo practice. speaking of news, we had several news reports about outlets indicating a kind of a purge in the cfpb of career staff earlier this year, with the transition to the biden administration. can you confirm early retirements were never offered for political reasons. >> as far as i know, they were not. as i shared earlier, i'm getting briefed on it. i'm seeking to understand, and we will of course comply with any inspector general inquiry on it. i have no evidence at all to suggest that there is any political purge. i'm not even aware of any terminations.

do you intend to respond to ranking member toomey's request, i think it dated back to june 17th on this subject? >> we will work with the committee to try and be responsive. again, this involves personnel matters, and if the executive branch, when it comes to specific personnel, particularly when it comes to allegations of misconduct, there are certain protocols that must be followed. >> it just seems to me, in your confirmation hearing, you committed to transparency. i specifically asked that question. i think it can begin with prompt responses to committee members, particularly the ranking member. thank you, mr. chair. >> thank you, sir. >> senator van holland of maryland is recognized for five minutes. >> thank you, mr. chairman. welcome, director chopra. i just wanted to cover a couple topics with you this morning. beginning with the foreclosure issue, and what i worry could become a foreclosure crisis. as you indicated earlier,

congress put in place important protections against mortgage foreclosure during the pandemic. and yet, cfpb documented in june a series of violations of that emergency protection. -- rule. i'm especially worried now that those protections have expired entirely as of last month, that we could see a wave of foreclosures. i know you put in place a new rule in august. i applaud cfpb for doing that. but what is your experience to date now that the protections have lapsed, and what are you going to do to make sure we enforce that rule? >> senator, i have directed the staff, a and i have started getting updates on somewhat is happening in the mortgage market

with respect to delinquency and foreclosure. i need to understand whether there's certain population segments that are being -- where there may be problems. i don't want to act too late on this. so i want to be hyper vigilant. the rule that the past acting director put into place is an interim rule that seeks to have an orderly transition back to repayment. servicers have embraced this and are starting to evaluate homeowners for alternatives to foreclosure, including loan modifications. the thing that is best for homeowners, that is best for investors and for our economic recovery, is to prevent avoidable foreclosures. it's a win-win-win when servicers are able to successfully get a borrower into successful repayment. >> i appreciate that. we'll work with you. we may have some issues in the

state of maryland, so i want to endorse some of the statements some of my colleaguers have made regarding the public service loan forgiveness program. i agree that this has been botched over a series of administrations. i am pleased and applaud the accident of education for waiving some of the excessive administrative hurdles that have to be done through. but as you indicated, you've got the primary servicer of these loans going out of business. and i am very nervous that it's going to be a challenge to implement those waivers and at the same time, transfer these loans to another borrower. do you see cfpb as playing a significant role in there now that you signed the mou with

d.o.e.? >> with respect to service loan consumers, they are covered under the laws. so we are a role in enforcing them. i think you're right, there's this issue, particularly when it comes to servicing, are some of these -- the reverberation is challenging to manage. we need a resilient ecosystem and making sure we are anticipating those risks. so yes, and we are making sure we are anticipating those risks, and that the incentives are right. so the transition back to repayment, -- that is high on my list to make sure we don't have a cascade of borrowers across the country getting the wrong bills. >> no i appreciate that but just to give you the maryland figure, 90% of maryland applicants were denied. >> were denied. -- >> and it's outrageous because

i spoken to folks and they qualified, but because of a whole lot of technical bureaucratic issues and technical things you know they were denied. last issue i want to raise with you, has to do with bank overdraft fees. in my view, we have to do a lot more to protect consumers in this area. under current law the thank consumer, on a onetime basis, says okay it's okay to overdrawn my count. and be charged penalties. but we see and what we see is after that first signature, no other communications or notice. so it leads to what i call the 35 dollar cup of coffee, and multiple cups of coffee in one day, because you go in you provide your credit card or whatever it may be, with no notice in many cases they are over drawing and then huge penalties. especially for lower income people. this is really a slug in the

wallet and stomach. i don't know if you're doing anything in this area but we look forward to working with you on this consumer protection issue. >> thank you sir. >> thank you. >> so senator ossoff from georgia, he is recognized from his office. >> thank you mister chairman and welcome back mr. rohit chopra and i enjoyed our discussion during your confirmation hearing i wanted to ask you a few questions about data privacy and finn tech and tech platforms that are exploring entry into the fintech or payment markets. first of all with respect to privacy, we have seen over the past decade, particularly the last couple of years a new entrance in the financial technology providing services that have typically been the domain of more traditional financial services companies. offering those companies a significant opportunity to

collect data about their users. about their patterns and habits of consumption. about their location and other personal identifying information that may have value in secondary markets. from data brokers, or why -- the finn tech company itself. can you comment on these companies. what jurisdiction your agency or partner agencies may have to protect data privacy's as more and more customers are using these financial platforms. >> thanks to the question senator. our country is turning into a bit of a surveillance state when it comes to some of these tech companies. the ability to combine browsing information and geolocation information and health information and the list goes on and on and on. to add to it the ability to

combine that potentially with not just our transaction data but skew level data. not just how much you spent at a place but specifically what you bought. this is actually a major issue when it comes to how can small entrance, entrepreneurs and small businesses who want to enter this arena how the can they compete with that? especially when some of these fintech gatekeeper power -- we have to make sure we have a competitive system, that is protecting privacy, and i don't think we have that now. i think we need to make sure that we get to that place. part of the reason we have issues with those orders is to understand those issues. i think that the [interpreter] -- provisions are so outdated and almost useless and of course we will continue to enforce them but it is a problem. i think it's something that we

can fix and the bureau has many authorities related to this but the first step for me is to study the market and see what's happening so we can shine a light on it. >> thank you mr. chopra. i am currently working on some draft privacy legislation, and let's sit down in the coming days and discuss your perspective. can you please approach that, from the perspective of looking at companies that may not currently be the cfpb jurisdiction, but entering the financial services based, and we've heard for example proposals from facebook to develop their own proprietary pseudo-currency. or cryptocurrency. and other big tech firms, that may have entry into the thin tech base, and having access to that swabs of data. with that in your view, but --

to your agency's jurisdiction? >> yes of course they would be under the jurisdiction. and what we also have to make sure that we're thinking about senator, is how are we going to make determinations as to whether they are even complying with the law. if we don't especially know what data is being used fits hiding behind some black box algorithm. you know secretary carson, issued a complaint against facebook for violations against facebook -- and for targeting, and we know that is likely the future of where financial services is going. and to the extent that the tech companies are using the treasure troves of data, there needs to at least be some clarity with local banks and other financial institutions who are following the law. we cannot hold them to a separate standard and simply let them off the hook. >> thank you mr. chopra and with my remaining time question

for you. do you consider crypto currency wallets, subject to your agency's jurisdiction? >> it's a broad question, all of these financial regulations are based on activities and in many cases, we need to look at this specific facts of the business model. look at the law. and it's a place i know that all of the financial regulators are actively looking at. and i'm happy to circle back to the question for the record to give you more detail. >> thank you mister chopra thank you mister chairman i yield. >> mr. hagerty is recognized for five minutes. >> thank you very much mister chairman, thank you for holding this hearing today. director chopra thank you for being with us today as well. in regard to the oversight responsibilities, and i feel that much more oversight is required for the regulatory agency that you run mr. chopra that's why long and my colleagues i produce

legislation that would subject the cfpb to the regular appropriations process. and return civil penalties to those that don't go to the direct -- victims act. this morning we saw the third quarter gdp economic growth, and it slowed down. now is especially not the time for the biden administration to double down on an anti business agenda. when that imposes excessive regulatory cost on small businesses. and limits the availability of a range of seven initial services to those most in need of them. again as i mentioned, i introduce legislation that -- would to the regular appropriations process. so the cfpb is accountable to the american peoples elected representatives. just like every other agency. and mr. chopra i would like to know if you're opposed to making the cfpb to making it responsible to the elective peoples representatives. >> that is really senator at

this issue for congress, but just to say with the facts are on it. the way in which the banking regulators are funding, and the -- has two components. there's a base level of funding, just which is a price statute, and separately it's as much as the bureau makes requests for supplemental funding, and that is subject to the normal appropriations process. today as i understand the cfpb has not made a supplemental request about that amount. and the f. d. c in the occ, which are much larger agencies, they have a fee charging arrangement, and they charge fees in their regulated institutions as i understand, and that was not practical to be implemented. not in this context because we do not just oversee chartered banks, we oversee non banks as well. that may not be subject to the same licensing. so i'm happy to work with anyone as bureau can provide technical advice on this, but i think as a factual matter,

there are two components which is the base level budget, and the supplemental budget that is subject to appropriations. >> well i would very much like to see working on a bill to hear this in this case, and the -- service that is made by taxing people fees, i think it's quite concerning. it creates a scent of a set of incentives that are discovering to me and too many. >> just to be clear we do not have that system. that is with the f. d. icy and the occ but we do not assess fees. >> in penalty? >> with respect to civil penalties the civil penalties under the law go into a fun for any entity which is subject to a civil penalty and where the victims have not been fully regressed the penalty is served for that purpose. and congress also authorize it to be served for financial literacy programs, but i will

share with you that my priority for this fund will be for victims redress, because there are many entities that we cannot recover. >> it should be. >> yes we cannot recover redress, and those victims should be made whole from that fund. >> i absolutely agree they should take top priority. again i hate to see a bounty system set up that some light might incentivize your agency to impose fees. because that's a funding source that goes beyond the funding site. >> i know there was concerns raised over the past, about how the financial literacy programs are used. we will make sure we look into that. and i want to know what disbursements are currently going on and to make sure that everything is in accordance with the law. >> thank you. >> i'd like to turn to cryptocurrency for a moment. my office received numerous complaints every month, from constituencies about the cryptocurrency being fraudulent or hacked. digital ledger technology, has

a lot of promise, in terms of financial innovation and inclusion. it's an industry where i think the united states is leading. and i'd like to see us continue to lead their. especially when we look at other countries, like china and the chinese communist party. that is moved to ban private sector activity in that arena. can you describe what's the cfpb is doing in the crypto currency arena? what you're doing? >> this is about consumer payments, and the payment system we administer the electronic funds transfer act, and last week i issued a series of orders to facebook, google, amazon, apple, and others to understand some of their business practices with respect to their payment platforms. i for one i'm concerned that they may have the incentive to at their win, kick off participants and incentives for something else that we don't know. i would like to understand how they are protecting against fraud. the electronic funds transfer

act, does have requirements in respect to that, but we don't have much transparency in respect for these big tech platforms. ultimately cryptocurrency, right now it's generally used for speculative purposes, but we don't know how that will scale. my sense is that it will scale rapidly if big tech platforms are taking a global. >> appreciate it, and i want to make certain as you do exercise your oversight responsibilities, that we don't -- innovation in this arena. we don't stifle. it >> yes i agree on one of the things that will be a priority for me is making sure that regulation and enforcement is not just empowering the incumbents even more, we need more entry, more dynamism, and we need more innovation and the way to do that is to not pick winners and losers by crowning incumbents further. >> that's great thank. you >> thank you. >> so senator warner from virginia is recognized from his office. >> thank you mister chairman,

and it's great to see you thank you and congratulations. first question i have, i'm going to shuffle it around a little here. let me apologize on the front end. is on the -- the i know your former acting director, i believe until october of 2022, and the rule was using a data driven approach, and a lot of support from advocacy groups. the i supported the final rule and supported it in a bipartisan way. and we work together on this, and i would be happy to share this i have a letter on it. and in delaying the limitation, we might be drifting off course. i'm very concerned particularly coming out of the coronavirus, that we may be pushing families of color out of access to capital.

as a team do you have any thoughts when we like at this rule out, and i hope the delay will not weaken the under writing isolation or the safe product standards and affordability on the queue are cap. i know you're concerned about access to it and how do we make sure this final rule does not undermine where we landed. >> senator just to clarify this was not it was delayed in regards to the mandatory compliance date. so far recall, the federal register had been briefed. >> i'm sorry compliance. the compliance date. >> yes so essentially it gave lenders more flexibility in determining which path they would get status for. as i understand, most of the

market has really moved to pricing. and a lot of it is has already been implemented. so the last thing i want to do is create disruptions in the mortgage market. that being said senator, i do think there are some places that are particularly interested in and where there may be opportunities to find more loans that could be subject to qualify q and protections and that is actually in the refinance space we. i think there's a lot of places where homeowners with lower balanced home, or low and lower balanced mortgages are not getting the benefits of refinancing. i'm obviously not following closely the changes to the agreement between treasury and h f h a and we will take that all into account but just to be clear that role has taken effect, and lenders can use the pricing regime now. and they can continue to do so

giving given the existing rule that has been put into place. even with the delayed mandatory compliance >> on the date. >> compliance component we want to make sure we don't wander off with some imperfections. i know for instance, i cortez masto raised similar questions around the big tech getting into the payment space. and i have some real concerns there. from fintech, but when facebook and google and others potentially getting into the payments, case it raises concerns beyond privacy issues, but frankly even from antitrust. -- why don't you sir with me your

concerns and tell me the cfpb's role in addressing some of the safety implications, as the big tech gets into payments, as well as the questions around facebook getting into digital currency? >> i think we can if big tech companies get scale this globally and rapidly it opens a whole host of questions. there's a whole host of concerns about fair competition. senator, we've discussed before and sometimes these large dominant tech companies entering a space, it freezes up capital formation and venture capital and other investors are less willing to put money -- think to themselves would if one of these big firms just set off. that's something we want to make sure our payment system is resilient to, and we have a fast fair and competitive system. i'm not really sure that this body should want our payment

system to look more like ali pay and wechat pay. i think we have to take an american approach to it, not a chinese approach or -- >> can you just stop there for one second. we do have to think about that in the context of which china is doing. >> of course. >> and the chinese platform companies, very active. >> that's part of their -- senator, that is part of the reason why our inquiry is also going to study the chinese tech giants practices because we need to understand the interplay and to make sure that our nation and our consumers are protected, but also that our national interest is protected as well. >> i look forward to working with you on that. thank you. >> senator daines from montana's recognized. >> thank, you mister chairman. i want to start first of all by expressing my concern and joining my colleagues and the overreach that we are seeing by

the pc of ppe -- under the old mama p cfpb, they ensue the regulation enforcement, using to give to countries without giving clarity on how to avoid, engaging with the cfpb -- abusive behavior and the behavior the cfpb has had a very detrimental effect and has limited consumer choice to increase cost and credit across america and my home state of montana. i'm concerned and i fear that the cfpb is already reverting back to some of those practices of the obama era. now cfbp, reimposing some burdensome rules. director chopra, you said during the confirmation hearing that you would not prejudge a business based on the industry that it's an. will you reaffirm that commitment to this committee here today? >> yes. we should never prejudge a law abiding business, and i'm happy to answer whatever you want.

yes. >> well, thank you. and you also said during your hearing that you intend on focusing your oversight on large businesses. will you commit to leaving small businesses alone? >> let me share some detail on that, my experience including the federal trade commission rather than actually going through the process appropriate enforcement that is subject to court review, with they do is they strong-arm stress strong businesses small businesses. no litigated decision it's. to create a hidden common law. i think it's very inappropriate. i think we have to focus on the biggest players with national harm and that we are doing so. they have the know-how ability and resources to defend this --

it's much more fair when we are focusing on widespread harm rather and doing with the ftc and others do, which is beat up on small businesses without really ever going -- >> yeah lot of small businesses don't have a complaints department. >> exactly. small businesses are not ones that are engaged in large-scale -- that being said in some cases, senator, when we are referred, when we are given a large number of complaints about a small entity, i'm not saying that small businesses have a free pass from the law, but that's not going to be -- >> senator tillis talked about this is. well i'm troubled about the cfbp on section ten 71. the proposed rule. i can tell you that montana is made up of very small financial institutions. many of them. this proposed rule would apply to those that originally 25 or more loans per year.

i think that is punitive by design and will play some major regulatory burden on a very small financial institution who are frankly the least -- we talked about compliance department being much much smaller. are you concerned about imposing undue regulatory burdens on small financial institutions. in 25 or more loans premiere? >> i don't know the specific details of with the compliance costs are, but i'm going to answer your question with yes, because here's how i see a lot of rulemaking that occurs in washington. it is extremely complicated. it's hundreds of pages so that the large players who have a lot of ability to influence it can cover every single scenario they want rather than having clear bright minds that are easy to follow and enforce. and that is something i want to move toward and some cases it

is challenging to do so brilliant bright line rules, but i'm very sensitive to with our local financial institutions are facing. restorii discuss the importancf restoring relationship banking. we have lost so much of that in our country and it is a harm to our economy and national resilience. >> thank you. i incentivize that in relation banking is a big part of how we do it in montana. i ask you to re-look at the 25 loans or more threshold. is that the right place to draw a line? everybody is going after the very small financial institutions. it's chilling for those back home. >> i understand and i want to understand to what is involved in reporting because the law is asking us to collect data on the white swathe of its own business -- i really encourage your financial institutions and others to submit comments in the record. we are required to look through those comments. i certainly will look at that.

>> thank you, sir. senator smith, from minnesota recognized from her office for five minutes. >> thank you, mister chairman. thank you for joining us, welcome to the committee and i would like to focus my questions on abuses by structured settlement buyers. over the last few weeks in minneapolis star tribune has run a series of really alarming stories based on what's structured settlement buyers are doing. so as you no doubt no, dr. scholl's brother, there are about 750,000 americans who received some sort of structured settlements which are idiot periodic payments to compensate people, monthly or yearly, for injuries that they or their family members of suffered. these payments are critical for helping families pay for medical care or sometimes just being able to survive after a tragic incident. we are talking about stories of people who have experienced some cases a catastrophic

industry and in some cases makes it impossible for them to live independently. then what happens is these businesses come in, realizing that they can make money off of these catastrophes and take advantage of these victims with the most vulnerable. the firms offer one upfront cash payments in exchange for the families agreeing to sign over all future, not always on, but sign over future settlement payments. on average these firms are taking 60% of the value of the settlements. that means that the individual who was harmed, or their family, are getting less value from those structured payments than the business that brought them -- bought them. it is especially concerning is the high pressure sales tax that are being used by the settlement buyers. targeting people when they are in a deep crisis. in fact, one former employee of

one of these structured settlement businesses was quoted as saying, quote, you have to not have a conscience to be involved in this industry. director chopra, i want to ask you about this. i know that you are working on responding to the literally sent you on this issue, but could you tell me today whether you will be looking into this very troubling and abusive practices? >> so i totally appreciate this question, senator. i also read those star tribune write-ups. structured settlements often target those who are getting recurring payments in exchange for a lump sum, and under my predecessor, there was an enforcement action done with, i believe several states, including the state of south carolina. we will obviously want to make sure we are getting the right type of consumer complaint. understanding what is happening in the market and take appropriate action. i would hate to see that those

who have been subject to a horrible accident or some other tragedy essentially lose financial stability for themselves and their family because of unlawful practices. >> thank you for that. i think this is the worst kind of predatory behavior that we have seen described here by businesses taking advantage of people. i appreciate you paying attention to this and looking into this. let me ask you quickly as a follow-up, and mister chair, i will probably wrap up after this. do you think, director chopra, that the cfpb's existing rules are sufficient to stop these abuses or do you think the new rules are needed? >> you know, i'm not sure. i'm happy to take a question for the record on that. i think the specific practices involved in a structured settlement exchange, i want to understand a little bit more about how they contractually

deal with that so that we can understand whether our laws are adequately protecting people. but i hear you very loud and clear that in some ways, this is a long against -- it has the equivalent of alone in some ways, and we need to make sure that we are protecting people in that way. >> as i was reading your stories, and some cases for example you will have an individual who was considering selling their future benefits and then they are provided with an adviser and in some cases that advisor is provided by the company that is going to be taking advantage of this individual, and and by some reports be compensated. you clearly have a conflict of interest that is part of the predatory behavior. i appreciate you looking into this and i think it it is a great example of how we need to be protecting people from this kind of just really editorial activity. thank you. thank you very much. b ro>> senator warnock from georga

is recognized. he will be followed by senator warren from massachusetts from her office. senator reed will close the hearing. senator warnock is recognized. >> thank you, general. brown director chopra, i look forward to working with you as chair of the consumer protection subcommittee. i'm proud of the significant number of military families living in the great state of georgia. we have 60, 000, more than 60,000 active duty military personnel and nearly 700,000 veterans. all calling georgia home. a cfpb survey estimated that at least 20% of service members separating from the military will have their credit scores dropped a tear after just six months. this concerns me and it should

concern all of us. we know what happens when that happens. we know that predatory lenders target members of our military, particularly young members of the military. service member complaints to the cfpb reached a high of 40,800 last year. director show bra, how is the cfpb addressing these complaints and protecting our serviceman and women from predatory lenders? >> so reverent, or senator,? >> both apply. >> okay. i want to make sure we are refreshing all of our work in the service members and veterans area. i've got to tell you, there's a lot of problems when it comes to identity theft of military families, because they move very frequently. they often -- it's not just a target for a scam. or it is also a target for state and non state actors.

we also have to understand they have unique housing issues that they face, often when needing to move, particularly when it comes to their mortgage. we -- i expect that we will be working with the judge advocate general corps, we will be working with the d.o.d., with the va, i will tell you that i'm going to be robustly increasing the analytical capabilities to compliment with the d.o.d. is doing with their own status of the force collections so that we understand specifically, including by geography, and you may know, senator, that our service members are very diverse group of people. we also have to make sure they are not being unfairly harmed due to their identity or to their service member status. >> well, it is a complicated issue, as you point out, and there are many contributing factors, some of which you've listed. and it leads to a kind of cascading issues for these

members of the military. it seems to me that when the service members fall behind on their predatory loans, manipulative debt collectors are ready to swoop in and they take advantage of people who don't know their rights. what is the cfpb doing to protect members of the military from manipulative debt collectors to ensure that they know their rights and that they have resources to help when they are facing harassment? >> we need to make sure that we are actively enforcing the military lending act. i'm quite concerned about when debt collectors inform a commanding officer about a debt. in some cases this feels like coercion. that, if someone may not even over the debt but they feel they have to pay up, because the chain of command is hearing about it. we have to make sure that we are understanding those that

collection issues. you know the d.o.d. made it very clear that financial readiness as part of force readiness, and i take that very seriously. >> thank you so much. if i might switch topics, unfair, deceptive and abusive acts, and practices and housing and mortgage market was a big reason for the creation of cfpb. the national housing act of 1934 was supposed to make housing accessible for all americans. however, this was not the case, and we saw a long history of americans of color, especially being redlined out of opportunities. within the housing act. today, many describe our official intelligence and machine learning as equalizer that are supposed to correct unfair actresses of the past. we know that not to be true. that often this is false. for instance, in 2019 the department of housing and urban

development, had sued facebook for its targeting advertising platform, violating the fair housing act and encouraging discrimination. how is the cfpb addressing the effects of algorithmic bias on consumers? >> this past friday the attorney general and i announced as part of a broader redlining initiative, that we are going to be looking -- i specifically stated that we need to hold accountable those who use discriminatory algorithms. there is a myth out there that algorithms can take the bias out of the transaction. in reality, they can make it go on steroids. we cannot have a two tier system or financial institutions have to play by the rules, where facebook and other tech companies using mysterious algorithms get to skate off with no accountability. secretary carson's complaint against facebook in the fair

housing act context is one that all of us should closely analyze, because there are many corollary areas of conduct where it applies throughout our economy, including with respect to financial services. >> thank you very much. i look forward to working with you on all of these issues. >> thank you, sir. >> thank you very much, senator. on behalf of chairman brown, let me recognize senator warren. >> thank you very much. director chopra, it is good to see you here. as the confirmed director of the cfpb, i know that you are going to help consumer financial markets, with more transparency, and that will help millions of american families. today i want to ask you about an emerging trend in consumer finance. the rapid growth of big tech companies and our payment systems. big tech platforms like venmo and square, and facebook pay have multiplied in recent

years. director chopra, a giant company like amazon owns an online marketplace, a cloud computer platform, a chain of grocery stores, and a payment platform. is that combination a risk for consumers? >> yes, and it is a risk to small businesses, to, senator. and as part of the reason why we issued the series of orders, including through amazon, apple, facebook, and google, to understand what are they doing with this data and how are they going to decide who gets admitted and who they are going to kick off and it is going to be distorted by their own financial incentives? >> and their own financial incentives here meaning when they have that kind of information, which is it that they can do? >> well, they can do a lot, and i don't think all of it is very good. look at what apple has done in its app store context. there are allegations that as soon as there is an app on the

app store that competes with one of apples, a go in for the kill, charging higher commissions, higher fees. if our payment system and the flow of our currency is distorted by this, that is a real harm to consumers, and not just to their privacy, but to the options that they have. >> good. not good. it is a terrible thing. but i do appreciate you making this point. because the risks are real, and i am glad to see that the cfpb is requiring these companies to provide data on how they operate their payment systems. it is long past time for transparency in this space. now you saw these companies up close and personal when you are an ftc commissioner. i want to ask a different question. do you think we can trust these companies on their own to put in place the safeguards that are necessary to make sure that consumers and small businesses that use these payment platforms don't get ripped off, or do you think you need a cop

on the beat like the cfpb? >> one of the problems is that when i arrived to the ftc, there was a clear bias in favor of these firms. take venmo. under republicans and democrats, the ftc just let them off the hook with a no money no fault settlement that did almost nothing to fix things. facebook violated its order over and over again and the ftc's response? and immunity clause four marks zuckerberg and cheryl send burke. we need to make sure that it is not just the ftc, not just the cfpb. every single government agency is being impacted by how big tech companies are infiltrating sectors of the economy. it's not just going to be one of us. we have to work all together to protect consumers and protect businesses and frankly to protect our country. >> that is powerful. we've already seen big tech's use their size and scope to rig

market places. there is no reason to believe that they will be any different as they infiltrate payment systems here. but as you indicated earlier, we are not powerless here. i know that you took these companies on while you were at the ftc and that that work continues under ftc chair con. but to the extent that financial products like payments platforms are part of the equation, the cfpb has an important role to play here. can you talk about just a few of the ways in which the bureau can actually help the playing field? >> we have a whole host of tools, including with respect to our partnerships with the prudential banking regulators. but of course, we administer laws like the electronic fund transfer act, like the privacy provisions. there may be places that we need to bring enforcement actions or issued guidance or rules to make sure that there is not a role over and play

dead mentality when it comes to policing these powerful firms. >> i very much appreciate your focus on the importance of protecting personal data. i know that that is going to be an important role for the cfpb. i've made my position clear. i think these companies have far too much power and they should be broken up, but in the meantime, we need our regulators, all of our regulators, using every tool that is available to them to make sure that they protect market places, that they protect small businesses and that they protect american families. thank you very much for your work. good luck to you. >> thank you, senator warren. on behalf of chairman brown, let me recognize senator moran. >> thank you very much. mr. chopra, nice to see you again. nice to have a brief conversation this morning. i want to thank you for a comment you made in regard to relationship banking, which is actually a phrase i use. i'm very interested in when i

call it relationship banking at home, and i have been an advocate for a different kind of treatment for those relationship banks. i just want to emphasize again the importance that has to be placed on preserving their capability of making loans to farmers and small business men and women, just a significant part of the community for really as long as i have been in congress. i have reminded my colleagues that economic development, where i come from, is often whether or not there is a grocery store in town. that is often determined by whether or not there is a lender who will make that one, because they know the people. it is in the best interest of the community. this ever increasing regulatory burden that our relationship tankers are facing means we have fewer relationship bankers and they get the banking industry --

it gets bigger and bigger. the bureau -- the bureau's implementation of section ten 71 is ongoing. i would love to hear from you with assurances you can provide me, that final rule would be appropriately narrowed to limit the compliance burdens on our smallest community banks and credit unions. >> i really appreciate the question, senator. one of the things we have seen throughout the history of our country, but particularly in all of the financial panics that really impacted rural areas, was that there was a community bank that served locally and the ability to tie that former over or rancher over when there was times of distress. farm bankruptcies are very disconcerting right now. i am with you, that we have lost that in our country in a way to be resilient and more equitable across areas, whether it's urban neighborhoods or

rural areas. the relationship banking is a key element of that. now with respect to your specific question, i don't want to prejudge it, but there is an open comment period. obviously the cfpb has to implemented congress has said to collect on small business loans. there are some places where we need to put in some parameters and what will be reported. i shared with senator daines that we want to take a close look at what is the impact on a financial institution to report that. you have my commitment, and i'm happy to meet with you to talk through what those impacts would be. at the same time, we also want to make sure congress made sure in the law and we need to take a picture to see what's happening in a small business in america. i think our country was that it is a disadvantage, particularly when constructing the ppp program to not have this robust data set. i hear you loud and clear on your concern that we want to

make sure we are attuned to making relationship banking and local banking successful rather than just having them all merge and consolidate into the big guys. >> i would be happy to meet with you and have further conversation. i appreciate the suggestion. you also said something and i would highlight. i know that senator daines raised this topic with you, but i did not want you to miss the opportunity to hear the importance. a lot of places across the country. the farm bill, the committee on agriculture will deal with over the next several years, we will do a farm bill of every five years. it's often described as the safety net for farmers and rangers. there's an additional safety net and it's the relationship between the farmer rancher and their banker. and it's a safety net that comes into play and it's often a relationship between a bank that is owned by a family generationally, with a farmer that has had at the farm in the generation from

great-grandparents to today. so there is a relationship that matters and there is an understanding and trust and a knowledge that is different from any regulation can ever demonstrate. it has more value than that as far as safety and soundness. in the 25 seconds i have left i raised a complaint i had with director portrait in hope that you would have a different leadership plan. under director cordery's leadership, the enforcement authority is often used as an extension of rule making. it was expected that the financial institutions would read between the lines and discern the rules going forward based on, for example, the press release announcing the action. circumventing any transparent rulemaking process. i hope you will commit to avoid rulemaking by enforcement. >> i have said repeatedly that i want to make sure we move toward a system where the law

and the rules are easy to understand, easy to follow, easy to enforce. i know we are out of time, but i'm happy to have a discussion with you about how i plan to do that. of course the cfpb cannot override or veto congressional legislation. we have to enforce the laws written. but there are ways that we can work with you and others to develop the law so that expectations can be made more clear in any way that we can -- in as much that we can do it, given the constraints of the statute. by a way>> the entities you ree large or small ought to have an input into the process. it can be eliminated by a way of rulemaking that is not rulemaking. thank you. >> thank you, senator moran. director joel burke, thank you for being here today. because of the pending -- i will submit my questions to the record, on behalf of chairman brown i want to thank you for your very thoughtful and compelling testimony.

and for my colleagues and those who would submit questions for the record, those questions or do one week from today november 4th. to the witness, please submit your response to the questions for the record 45 days from the day you received them. once again, thank you. i have great confidence in you. it was very pleasing to speak with you. you are doing remarkable work to protect consumers around the country. with that, the hearing is adjourned. thank you.

union leaders testified on transportation security before a house homeland security subcommittee. they discussed the increased number of violent incidents occurring on airlines and the november 22nd deadline for all federal employees to receive the covid-19 vaccine. >> the subcommittee on transportation and maritime security will come to order. the subcommittee is meeting to receive testimony at today's hearing and title on the front and turbulent times. workforce respective's on the