[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                 CONSUMERS FIRST: SEMI-ANNUAL REPORT OF
                THE CONSUMER FINANCIAL PROTECTION BUREAU

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

                             HYBRID HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           DECEMBER 14, 2022

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-110
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                              __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
50-165 PDF                  WASHINGTON : 2023                    
          
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            ANN WAGNER, Missouri
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            ROGER WILLIAMS, Texas
BILL FOSTER, Illinois                FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio                   TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
CINDY AXNE, Iowa                     TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois                ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts       JOHN ROSE, Tennessee
RITCHIE TORRES, New York             BRYAN STEIL, Wisconsin
STEPHEN F. LYNCH, Massachusetts      LANCE GOODEN, Texas
ALMA ADAMS, North Carolina           WILLIAM TIMMONS, South Carolina
RASHIDA TLAIB, Michigan              VAN TAYLOR, Texas
MADELEINE DEAN, Pennsylvania         PETE SESSIONS, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   RALPH NORMAN, South Carolina
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    December 14, 2022............................................     1
Appendix:
    December 14, 2022............................................    63

                               WITNESSES
                      Wednesday, December 14, 2022

Chopra, Hon. Rohit, Director, Consumer Financial Protection 
  Bureau (CFPB)..................................................     5

                                APPENDIX

Prepared statements:
    Chopra, Hon. Rohit...........................................    64
    Semi-Annual Report of the Consumer Financial Protection 
      Bureau, dated Spring 2022..................................    69

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of the National Association of Federally-
      Insured Credit Unions (NAFCU)..............................   142
Chopra, Hon. Rohit:
    Written responses to questions for the record from 
      Representative Adams.......................................   151
    Written responses to questions for the record from 
      Representative Casten......................................   152
    Written responses to questions for the record from 
      Representative Hill........................................   154
    Written responses to questions for the record from 
      Representative Norman......................................   158
    Written responses to questions for the record from 
      Representative Rose........................................   162
    Written responses to questions for the record from 
      Representative Steil.......................................   164
    Written responses to questions for the record from 
      Representative Velazquez...................................   166

 
                      CONSUMERS FIRST: SEMI-ANNUAL
                         REPORT OF THE CONSUMER
                      FINANCIAL PROTECTION BUREAU

                              ----------                              


                      Wednesday, December 14, 2022

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:10 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Maloney, 
Velazquez, Sherman, Green, Cleaver, Perlmutter, Foster, Beatty, 
Vargas, Gottheimer, Casten, Pressley, Lynch, Adams, Tlaib, 
Dean, Garcia of Illinois, Garcia of Texas; McHenry, Lucas, 
Luetkemeyer, Huizenga, Wagner, Barr, Williams of Texas, Hill, 
Loudermilk, Mooney, Davidson, Budd, Rose, Steil, Timmons, 
Sessions, and Norman.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Today, we welcome Director Chopra of the Consumer Financial 
Protection Bureau (CFPB) to our committee.
    I would like to take a moment to highlight just how 
important the CFPB has been in the past year. Under Director 
Chopra's leadership, the CFPB has been combating redlining, 
housing discrimination, illegal evictions, and foreclosures, 
and has worked tirelessly to root out appraisal bias. I commend 
the CFPB for its announced plans to create an online registry 
of companies which have violated consumer financial protection 
laws, which will certainly support the CFPB's current efforts 
to hold repeat offenders accountable and ensure consumers get 
the relief they are owed.
    The CFPB has also put pressure on the credit bureaus to 
make overdue policy changes to relieve the burden of medical 
debt on consumer credit reports, highlighted financial 
institutions' excessive overdraft fees, helped small businesses 
get the access to capital they need to thrive, and closely 
monitored the impact that fintech products and crypto assets 
have had on consumers. So, Committee Democrats applaud the CFPB 
for once again putting consumers first, all of our consumers 
first, with these critical wins, and we remain committed to 
fighting against any and all efforts to thwart this progress.
    We are also closely monitoring the deeply-flawed ruling 
from the Fifth Circuit which focuses on the CFPB's funding that 
would disrupt the entire Federal Government, harm the economy, 
and leave consumers with fewer protections than the predatory 
pre-financial-crisis days. Democrats support the Justice 
Department, and CFPB has appealed to the Supreme Court to 
overturn this absurd ruling, and we stand ready to support the 
CFPB as much as we possibly can.
    At one point yesterday, the ranking member mentioned that 
we oftentimes work together, and we have been able to work 
together on any number of issues and that we will continue to 
try and do that. There is a lot that I could say about my 
displeasure with the way my Republican colleagues have dealt 
with the Consumer Financial Protection Bureau. But I am going 
to eliminate the criticisms that I have in an effort today to 
recognize that this is our last hearing, and that I am looking 
forward to working with the ranking member. And also, I want to 
give the opposite side of the aisle the opportunity to at least 
identify what it is that they like and appreciate about the 
Consumer Financial Protection Bureau.
    And so, in an effort to end on a good note, I will yield 
back the balance of my time, and recognize the gentleman from 
North Carolina, the ranking member of the committee, Mr. 
McHenry.
    Mr. McHenry. Madam Chairwoman, a point of personal 
privilege, if I may. On that note, you should have picked as 
your last hearing a different witness, from a different bureau, 
with all due respect. But I did want to say as a point of 
personal privilege, I want to congratulate you on your 4 years 
as Chair. I know it was not your intention for next Congress to 
not be Chair, but I am excited to have the opportunity to 
actually take your chair, and I will say it has been an honor 
to work with you. The historic nature of your chairmanship, as 
I noted at the beginning of the first hearing, as the first 
Californian to chair this committee, the first woman to chair 
this committee, and the first African American to chair this 
committee, and, I'm sorry, Blaine and Ann, the first Missouri-
born to chair this committee. There are a lot of firsts in 
that.
    [laughter]
    I know you worked intensely hard to get the chairmanship 
after a long career in California politics, and I want to 
congratulate you. And the great news is because of the great 
working relationship you had with Chairman Hensarling, if you 
have a portrait made during my chairmanship, I am going to put 
you two right next to each other, but we will have to position 
Barney Frank to be able to just stare at the Democrats, not the 
Republicans.
    [laughter]
    Mr. McHenry. But I do want to congratulate you on that, and 
we have from time to time worked together. Last Congress, we 
did big things together that took down the temperature on 
controversial subjects in this committee. And while I offered 
to help on this, it was your leadership which enabled that to 
happen. The same thing with the CARES Act, the good work we did 
with the CARES Act, and the same thing we have done in our 
approach to confronting Russia about Ukraine. And I want to 
commend you for that outreach, because without that outreach, 
we could not have gotten a bipartisan product. I know there are 
other partisan products you may list under your chairmanship, I 
won't, but I am grateful for the outreach and the times that we 
did work together, and I hope that we can do that in the next 
Congress as well.
    Chairwoman Waters. I would like to take a point of personal 
privilege at this point, and also thank you for the times that 
we have been able to work together, but I want to spend a 
little bit of time on some recent work that we have been doing 
on stablecoins. Our staffs have been working very, very hard. 
We have all taken cryptocurrency very seriously, and I want to 
commend all of the Members on both sides of the aisle for the 
way that we all conducted ourselves yesterday. I think every 
Member had something important and very, very thoughtful to say 
about what is taking place, what we are attempting to do, and 
our surprise at not having Sam Bankman-Fried here to testify. 
So, I am not only wishing you the best in your chairmanship, 
but I am looking forward to continuing to work not only on some 
of the issues that I have alluded to, but certainly on 
cryptocurrency. Thank you very much, and I yield back the 
balance of my time.
    Mr. McHenry. Thank you, Madam Chairwoman, and along those 
lines, I agree. I hope that we can continue to do bipartisan 
work with this committee, because this is the center of where 
the legislation is going to happen on digital assets for the 
coming years, so thank you.
    Chairwoman Waters. Thank you very much. And I now recognize 
the ranking member of the committee, the gentleman from North 
Carolina, Mr. McHenry, for 4 minutes to give an opening 
statement.
    Mr. McHenry. Thank you, Madam Chairwoman. Director Chopra, 
you just made it, 2 weeks before the close of Congress, for 
your second statutorily-required appearance this year. Welcome 
back. You can look forward to a few more of these invitations 
next year, and we think we will have you back before the 
committee a number of times, and I look forward to you being 
very willing to change your schedule to adhere to that.
    We have a lot to cover today, and I will start by saying it 
is obvious that the CFPB's lack of transparency is of grave 
concern. Over the last year, committee Republicans sent more 
than 10 letters with specific questions we wanted answered, to 
which you replied with single-page responses. It looked glib 
and not as thoughtful as a major regulatory agency should take 
rational oversight. My encouragement would be for you to 
actually take those letters more seriously with the new 
Majority next Congress, because without proper oversight, this 
system of government doesn't work well.
    And it is not good for financial institutions, it is not 
good for market participants, and it is not good for the 
consumers whom we are trying to protect either. In fact, what 
we have seen from Director Chopra's leadership is to only put 
forward one real rule through the notice-and-comment process, 
and that action was directed by Congress under my bill, the 
Debt Bondage Repair Act. Meanwhile, you have issued six 
compliance bulletins, five advisory opinions, five interpretive 
rules, and, just this year, seven circulars.
    While not legally binding, such clarifications and guidance 
without time to process the changes fosters an environment of 
uncertainty for the industry. That doesn't make it better for 
the consumers. Financial institutions and other market 
participants changed their behavior, increasing compliance 
costs, and ultimately limiting consumers' access to affordable 
products and services, and leading to more confusion, not more 
clarity. You are implementing progressive policies at the 
expense of both consumers seeking financial products and market 
participants trying to comply with the law, and you are doing 
so without fully and transparently considering the consequences 
of your actions.
    You have also moved the Office of Innovation to the back 
burner. It has had almost no activity during your tenure. You 
did, however, rescind a no-action letter as well as the sandbox 
approval order. And you gave virtually no notice to those 
market participants, and threw their operations into jeopardy 
without signaling any willingness to work with them to address 
the CFPB's concerns. And again, there is no certainty and no 
transparency along the way.
    This is all against the backdrop of the Fifth Circuit Court 
of Appeals ruling that the CFPB's funding mechanism is 
unconstitutional, and vacating the CFPB's payday lending rule 
as a result. Last month, the U.S. Solicitor General responded 
by filing a cert petition on behalf of the CFPB, asking the 
Supreme Court to review the Fifth Circuit decision. I think we 
are all interested in the Supreme Court action here, but the 
real problem here, and what we have been saying from the moment 
of your Agency's inception is this: Why wouldn't the next 
Director, with a politically-different persuasion, not abuse 
his or her powers with the precedent you have set? The 
political pendulum does not stop swinging.
    Next month, there will be a new Majority in the House of 
Representatives. We look forward to more oversight, and I hope 
you will wish you had tried harder. Well, I know you will wish 
you had tried harder, and played by the rules, and we hope you 
will change your behavior going forward.
    Chairwoman Waters. Thank you, Ranking Member McHenry. I now 
recognize the gentleman from Missouri, Mr. Luetkemeyer, who is 
also the ranking member of our Subcommittee on Consumer 
Protection and Financial Institutions, for 1 minute to give an 
opening statement.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman. When Congress 
passed the Dodd-Frank Act, there was much concern that if a new 
Consumer Financial Protection Bureau was developed in an 
unconstitutional manner, that opened the door for massive 
abuses of power. Over the last year, those concerns have come 
to fruition. Under the direction of Mr. Chopra, the Bureau has 
shown a willingness to operate and regulate by any means other 
than those that are legally- and ethically-appropriate.
    In contravention to the Administrative Procedure Act and 
rulemaking process, Mr. Chopra illegally redefines and creates 
words through press releases, then sues U.S. companies based on 
those erroneous definitions, refusing to meet with consumers 
and industry stakeholders, and instead spends his time 
undermining other regulators strictly to increase his own 
perceived power and stature. These actions smack of a person 
who is either uninterested in or too lazy to fulfill his 
statutory duties as a regulator. The courts have already begun 
to chip away at the Bureau's illegal framework and actions. It 
is long past time that Congress does our part. With that, Madam 
Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much. I want to welcome 
today's distinguished witness to the committee, the Honorable 
Rohit Chopra, the Director of the Consumer Financial Protection 
Bureau.
    You will have 5 minutes to present your oral testimony. You 
should be able to see a timer that will indicate how much time 
you have left. I would ask you to be mindful of the timer so 
that we can be respectful of everyone's time.
    And without objection, your written statement will be made 
a part of the record.
    Director Chopra, you are now recognized for 5 minutes to 
present your oral testimony.

  STATEMENT OF THE HONORABLE ROHIT CHOPRA, DIRECTOR, CONSUMER 
               FINANCIAL PROTECTION BUREAU (CFPB)

    Mr. Chopra. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, thank you for holding this hearing 
today.
    Our economy and our consumer finance markets are truly in 
transition out of a pandemic and further into a digital era. 
Given the economic uncertainties in today's markets, the CFPB 
is carefully monitoring consumer finance markets to protect 
honest businesses, consumers, and to prevent the type of 
widespread harms we saw in the financial crisis more than a 
decade ago. Over the last year we have recovered hundreds of 
millions of dollars in victim redress and penalties. We have 
sharpened our focus on repeat offenders, those companies that 
repeatedly break the law, and Congress has directed the CFPB to 
implement several rules and we have prioritized getting these 
done. While we continue to address the challenges consumers 
face today, the CFPB is also preparing for the future. When new 
companies can take on incumbents, and when consumers can easily 
switch providers in a decentralized market structure, we are 
all better off.
    In October, the CFPB kicked off a rulemaking process under 
Section 1033 of the Consumer Financial Protection Act. The 
proposals under consideration would require that firms provide 
consumers access to their own financial data. Consumers would 
then be able to provide permissions to this data safely and 
securely to competing financial firms. The CFPB is also focused 
on stimulating refinancing, including automobiles, credit 
cards, and mortgages, and we have been working with industry 
and others to find ways to lower barriers to entry and to 
foster innovation that addresses important market gaps.
    We are taking a hard look at how Big Tech and other 
technology conglomerates are entering payments and consumer 
finance. Over the past year, we have had productive discussions 
with members from both chambers and on both sides of the aisle 
on reforms that can be advanced on a bipartisan basis.
    First, I would urge Congress to take action to protect the 
neutrality of our payment system. Facebook's Libra proposal in 
2019 was a wake-up call to policymakers around the world. There 
is now growing concern about how a small group of payment 
platforms, including Venmo, PayPal, Apple, and Google, are 
gaining a greater foothold in the payment system. Large tech 
firms are now the conduit for trillions of dollars in 
transactions, and the CFPB is conducting an ongoing study into 
the role of these companies in financial services.
    The rise in dominance of a small group of tech firms raises 
questions about how they can suppress, suspend, or even 
discriminate against certain users over others. The CFPB has 
even heard concern about payment apps kicking off users or even 
fining users for their speech, and we have heard concerns about 
firms abusing their positions to increase fees on small banks, 
merchants, and consumers. Our nation's payment system serves as 
core economic infrastructure that should be neutral and 
nondiscriminatory. Congress needs to ensure that tech platforms 
aren't the ones picking winners and losers.
    Second, Congress should strengthen financial privacy 
protections. More than 20 years ago, legislators on this 
committee and others began raising concerns about the creation 
of behavioral profiles using our credit- and debit-card data. 
Today, with the rise of ecommerce and Big Tech platforms that 
monetize user behavior through targeted advertising, these 
concerns are even more acute. I am concerned that the notice-
based privacy regime of the Gramm-Leach-Bliley Act from decades 
ago is no longer effective in today's market. Privacy policies 
for financial services are often all or nothing, and consumers 
must choose to accept the company's terms wholesale or decline 
to participate altogether. While Congress is looking at privacy 
protections across sectors of the economy, I hope you will 
consider updating the Gramm-Leach-Bliley Act to provide 
limitations on the collection, use, and sharing of extremely-
sensitive personal financial data.
    There are a number of other opportunities for bipartisan 
legislative efforts, and the CFPB is eager to work with this 
committee to craft solutions on these and many other issues. 
Thank you again for the opportunity, and I look forward to your 
questions.
    [The prepared statement of Director Chopra can be found on 
page 64 of the appendix.]
    Chairwoman Waters. Thank you very much, Director Chopra. I 
now recognize myself for 5 minutes for questions.
    Director Chopra, this committee has been investigating the 
collapse of FTX, whose founder, Sam Bankman-Fried, has been 
indicted by the Justice Department on eight criminal counts, 
and charged by the SEC with, among other things, concealing a 
years'-long fraud of diverting FTX customers' funds to Alameda 
Research, his privately-held crypto hedge fund. CFPB recently 
published an analysis of consumer complaints about crypto 
assets, which found that most consumers complained about rapid 
fraud, including theft and hacks of their accounts.
    I have also been concerned about reports of fraud we have 
seen elsewhere in the fintech industry, with companies like 
Zelle, PayPal, and other mobile wallets, and a lack of consumer 
protections when such fraud occurs. Over a year ago, the CFPB 
launched an inquiry looking into Big Tech payment platforms 
like PayPal. Would you please share with us the status of that 
inquiry and any areas of risk and concern you may have 
identified?
    Mr. Chopra. Thank you for the question. I think Big Tech 
and other payment platforms entering the payment system raises 
a host of questions about how banks, consumers, and others will 
fairly participate. We have recently reopened the docket to 
hear further concerns about consumers getting their accounts 
frozen or suspended because of their speech or their other 
activities. This is really a new concept that was unheard of 
and raises a lot of concerns about people and the payment 
system. The payment system is not supposed to be one that picks 
winners and losers. We are also noting that there is an 
extraordinary amount of data that is being collected about 
individuals and their transactions.
    We have heard from many banks themselves about the 
inability to understand fraud when it comes to the use of some 
of these apps and Big Tech technologies, so we will be offering 
a report on some of these topics. There likely will be a series 
of analyses we release, and we look forward to working with 
this committee on how we deal with that. We have to deal with 
fraud, we have to deal with fairness, and it is not clear to me 
that consumers should get their accounts frozen or suspended 
unless there is some indicia of money laundering, fraud, or 
other unlawful activity.
    Chairwoman Waters. Thank you. There have been various 
proposals made to improve the regulation of payments. For 
example, in a recent Treasury report on digital assets, the 
Biden Administration raised concerns with non-bank payment 
providers, and called on Congress to establish a Federal 
framework for payments regulation to better protect users and 
the financial system. What issues would you recommend Congress 
prioritize in legislation to strengthen consumer protection 
with respect to payments, including digital payments?
    Mr. Chopra. I think with respect to stablecoins, that is 
the number-one issue that I think would affect consumers and 
consumer financial protection. Right now, stablecoins are not 
really being used for consumer payments. When Libra was 
proposed in 2019, I think that was a sign that something like a 
stablecoin could very, very rapidly scale. And how will we make 
sure that there are not runs like we have seen in money market 
funds or even in the recent FTX situation? How do we make sure 
that fraud protections are in place, and ultimately, we want to 
have a modern payment system with real-time payments, that 
scales in ways that helps everyone? And ultimately, I think 
that is a place we would be happy to work with you specifically 
on some of the consumer protection and fraud-related issues.
    Chairwoman Waters. Thank you, and I look forward to working 
with you and your team to craft legislation to better protect 
consumers in our payment system.
    And now the gentleman from North Carolina, Mr. McHenry, who 
is the ranking member of the committee, is now recognized for 5 
minutes.
    Mr. McHenry. Thank you, Madam Chairwoman. Director Chopra, 
I raised this last April about regulation-by-press-release. In 
your first 6 months, you issued 49 press releases. I just want 
to understand the internal processes. You have blog posts. You 
also have the Administrative Procedure Act. How do you make the 
distinction for rulemaking on what gets a blog post, what gets 
a press release, and what goes through the Administrative 
Procedure Act? Walk me through the legal doctrine there, the 
regulation that you all have established. It is not clear to 
me.
    Mr. Chopra. Yes, I will try. One of the things that we have 
tried to do is try and issue a lot more guidance. That is 
actually because of feedback and requests from industry and 
also from some of you. That clarity we issue through guidance 
documents, through circulars, through interpretations, and 
others. We essentially try and reveal, based on feedback from 
many of you, that enforcement is just one vehicle, but to 
promote compliance and clarity to also be able to provide more 
transparency on how we interpret rules. None of the guidance 
documents commit institutions to new obligations. They are 
supposed to restate.
    Mr. McHenry. Are those legally enforceable, though? Is that 
guidance legally enforceable?
    Mr. Chopra. Guidance does not create any obligations under 
the law. They are supposed to--
    Mr. McHenry. So, you would tell folks who look at new 
guidance that was issued maybe this morning, that has no new 
force of law, no new obligation on them, that it is just 
guidance?
    Mr. Chopra. The things that have obligations under the law 
are statutes and regulations. We publish blog posts.
    Mr. McHenry. What is a blog post?
    Mr. Chopra. A blog post or any posting on the website is 
supposed to communicate and be transparent. In fact, we have 
gotten requests to publish more information about what we are 
doing. As a regulator, when you put out a blog post--
    Mr. McHenry. You are telling me that does not have any 
enforcement action? No enforcement action would be taken off of 
a new blog post?
    Mr. Chopra. I don't know if I totally follow what you are 
saying. The only enforcement that you can enforce is a statute 
and a regulation, so in our complaints, when we file an 
enforcement action, it cites particular statutes and particular 
regulation.
    Mr. McHenry. Okay. So, as an example--
    Mr. Chopra. In certain statutes, like the Fair Credit 
Reporting Act, there are different ways in which they define 
guidance. We try our best to look at each of those statutes.
    Mr. McHenry. We have other regulators that have been doing 
this stuff for 100 years, and your approach at the CFPB is 
novel. It is new. We don't see these kinds of actions from 
other agencies, so--
    Mr. Chopra. I would just disagree. I think many agencies 
publish things on their website, blog posts, letters, other 
things, to provide information to the public about how--
    Mr. McHenry. --that is significant. What agency would you 
reference that is doing what you are doing?
    Mr. Chopra. We can provide you a list. The Treasury does 
this. We see this also from the Education Department, the Labor 
Department, and the Homeland Security Department. There are 
many ways in which they communicate to be able to provide--
    Mr. McHenry. Sure. So, let me get into this. You have the 
non-bank supervision, so you have a rule for non-bank 
supervision. Is that going through the Administrative Procedure 
Act, or does it not have to?
    Mr. Chopra. The non-bank, under Section, I believe, 1024, 
this is about how the procedures that the CFPB will use in 
order to define that. It was not required to do a rule. We 
provided and published a procedural rule so that entities would 
know how this works, what--
    Mr. McHenry. Did you get feedback on that?
    Mr. Chopra. Yes, we did.
    Mr. McHenry. So, there was clarity for the industries that 
were going to be affected before you posted that?
    Mr. Chopra. We published the procedural rule and asked for 
comment on it. We received comment, and we also published an 
update to reflect to respond to those comments and reflect--
    Mr. McHenry. Okay. But I just want to close here. So in 
your view, guidance is not legally binding. Is that true?
    Mr. Chopra. Statutes and regulations are what are enforced.
    Mr. McHenry. No, but I am asking a--
    Mr. Chopra. Bulletins. This is not something you can plead 
in a courtroom.
    Mr. McHenry. But let me just ask, is guidance legally 
binding or not?
    Mr. Chopra. No, generally speaking--
    Mr. McHenry. Okay. Thank you.
    Mr. Chopra. --guidance is supposed to provide 
interpretation, and what you plead in an enforcement action is 
statutes and regulation. Guidance can sometimes help in an 
enforcement to show notice, to show other factors.
    Mr. McHenry. Well, that, ``help,'' has had a negative 
effect on consumer protection. I yield back.
    Chairwoman Waters. Thank you. The gentleman yields back. 
The gentlewoman from New York, Ms. Velazquez, who is also the 
Chair of the House Committee on Small Business, is now 
recognized for 5 minutes.
    Ms. Velazquez. Thank you, Madam Chairwoman. Director 
Chopra, the Bureau's Section 1071 rulemaking is an issue that 
you and I have spoken about several times. According to 
publicly-available material, the Bureau is on track to issue a 
final rule by March 31, 2023, is that correct? And do you 
expect to issue a final rule by this time?
    Mr. Chopra. That is right. The Bureau was sued a few years 
ago for not implementing that rule, and we are under court 
supervision to complete it by March 31st, and we will adhere to 
that court supervision and get it done by that date.
    Ms. Velazquez. Thank you. And in 2012, the CFPB created the 
remittance rule, which was a monumental step in protecting the 
millions of Americans utilizing remittances from hidden fees. 
While the rule makes a positive impact by requiring providers 
to disclose certain fees, consumer and immigration groups have 
found that remittances still lack full transparency. Providers 
can still hide fees in the exchange rate and force consumers to 
unknowingly pay higher costs, resulting in Americans losing 
$8.7 billion in hidden fees per year. Has the CFPB considered 
strengthening the remittance rule to better protect consumers 
and working-class families from these hidden fees?
    Mr. Chopra. Let me just say, Congresswoman, that when 
someone is sending a remittance, the cost to them is a mix of 
any immediate fee plus any exchange rate delta, and in many 
cases, the consumer cannot really know how much money is always 
going to end up on the other side. So, this is a place where we 
are starting to see some more digital apps and others try and 
compete more, and we think that is a good thing. But 
ultimately, the exchange rate opacity is a concern, and we are 
going to continue to look at that and to look at all of the 
players and what would be ways that the exchange rate 
transparency can be better.
    Ms. Velazquez. Okay. Director Chopra, I would like to work 
with you on this issue going forward. Earlier this year, I 
wrote you a letter on the lack of information that the Bureau 
has published pertaining to Puerto Rico and the other 
Territories. In your response, you have stated that you will 
direct staff to find opportunities to incorporate data for 
Puerto Rico and the other Territories in reports and other data 
products. Can you explain how you are intending to carry this 
out, and what type of information should we be expecting?
    Mr. Chopra. I appreciate that. Puerto Rico, I think if 
ranked by population, would be maybe the 30th- or 31st-largest 
State. So what we are doing is, particularly in our analysis of 
credit reporting data and other loan data, we are trying to use 
that to see in our reports if we can make sure that every 
Territory has some specific information, just like we have 50-
State information. We also particularly want to look at 
overseas military personnel to figure out their unique 
experiences. Sometimes, it is a challenge, because we rely on 
Census Bureau data and other data published by other agencies. 
My understanding is some of them are also looking at enhancing 
data on Puerto Rico and the Territories, so we will continue to 
find ways to make sure that we are able to understand what is 
going on.
    Ms. Velazquez. And are you working with other Federal 
agencies and Departments to acquire this data?
    Mr. Chopra. Generally speaking, we work with the Census 
Bureau. We work with really publicly-available datasets. I 
can't speak off the top of my head about what discussions there 
have been on an interagency basis about more data publicly 
available on the Territories. I am happy to follow up with you 
on that. But I think the spirit of it is that these are 
American citizens, and the more we can make sure that we 
understand what is going on and how it might be different from 
the 50 States, that feels very important.
    Ms. Velazquez. Thank you. I yield back.
    Chairwoman Waters. Thank you. The gentlewoman from 
Missouri, Mrs. Wagner, is now recognized for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman, and I am going 
to, Director Chopra, follow up on what I think is a mantra that 
you are going to hear from our side. We are hearing from 
industry and investors and others that you have clearly chosen 
to regulate by press release, guidance, and enforcement action 
instead of through the traditional Administrative Procedure Act 
(APA), through that process. These actions show an intent to, 
frankly, subvert the notice-and-comment procedures of the APA, 
that provide accountability and improve rulemakings. Since your 
public statements are not rulemakings or official actions, and 
your guidance is not legally binding, as you stated previously 
in response to the ranking member's question, do you agree that 
financial institutions and firms are within their rights not to 
adhere to your proclamations?
    Mr. Chopra. Congresswoman, I would characterize it as 
existing--
    Mrs. Wagner. That is a yes-or-no question.
    Mr. Chopra. Those are existing obligations under the law. 
One of the things that you have actually shared in the past is 
a concern about so-called regulation by enforcement. I take 
that very seriously. So what we have done is make sure that any 
of those potential enforcement actions, any of those 
interpretations, we could bring an enforcement action. But what 
we have tried to do is issue much more transparency about how 
we believe existing situations in the marketplace would apply 
to the existing law. We also use this in talking with Members 
of Congress, where you all believe there should be changes in 
interpretations and statutory changes. We try our best to say 
what--
    Mrs. Wagner. Reclaiming my time, are these financial 
institutions and firms within their rights not to adhere to 
your proclamations outside of the APA? Yes or no?
    Mr. Chopra. Every single institution has the right to 
challenge in an enforcement act --
    Mrs. Wagner. Oh, good heavens. Okay. Enough. I am 
reclaiming my time. To reiterate, for the record, will you 
commit to not bringing enforcement actions against financial 
institutions and other market participants that do not comply 
with any decree other than APA rules?
    Mr. Chopra. We will enforce the law as written. The law and 
statutes are crafted by Congress.
    Mrs. Wagner. That is why the APA is there.
    Mr. Chopra. No, statutes are developed by Congress. When 
there are additional obligations or requirements to conduct 
rulemaking, we absolutely do go through that process, just as 
we did through Ranking Member McHenry's Debt Bondage Repair 
Act, and as we are doing in Section 1033, as we are doing in 
Section 1071, and we are doing on the--
    Mrs. Wagner. Does the Bureau's communications department 
have a role in shaping policy through press releases or on-the-
record comments?
    Mr. Chopra. I do not know. The interpretations of policy 
are made by all sorts of individuals.
    Mrs. Wagner. Okay. Again, no answer to the question. 
Director Chopra, you recently indicated through a blog post 
titled, ``Rethinking the Approach to Regulations,'' that you 
would pursue, ``simple and straightforward terms, basic bright 
line guidance and rules, and clarity and simplicity in 
rulemaking.'' Those sound like great principles, sir. Would you 
give specific examples of how you have implemented this change 
so far, and how do you plan to continue providing these simple 
and straightforward terms?
    Mr. Chopra. We are happy to provide you a list. I will give 
you some examples. One example is that we have received 
questions from industry participants about the use of certain 
algorithms and automated decision-making. We have made clear 
that those are usable when you can comply with the adverse 
action notice under Regulation B and under the Fair Credit--
    Mrs. Wagner. If you could, Director Chopra, just provide me 
with the list. I have other questions here. I am very concerned 
that the proposed Small Business Data Collection Rule, Section 
1071, which would impose new reporting requirements on lenders, 
will have an unintended result of increasing origination costs 
and decreasing access to credit for businesses that need loans 
the most. How has the CFPB adhered to these principles when 
working to finalize a small business data rulemaking?
    Mr. Chopra. I think bright lines are always the best. 
Sometimes Congress doesn't pass statutes with bright lines. In 
the case of Section 1071, Congress did specify a whole host of 
factors and delineations of what data should be collected, and 
we are under a court order.
    Mrs. Wagner. I hope you will commit to those principles 
when taking future policy actions. And I yield back.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Green, who is also the Chair of our Subcommittee on Oversight 
and Investigations, is now recognized for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman, and thank you, Mr. 
Chopra, for appearing today. I compliment you on the work that 
you have done, and I do so because I was here in 2008 when we 
had the downturn in the economy. I remember a time when banks 
would not lend to each other. I remember a time when we had the 
dastardly yield spread premium as a norm. I remember 327s and 
228s. It was a time of open season, it seems, on consumers. But 
the Consumer Financial Protection Bureau has made a difference, 
and this is why I support an independent Consumer Financial 
Protection Bureau that doesn't have to depend upon the vagaries 
of Congress for its funding, a Congress that has difficulty 
funding the Federal Government, a Congress that has difficulty 
raising a debt ceiling so that the United States of America, 
the greatest country in the world, will not be perceived as a 
deadbeat nation. The independence is what makes the difference. 
Give us the purse strings, and you will see a change in your 
ability to move forward with the actions necessary to protect 
consumers.
    So, here is my one question. Assuming that Congress 
controls the purse strings and there is a sharp cut in funding 
to the CFPB, how will this impact consumers?
    Mr. Chopra. Ultimately, a CFPB that is robust and reliable 
is the best thing for consumers to avoid some of the horrible 
things that you referred to in the mortgage crisis. It is also 
very critical for industry participants that we provide the 
framework that serves as safe harbors in mortgages and what 
they can rely on in debt collection. It would be chaos if there 
was not an orderly way in which these critical rules are 
administered. The mortgage crisis was such a lesson, I think, 
for so many people about what happens when you don't have an 
orderly system to protect consumers. Consumers are ultimately 
deeply intertwined into broader financial stability and 
economic stability. They go hand-in-hand. So, I really think a 
strong and independent CFPB, just like the Federal Reserve 
Board, just like the other bank regulators for 150 years_it 
seems really unwise to create chaos by dismantling that.
    Mr. Green. And to this end, the notion that it could be 
dismantled, what would that do for people who are in the 
business of acquiring a loan? How could they be adversely 
impacted by our sharply cutting funds?
    Mr. Chopra. We have heard, they have said it publicly, the 
mortgage industry, about the real problems of not having the 
CFPB and its rules to make clear about what is the two-way 
obligation between homeowner and mortgage lender. If we want 
housing and mortgages to be robust, if we want that to be a 
vehicle for people to get ahead in life, I don't see how 
throwing huge amounts of uncertainty in that will help anyone. 
So, I really hope that we can make sure that consumer 
protection is a way to make sure there is a fair market system 
with obligations on both sides.
    Mr. Green. Thank you. And with my last few seconds, Madam 
Chairwoman, I do want to compliment you on your leadership in 
this Congress. We haven't done all of the things that we wanted 
to do, but we have done some remarkable things under your 
leadership. We have improved housing for many. We have helped 
many persons who find themselves living in the streets of life. 
We have not done enough. We want to do more, but I compliment 
you on what you have done. You have made a difference. And I 
thank Mr. McHenry for being kind today, and I look forward to 
working with him in the next Congress. We can do this; we only 
have to have the will, the ways before us. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Texas, Mr. 
Sessions, is now recognized for 5 minutes.
    Mr. Sessions. Madam Chairwoman, thank you very much. 
Director Chopra, thank you for taking the time to be here, and 
thank you for taking the time to come and shake our hands 
before we began today. Chairwoman Waters asked us if we would 
take the opportunity to offer feedback about the things which 
we perhaps disagree with or that we would like to include, and 
one of them has been briefly discussed today. We don't need to 
get into it, but what we consider to be from the Federal court 
here, the District Court of Appeals here in D.C., that the CFPB 
is unconstitutionally constructed. And I heard you refer to the 
CFPB in the same terms as other boards, but that have 5 or 3 
members on them, not a solely constructed, nor are they given 
the status of using the money that they would choose. Secondly, 
that we would get into what some history has been, although I 
don't know lately what an IG may say, but about a toxic 
workplace that the CFPB has been and may still be involved in.
    Director, I found your words pretty interesting. You talked 
about the critical role of an orderly system, and avoiding 
disruption and chaos. About the things when you use the 
internet platforms to perhaps give advice, I just want you to 
know, I think that, as the gentlewoman from Missouri said, we 
need a direct answer because people, if they intend to comply 
with the law, don't need to be sitting on the internet taking 
your advice, or consent, or whatever you would give as opposed 
to structurally the law. We deal with lawyers who look at 
words, who understand what those meanings are, and next year, 
our young chairman will engage you again, and I think everyone 
on this committee.
    Director, as I told you when you walked by, in your 
testimony in recent years, you have pointed out that Big Tech 
companies and other digital giants have leveraged their 
existing platforms to expand their reach into banking and 
finance. What is your working definition of, ``Big Tech,'' and 
when you are deciding which of these tech companies we would 
have, you would have in mind that allows us to know more about 
what you are thinking> So, Director, I ask that question with 2 
minutes and 25 seconds left for you to respond.
    Mr. Chopra. Sure. Let me just say one thing, Congressman, 
that the CFPB has, in many ways, a similar structure to the 
Office of the Comptroller of the Currency, which is led by one 
person. The Federal Reserve Board of Governors has the same 
exact funding system. I acknowledge they do have multiple 
members. This question has been addressed in the Supreme Court.
    With respect to your question on Big Tech, the Treasury 
Department, the Financial Stability Board, and others also use 
this term. It is generally meant to convey the very largest 
technology conglomerates that operate globally, but, 
particularly, have scale and network effects, whether it is in 
social media, in mobile operating systems, or other key 
platforms. When there is the introduction of these firms who 
have many, many other businesses into the payment system, as 
you know, banks really aren't allowed to have side businesses 
and ancillary businesses. They are really supposed, to when 
moving money, move it from point to point. They are typically 
not allowed to have their own industrial businesses, and they 
also typically don't harvest enormous amounts of information to 
preference their other businesses.
    And so what you are seeing in Big Tech firms is really they 
have enormous power to elevate or suppress some users over 
others. I think that is very scary, and I think in the context 
of payments, payments are really about moving money from one 
place to the next. It is really not supposed to be about 
elevating someone or the other. And of course, there is room 
for detection of fraud, preventing money laundering, but I 
think we have a lot of tough questions to deal with. We have 
seen class action lawsuits by credit unions and small banks 
about some of these payment platforms operated by Big Tech 
companies, and there really is a host of issues about how 
really do they make decisions, how are they using our data, and 
how might it be disadvantaging banks, merchants, and even 
consumers?
    Mr. Sessions. Director, thank you very much. I would assume 
we will follow up next year with you to gain more insight into 
your discussions about that, whether it is on the internet or 
whether it is in rulemaking. Thank you very much. Thank you, 
Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentleman from Missouri, 
Mr. Cleaver, who is also the Chair of our Subcommittee on 
Housing, Community Development, and Insurance, is now 
recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman, and I will try to 
do this quickly. I want to follow up on what Mr. Green said 
earlier. We were all here, Mr. McHenry, on down this way. We 
were in here. We met almost every single day, and I was 
reminded of President Bush's Secretary of the Treasury coming 
in that door, holding up a few sheets of paper, and asking for 
$850 billion, I think, or close to that, and Mr. Oxley and 
Barney Frank worked hand-in-hand. This committee held the fate 
of the U.S. economy in its hand, and so we worked together. And 
the CFPB was created not out of any partisanship, but we wanted 
an agency where the people got up every morning with one thing 
in mind, and that was protecting the consumers of the United 
States. That was it, and I am glad that we did it.
    I want to move now to the contemporary issues that we are 
facing. The dollar was backed by gold, and then I guess it 
switched. It was cancelled, suspended 2 or 3 times as the value 
dropped. And then under in the 1970s, I think, underneath 
Richard Nixon, the dollar was backed by fiat currency. So, I am 
thinking now, what are all of these digital assets backed by? 
Can you help me with what backs that up? The dollar is backed 
with the full faith and credit of the United States, so what 
backs up--
    Mr. Chopra. For the CFPB, I think, things are backed up in 
terms of payments, and while these digital assets are really 
not used as a payment instrument now, certainly we all have to 
be thinking about, could it be and when will it be? And if 
there is a dollar-denominated stablecoin, there are obviously 
going to be questions about what is it backed up by, does it 
have the right liquidity, could there be a run on it, would 
there be fire sales? So obviously, as this committee thinks 
about stablecoins, the issues are run risk and fire sales. When 
people can't access their money, what the CFPB has experienced 
with this in the prepaid card context and some other contexts, 
is it is hugely catastrophic to an individual family when they 
can't access their own funds in their deposit account.
    And to the extent to which people are relying on that 
safety and security, apps like PayPal, Venmo, and others are 
very, very heavily used, and many consumers are not aware that 
those funds that they have there may not be insured by the 
FDIC. So, there are lots of changes in the market, and to make 
sure we are doing our part where we have jurisdiction to 
provide that clarity, but I think there is a lot of work for 
the regulators and Congress to do across-the-board.
    Mr. Cleaver. Thank you. I referred to cryptocurrency 
yesterday as a, ``creepy dough.'' When I grew up, you had some 
dough, money, and as a result, before nightfall, we had all of 
these new creepy dough assets being promoted. And one of them, 
as of this morning, is worth $600,000 overnight on something 
that doesn't even exist, which is something I said at a 
committee hearing, and it is trending. People are getting other 
people's money. This is dangerous, and we have to do something, 
and I am willing to do whatever we need to do. Do you have any 
ideas about what we need to do?
    Mr. Chopra. Again, we are focused on payments, and right 
now it is not in consumer payments. But we are really happy to 
work with you to figure out how to make sure that if it is ever 
used in consumer payments, what is the right way to make sure 
that we don't see a repeat of some of the problems throughout 
history.
    Mr. Cleaver. Thank you very much. Thank you, Madam 
Chairwoman.
    Chairwoman Waters. Thank you very much. The gentleman from 
Missouri, Mr. Luetkemeyer, is now recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman. Director 
Chopra, in October of this year, you issued guidance on 
overdraft fees. In that guidance, you stated there are two junk 
fee practices that are likely unfair and unlawful under 
existing law. I would like some clarity here. This guidance 
seems to say that something that was legal yesterday, is 
illegal tomorrow. There are a couple of different things with 
this. You are trying to use guidance to determine whether 
something is legal or not. You just said, in answer to Mr. 
McHenry a while ago, that you can't do that, number one. And 
number two, you are trying to do something with overdrafts. You 
have no authority on overdrafts whatsoever. And number two, you 
have used the word, ``likely,'' in your comment there, which is 
no certainty, too, but yet you infer something and you try to 
undermine people's confidence in what they are doing. Tell me, 
what is going on there?
    Mr. Chopra. Sure. With respect to those guidance documents, 
here is what I would say. There was no change in obligations 
whatsoever. The rules the day before were the rules the day 
after.
    Mr. Luetkemeyer. Okay. Let me interrupt right there because 
30 days before you issued that, you took an enforcement action 
against a company. How does that work?
    Mr. Chopra. That enforcement action was against Regions 
Bank, which was repeatedly on notice.
    Mr. Luetkemeyer. You used this guidance to go after them.
    Mr. Chopra. Oh no, that is not true. The guidance--
    Mr. Luetkemeyer. What did you use? What was the need to go 
after them?
    Mr. Chopra. The enforcement action in the complaint 
outlines the violations of law and regulation. It noted that 
the entity was actually already aware of the issues expressed 
by the regulators, and, in fact, these documents are very 
similar to what has been issued by State regulators, by the 
other banking--
    Mr. Luetkemeyer. Now, you are conflating things here. We 
are talking about guidance. You are talking about something 
else there. Number two, in your statement here, you are talking 
about junk fees. There is no such word in the financial 
services lexicon. You just made that word up, sir, or that 
phrase. You are not a legislator. We are legislators here. We 
make up these words and define them in law to make sure that 
they are fairly adjudicated, make sure that the law is actually 
determining what is going on, and use a word and define that 
word to make sure we have the law correct. You are making up a 
word and then using it to go out and enforce something that 
doesn't exist. This is scary stuff that we are looking at here 
today.
    Mr. Chopra. Can I just say for the record that you 
mentioned that the CFPB does not have any authority with 
respect to overdraft fees? I just want to state for the record, 
all of the rules related to overdraft fees that the Board of 
Governors of the Federal Reserve System promulgated under the 
Truth in Lending Act and others are under congressional 
mandate, enforceable and--
    Mr. Luetkemeyer. I would argue against that point, but 
let's move on. I have a lot of questions about your inability 
and your unwillingness to meet with my constituents, industry 
officials. There is a huge lack of transparency with regards to 
your schedule.
    Mr. Chopra. That is not true, sir. I have met more than 
both of my predecessors.
    Mr. Luetkemeyer. Let me just show you a copy of your 
schedule here, sir. Here is a copy of one of your days, and 
here is a copy of 2 or 3 other days. There is nothing on there. 
You talk about a meeting, but there is no description of what 
kind of meeting you have. It could be a staff meeting. I don't 
know. There is no meeting on here. Do you understand what the 
Freedom of Information Act (FOIA) is all about? There is an 
article here just this week with regards to the Security and 
Exchange Commission's Chairman Gensler, who is scrubbing his 
meetings to make sure that people don't know he met with 
Secretary of State Clinton and billionaire donor George Soros. 
Are you meeting with those sorts of people and hiding that 
information from the public?
    Mr. Chopra. We publish our calendar publicly. We have for 
years and years--
    Mr. Luetkemeyer. Mr. Chopra, I have your calendar, and it 
is not on there, sir. Well, there is nothing there except it 
says, ``meeting with no description.''
    Mr. Chopra. I am happy to look at any specific days. It is 
true that meetings about particular enforcement actions, about 
particular supervisory matters--
    Mr. Luetkemeyer. Mr. Chopra, we are going to request from 
you an entire year's worth of meeting descriptions, because 
they are not here. Tell me how many different industry folks 
that you met with, how many constituents you met with over the 
last year, because I can tell you not one single one coming to 
my office has ever said, that yes, they had a meeting with you.
    Mr. Chopra. Well, with me.
    Mr. Luetkemeyer. Yes.
    Mr. Chopra. I have personally met with, I believe, 21 State 
banker associations, and I believe it doesn't state--
    Mr. Luetkemeyer. From this right here, 40 percent of your 
time over this year is nothing. There is nothing on this 
calendar to show that you are doing--
    Mr. Chopra. I have done more industry outreach with those 
affected by the CFPB than both of my predecessors. I understand 
that it is not just large institutions--
    Mr. Luetkemeyer. Mr. Chopra, it is your job to meet with 
the very people and industries that you oversee. Your weekly 
schedule doesn't show that is going on.
    Mr. Chopra. If there are entities in your State that invite 
me to work with them, I am very happy to do that, sir.
    Mr. Luetkemeyer. Thank you. You shall receive a letter from 
us. I yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
California, Mr. Sherman, who is also the Chair of our 
Subcommittee on Investor Protection, Entrepreneurship, and 
Capital Markets, is now recognized for 5 minutes.
    Mr. Sherman. I would comment that I don't release a 
complete schedule of whom I meet with, and I doubt most members 
of this committee do either, so I am happy to meet with both 
George Soros and Hillary Clinton at any time.
    The gentleman from Missouri pointed out that I guess, 
``creepy dough,'' has now has a value of over $600,000, 
supposedly. I want to relate the fact that the same thing 
happened in this committee room, what must have been 8 or 10 
months ago, when I indicated that I thought crypto was kind of 
silly, and maybe the next coin would be a Hamster Coin. My 
staffer tapped me on the shoulder after the hearing in, I think 
it was March of this year, and he told me, boss, there already 
is a Hamster Coin. And I said, okay, what about a Cobra Coin? 
And he told me there was a Cobra Coin. So I came here and I 
said, well, what is Mongoose Coin going to do with Hamster Coin 
and with Cobra Coin, and by the afternoon, they had created a 
Mongoose Coin. And I shouldn't say this, but I think the 
Mongoose Coin at one time was more valuable than the Creepy 
Coin is today, but the Creepy Coin could go back up, so we will 
have to see.
    A lot of discussion about crypto is about payment systems. 
We do need to improve the payment system, but it should be a 
system where you pay in dollars and you know your customer, but 
small businesses shouldn't be paying 3 or 4 percent when you 
use a credit card. I realized there is a bad debt risk on the 
credit card for the credit card issuing company, but they 
charge plenty of interest from the consumer to cover that. I 
think we talked privately about Dodd-Frank Section 1071, which 
requires financial institutions to compile and maintain and 
submit data to you, and I asked you when those regulations were 
coming out, and you said by the end of March. Did I get that 
right?
    Mr. Chopra. That is right. We will issue the final rule on 
Section 1071 on small business lending data no later than March 
31st. We are under court supervision to complete it by that 
date. It is a long-overdue rule. It is a tough one for sure, 
but we will comply based on the court's order.
    Mr. Sherman. And one particular thing to look at there is 
that often the auto dealer is acting as an agent for a lender. 
The auto dealer isn't under your jurisdiction, but the lender 
is. The lender may be required to compile this information 
about the race, et cetera, of those applying for a loan, but 
the auto dealer may be prohibited from asking. So, I would hope 
that you would work this out and make sure you don't have a 
circumstance where the lender is required to report that which 
the auto dealer is required not to ask. Every time I buy a car, 
I do it face to face, and I guess they can tell what my race 
and gender is, so I don't know why there is any law prohibiting 
the auto dealers from asking, but I am told that there is.
    Let's move forward to Property Assessed Clean Energy (PACE) 
loans. In May of 2018, Congress passed and the President signed 
a law that you would promulgate rules dealing with these PACE 
loans. There has only been a request for informtion (RFI) from 
your predecessor that was back in 2019. When will you get those 
PACE loans out and at least make sure that there is an ability 
to pay before people sign up?
    Mr. Chopra. You are right that that rule has not been 
implemented yet. I am planning to propose it this spring, 
hopefully by April or May. The goal would be to get the 
proposal out and to be able to finalize it in a reasonable 
amount of time.
    Mr. Sherman. I am going to try to sneak in one more 
question, and that is on appraisal management companies. We 
have seen these articles where appraisers come to different 
values on a home based on the perceived race of the owner. I 
don't think that would happen in L.A., where we have tract 
homes, but appraisal is more of an art here where the homes are 
less uniform, so there can be bias. There can be other areas 
with these appraisers. They are set up by these appraisal 
management companies. What oversight is there for the appraisal 
management company industry you plan to look at in this area?
    Mr. Chopra. It is pretty complicated how the appraisals 
piece works. I don't have much time, but I do think we need to 
work with Congress to make sure there is good availability of 
appraisers in rural and urban areas alike and that we focus on 
accuracy. Undervaluation and overvaluation are both problems. 
We have seen how it can be problematic in the financial crisis, 
and making sure good, robust independent appraisals are 
available to the whole housing system.
    Mr. Sherman. Thank you.
    Chairwoman Waters. The gentleman from Oklahoma, Mr. Lucas, 
is now recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman. Director Chopra, 
could you describe how you engage with the Federal Reserve, the 
FDIC, the OCC, and the NCUA to ensure that the CFPB's 
regulation is in line with their safety and soundness 
objectives?
    Mr. Chopra. That's a great question. Safety and soundness 
and consumer protection absolutely go hand in hand. There are 
some formal ways in which we gather their input and make sure 
they and we, our staffs can really understand the nexus of some 
of those issues. Those formal consultations certainly occur in 
the context of rules and other similar policymaking, but also 
as it relates to official votes, the CFPB is required to make 
on different bodies, including the Financial Stability 
Oversight Council (FSOC). The FSOC itself is able to overturn 
CFPB rules pursuant to the statute, if any of those rules might 
pose a threat to safety and soundness. So, of course, this is a 
huge issue that we really work closely on with all of those 
agencies to make sure that consumer protection and safety and 
soundness really go hand in hand.
    Mr. Lucas. The reason this comes to mind, Director, is that 
last month, the Federal Reserve and the FDIC announced the 
results of their resolution plan view of the largest U.S. 
financial institutions. And I believe you released a statement 
which had a quote to the effect that it is highly unlikely that 
any of these institutions, as currently constituted, could be 
resolved in a rapid and orderly manner under the bankruptcy 
code. Would you mind elaborating on this, and should your 
statement be viewed as a criticism of the Fed and the FDIC for 
not identifying shortcomings in all of the resolution plans?
    Mr. Chopra. Thanks for the opportunity. As you know, and 
actually Chairman Hensarling, whose painting is right there, 
was very, very critical, and I shared that criticism about 
bailouts. And one of the things that Congress did is it 
basically said, we don't want to do bailouts anymore. We want 
to make sure that when large financial institutions get into 
distress, they can resolve themselves through Chapter 11 
bankruptcy. And they require the regulators, and I had to cast 
a vote about whether or not the plans that were submitted by 
the Global Systemically Important Banks (G-SIBs) could be 
resolved in bankruptcy. I agreed with the FDIC and the Fed that 
there was an institution that was deficient on this front, but 
I, more broadly, was questioning some of the assumptions on 
Chapter 11 of the bankruptcy. And, in fact, Members on this 
side of the aisle have also questioned whether Chapter 11 is 
really realistic for a very, very large firm to go through 
bankruptcy, and, in fact, the firm suggests that they will 
self-finance their bankruptcy. That is really not a thing that 
we see in the rest of the economy. So ultimately, an orderly 
resolution that avoids bailouts, and I think bailout risk is 
really the key here, Congressman Lucas.
    We do not want to be in a position where we have to bail 
out a large firm. We want it to be resolved in an orderly 
fashion that does not disrupt the entire capital markets, 
disrupt access to credit. This is an unfair subsidy that small 
banks don't really get if you can't be resolved in an orderly 
fashion. So, I voted on it after reviewing the plans, and it is 
typical to issue voting statements with those.
    Mr. Lucas. Director, what kind of interaction have you had 
with the Fed and FDIC after your comments, and how have they 
responded to your quotes?
    Mr. Chopra. I think it is an ongoing question in the next 
submission of resolution plans. If you look at the feedback 
letters that the agencies provided to the G-SIBs, I think we 
are moving in exactly the right direction. Is it theoretical, 
or is it realistic? We are going to be doing capabilities 
testing by the Fed and the FDIC and making sure that this is 
not a fairy tale, but it is really grounded in business 
realities and the Chapter 11 process.
    Mr. Lucas. One last question. In your recent budget request 
to the Federal Reserve System, it is much higher than any other 
4th quarter request, which typically is the largest request in 
the year. Can you elaborate on this budget request? Does it 
indicate that the CFPB may undertake significant rulemaking, 
requiring more resources in the near future? You need more 
money because you are going to crank out more rules?
    Mr. Chopra. No, I think there is some seasonality to our 
spending, and I am happy to look at the numbers and take a 
question for the record on this, but we do look at our needs 
and then we make that request in order to manage our treasury 
cash flows appropriate--
    Mr. Lucas. It is an amazing system you operate under. Thank 
you, Mr. Director. And thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you. The gentleman from Colorado, 
Mr. Perlmutter, who is also the Chair of our Subcommittee on 
Consumer Protection and Financial Institutions, is now 
recognized for 5 minutes.
    Mr. Perlmutter. Thank you, Madam Chairwoman. Let's first 
correct the record on this Creepy Coin. Creepy Coin is today, 
or at least according to that chart that Mr. Cleaver had, is 8 
cents. They did $613,000 worth of trades on that coin 
yesterday, so it is not worth $613,000, but it has been 
trading. So, that record is clear.
    Now, the thing I really want to talk about is something you 
and I have spoken about, Mr. Chopra, and that is enforcement 
versus guidance, because I think my friends are really going 
down the wrong path here. And I might remind them that Mr. 
Huizenga and I worked with the CFPB on this subject because Mr. 
Huizenga had a constituent, a title company, that just got 
clobbered. They were enforcing and through the industry by 
bringing this big action against a small title company, and 
they were sued for $500,000, and ultimately settled for $50,000 
after I don't know how much in attorneys' fees. So, why don't 
you just give people a heads up before you bring the 
enforcement hammer, and that is precisely what I think the CFPB 
is trying to do now.
    Look, I am going back to practicing law. I am happy if they 
enforce everything because it is going to mean more business 
for me. That is the problem here. You want to get the heads up 
and you want to get the notice. So, I am going to let you have 
a little bit of say as to why you proposed and why you are 
providing guidances to give the different industries, different 
groups, different banks, different title companies, some notice 
as to what you are thinking about particular regulations and 
statutes.
    Mr. Chopra. My predecessor, Director Kraninger, established 
an advisory opinion program for the CFPB to be able to provide 
clarity on where it would exercise its enforcement and 
rulemaking. And let me just say, Congressman Perlmutter, the 
CFPB is not strong-arming small businesses anymore like I see 
at the other agencies. The Federal Trade Commission is 
notorious in years prior for focusing on small businesses. We 
are focused on repeat offenders, the largest players, many of 
whom have ample resources to fight us, and they do, and I will 
also add that regulators should not be in the business of 
increasing the costs of lawyers. When we issue guidance, we 
hear from firms actually this is another reason that I don't 
need to hire more outside attorneys. I realize outside 
attorneys probably don't like that. They like anytime that they 
can create uncertainty.
    We want to provide the clarity, and maybe firms don't agree 
with it. They can go to Congress and change the laws. We try 
and offer existing legal interpretation about obligations 
today, where we are seeking to create new obligations. We go 
through the rulemaking process, and we focus on large market 
actors, and that is why we are litigating more. We are often--
    Mr. Perlmutter. Let me stop you. I was looking through the 
booklet that we all got. There must be 50 big cases that are 
either pending or have just been settled. Am I wrong about 
that?
    Mr. Chopra. That is right. We have a lot of litigations. We 
are in court in many places all over the country. There are, of 
course, some smaller fraudulent actors. We have continued to 
litigate those, but our enforcement emphasis is on bigger 
players that repeat.
    Mr. Perlmutter. But the bottom line on the enforcement and 
the guidance, and I agree with their points_guidance isn't the 
law, the law is the statute, the law is the regulation, but the 
guidance gives somebody a heads up, gives them notice that, 
look, we think there are problems in this area. This industry 
should be prepared or be aware or clean it up if they want to, 
or, no, say, we are not doing anything wrong and okay, fine.
    Mr. Chopra. And we have actually found that in many cases, 
offering transparency in what we are finding in our 
examinations is allowing other firms to gut-check. Might their 
systems be mis-programmed? Might they be doing something 
different? This is what we are seeing, for example, in auto 
repossessions. We found that there was a number of places where 
there were unlawful repossessions. And we are hearing firms 
saying, after you issued your bulletin, we looked at our 
systems to figure out how we can reduce that and stay in 
compliance. So that transparency is something industry asked 
for, at least they used to ask for publicly, but privately, 
they continue to ask for it, so we are trying to do our best by 
responding to the concerns about enforcement, attention, and 
clarity.
    Mr. Perlmutter. Okay. Thank you for your answer, and if you 
go back to enforcement, it will be okay with me, because I am 
going back to practicing law. See you.
    Chairwoman Waters. Thank you, Mr. Perlmutter.
    The gentleman from Kentucky, Mr. Barr, is now recognized 
for 5 minutes.
    Mr. Barr. Thank you, Madam Chairwoman. Director Chopra, 
your statement that the Bureau is focused on enforcement 
against only the largest firms is curious because the Bureau 
has recently told a very small consumer lender to sue in order 
to find out what they allegedly did wrong, so that doesn't 
really square with your statement, but let me focus on the 
Fifth Circuit decision really quickly. Director Chopra, are the 
funds of the CFPB congressionally-appropriated?
    Mr. Chopra. The question of whether it meets the 
appropriations clause of the Constitution, which says that no 
money shall be drawn from the Treasury but in consequence of 
appropriations made by law, that is the subject of the Supreme 
Court petition by the solicitor general. That is an open 
issue--
    Mr. Barr. Yes, and the solicitor general on your behalf 
says that the CFPB's funding statute indisputably establishes 
an appropriation under the long-accepted understanding of that 
term. Let me read you what the Fifth Circuit says about that 
argument. It contends that there is no constitutional infirmity 
because its funding scheme was enacted by Congress. In essence, 
the Bureau contends that because Congress spun the Agency's 
funding mechanism into motion when it passed the Act, voila, 
the appropriations clause is satisfied. The Bureau's argument 
not only not only misreads Supreme Court precedent, but also 
the plain text of the appropriations clause. What is that 
clause? ``No money shall be drawn from the Treasury but in 
consequence of appropriations made by law,'' and the Fifth 
Circuit says a law alone does not suffice. An appropriation is 
actually required. So again, are the funds of the CFPB 
congressionally-appropriated or not?
    Mr. Chopra. You should look at the solicitor general's 
opinion.
    Mr. Barr. I have.
    Mr. Chopra. That is the best and most authoritative view of 
the United States and the Executive Branch, and it is the same 
funding as the Federal Reserve Board.
    Mr. Barr. And you are double-insulated because you get your 
funding from the Federal Reserve. But Mr. Chopra, reclaiming my 
time, in 2012 the Bureau's first Director, Richard Cordray, 
testified that the revenues were, ``non-appropriated funds.'' 
He said what is obvious to everyone. The Bureau has released 
three public reports which state that the funding for the 
Bureau happens outside of the traditional appropriations 
process. Last year, you testified that the base level of 
funding is, ``guaranteed by statute.'' That doesn't sound like 
an appropriations process. What is your position, sir?
    Mr. Chopra. Is this a trick question?
    Mr. Barr. No, it is not a trick question.
    Mr. Chopra. The answer is very clearly outlined in the 
solicitor general's opinion. We believe the Fifth Circuit 
opinions ruling is not correct. The solicitor general has 
petitioned this issue. There are many, many--
    Mr. Barr. Director Chopra, reclaiming my time, if the 
Supreme Court does what it will do and affirms the Fifth 
Circuit's decision, doing not the absurd thing, as the Chair 
says, but actually the constitutional thing, which is to 
vindicate the separation of powers, I want to know, are you 
going to support my Taking Account of Bureaucrats' Spending 
(TABS) Act, which would put the Bureau under congressional 
appropriations to save your Agency?
    Mr. Chopra. We will comply with whatever the Supreme Court 
rules. We always work with everyone on any potential 
legislation.
    Mr. Barr. Reclaiming my time, your exam manual, updating 
the interplay between UDAAP and anti-discrimination statutes, 
do you believe your exam manual fills gaps where there is 
presently no specific anti-discrimination law like the Fair 
Housing Act or the Equal Credit Opportunity Act?
    Mr. Chopra. The prohibition on unfair acts or practices has 
three prongs. Some of the--
    Mr. Barr. I don't have much time, Director. Does it fill 
gaps or not?
    Mr. Chopra. The law is the law--
    Mr. Barr. Let me ask the question a different way. You say 
in your press release in March that examiners will require 
companies to show their processes for assessing risk and 
discriminatory outcomes, including documentation of customer 
demographics, etc. Were companies required to do that before 
your exam manual update?
    Mr. Chopra. The manual is guidance for examiners.
    Mr. Barr. Were they required to do that before, Director?
    Mr. Chopra. The examiners or the institution?
    Mr. Barr. Before your update, did examiners look for 
disparate impact in conduct not covered by fair lending laws?
    Mr. Chopra. Disparate impact is not a theory of liability 
under unfairness. Unfairness has substantial injury, reasonable 
avoidability.
    Mr. Barr. Director, reclaiming my time, and I am running 
out of time, you are changing the law, and you are changing the 
law without Congress.
    Mr. Chopra. I am not.
    Mr. Barr. Yes, you are.
    Mr. Chopra. That is existing law.
    Mr. Barr. These are obligations not previously required, 
and you think you are Congress. You are not.
    Mr. Chopra. I know. You are Congress--
    Mr. Barr. You are not. This is not interpretive guidance. 
You are trying to change the law.
    Mr. Chopra. Not true, sir.
    Mr. Barr. I yield back.
    Chairwoman Waters. The Director's position is clear. This 
case of whether or not you have to go through the 
appropriations process is on appeal, is that correct?
    Mr. Chopra. Yes, ma'am.
    Chairwoman Waters. Okay. The position is clear. With that, 
the gentlewoman from Ohio, Mrs. Beatty, who is also the Chair 
of our Subcommittee on Diversity and Inclusion, is now 
recognized for 5 minutes.
    Mrs. Beatty. Good morning. First of all, let me just say 
thank you to you, Director Chopra, for speaking with us today, 
and for everything that you do at the CFPB to protect consumers 
and to ensure fairness in our financial system. I cannot begin 
to tell you how honored I am to have someone who understands 
protecting our consumers and putting them first. We have had a 
lot of work that we have had to do in the past, especially 
under the last Administration.
    I want to commend your agency for its efforts to boost 
contracts with minority- and women-owned businesses. According 
to the report, 27 percent of $96 million in contracts went to 
these firms in the reporting period. As you probably will be 
reminded, every Director who has an Office of Minority and 
Women Inclusion (OMWI), I have said to them the value of making 
sure that they follow all of the guidelines that our chairwoman 
fought so hard for to get in Section 342 of the Dodd-Frank Act. 
So, it is good to see a Director who works well with OMWI and 
is able to report back what you did.
    Secondly, under your OMWI implementations, I was very 
pleased to see that you implemented the persons with disability 
action plan last year to address these barriers. We did the 
same with our Subcommittee on Diversity and Inclusion. We had a 
hearing that dealt with disabilities. But now let me go to the 
questions that I want to propose to you.
    According to a recent report, from April 2021 to April 2022 
of this year, you reported over 1.1 million complaints, and 73 
percent of those complaints pertained to credit reporting. Do 
you have any idea if that is because people didn't know how to 
get their credit report? Do you have any idea of that? And let 
me just say before you answer, I am asking that question 
because many of my colleagues have pieces of legislation that 
deals with credit reporting and credit scores. For example, I 
have the Free Credit Scores for Consumers Act that aims to 
reform the credit reporting system. Can you talk to us about 
any information you could share on credit reporting?
    Mr. Chopra. I appreciate the question. I think one of the 
things that is very important for this committee to know is 
that it is not just the three major credit reporting 
conglomerates. We now have more Big Tech firms, data brokers, 
and others that are developing scores and background dossiers 
on all of us. And I think this raises some real questions about 
what are we going to do to protect privacy, data sharing, and 
also all of the decisions that are being made about us in these 
dossiers, and I think we have to work together on this.
    We will continue to use our Fair Credit Reporting Act 
authorities as we do in background screening. We see a whole 
ecosystem of this, but I am worried that we are shifting to a 
more social scoring environment that really you only see in 
places like China and other similar jurisdictions. I think we 
want to avoid that kind of backdoor back room data collection 
on all of us and really understand what the Big Tech firms and 
these data brokers are doing with our data. Accuracy in 
disputes is a core issue. When people have background reports, 
they are sometimes falsely matched to a criminal record, or 
falsely accused of something. This is something that is--
    Mrs. Beatty. I'm going to stop you only, because of the 
clock running, and ask you to respond, ``yes'' or, ``no.'' I 
assume this means you will work with us and legislation to help 
you in this area?
    Mr. Chopra. Of course. I think credit reporting is a key 
place and background reporting for us to all to work together 
on both sides.
    Mrs. Beatty. Let me just say thank you for that, and in my 
last 20 seconds, this is our last hearing of the year. I want 
to dedicate it to saying thank you to our chairwoman. I could 
not have been more honored to serve on the Financial Services 
Committee under her and for the appointment of the DNI 
subcommittee. I want America to know that we are all the better 
because of Congresswoman Maxine Waters fighting and standing up 
for the people. Thank you, and I yield back.
    Chairwoman Waters. Thank you so very much. The gentleman 
from Texas, Mr. Williams, is now recognized for 5 minutes.
    Mr. Williams of Texas. Thank you, Madam Chairwoman, and 
Director Chopra. I regularly speak with community bankers from 
Texas. That is where I am from. And in all the meetings I have, 
every single person tells me how terrified they are about your 
Agency's 1071 small business data collection rulemaking. They 
are concerned that complicated reporting requirements will tie 
up loan officers, maybe create more compliance officers, and 
increase the cost of credit. They are concerned that this will 
push the industry towards a standardized small-business loan 
product and kill relationship banking, which is community 
banks. And they are concerned this will force their employees 
to consider factors outside of creditworthiness as they 
evaluate small business loan applications.
    You don't have to take my word for it. It is really 
interesting. Biden's Small Business Administration's Office of 
Advocacy raised similar questions on how harmful 1071 will be. 
They submitted a letter earlier this year on the rulemaking 
that stated, ``We are concerned that the CFPB's approach may be 
unnecessarily burdensome to small entities, may impact the cost 
of credit for small businesses, and may lead to a decrease in 
lending to small, minority- and women-owned businesses.'' That 
is from the Biden SBA. Director Chopra, describe how you have 
been working to accommodate the concerns of small businesses 
within the rulemaking?
    Mr. Chopra. Yes. No, I think you raise a point about how to 
make sure that we implement the congressional requirement in 
ways that we can simplify as much as possible in terms of 
systems. We know, and I am actually very worried that a lot of 
businesses may have to bank with the very largest rather than a 
local bank, and local banks, as we saw during the Paycheck 
Protection Program (PPP). were much more responsive and agile. 
So what we do is, I have met with dozens of State associations 
of credit unions and bankers. We have heard from them. We are 
obviously taking very seriously what we hear in all of the 
comments, but it is a tough one. We have to implement this in 
accordance with what the law and the court says.
    I think over time, we want to make sure that we have an 
implementation period that gives the smaller firms more time 
and the ability to make sure that it is not duplicative with 
existing requirements under the Community Reinvestment Act 
(CRA). So, we are going to get it done by March, but I hear 
your concerns loud and clear. We are going to do the best we 
can, but of course the statute is what we have to look to.
    Mr. Williams of Texas. Your regulations trickle down. You 
can save Main Street America, cut these regulations. Now, the 
first time you came before this committee, you said you would 
protect the interests of small business. However, since you 
joined the CFPB, I cannot find one example where you have 
listened to the private sector and changed your course of 
action. I hope I am proven wrong on how this 1071 rulemaking 
plays out; you are saying you understand what it does to 
community banks and small businesses, and I hope I am proven 
wrong on that, but I am also very skeptical that you will 
change the way you do it. If you continue to disregard the 
concerns of Main Street America, half of the payroll, half of 
the workforce, it will lead to the demise of countless small 
businesses, leaving many communities without a vital source of 
economic growth and stability.
    To that end, the CFPB recently issued a request for comment 
on data for auto lending. When the CFPB was created, auto 
dealers were specifically exempt from your Agency's purview. I 
can tell you the supply chain crisis, coupled with the 
increased interest rates, are hammering car dealers right now 
and it is hurting consumers, and the threat of increased 
regulation from your Agency is not needed at this time. So, 
Director, the CFPB does not have the authority over auto 
dealers, correct?
    Mr. Chopra. That is correct. We cannot exercise any 
enforcement or supervisory jurisdiction.
    Mr. Williams of Texas. So, what information are you looking 
to collect from them?
    Mr. Chopra. I don't think we have proposed any information 
collection on them. I think the outstanding auto debt is now, I 
believe, $1.5 trillion, and as you mentioned, the cost of 
vehicles has meant more people have had to borrow.
    Mr. Williams of Texas. Couple that with higher interest 
rates.
    Mr. Chopra. Of course, and I think the challenges are that 
there is a very disparate set of data about what is happening 
in auto lending. And we had a meeting with industry groups 
where we talked about what would be most useful to investors, 
to analysts, and to banks, because many banks and credit unions 
want to get into auto lending. So figuring out what is the 
public data that they can look at in order to entice their 
entry, but just so you know, there is no proposal to collect 
from auto dealers.
    Mr. Williams of Texas. Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentleman from 
California, Mr. Vargas, is now recognized for 5 minutes.
    Mr. Vargas. Thank you very much, Madam Chairwoman. First of 
all, as Mrs. Beatty stated, I want to thank you. It has been an 
honor to work with you. You really have been a champion, 
especially for affordable housing consumers. I do keep thinking 
of what we could have done if we had that $150 billion for 
housing in the United States, and how hard you fought for that, 
and, again, it has been an honor to serve with you. It really 
has been a pleasure.
    I want to thank you, Director, for being here. I do want to 
quote you here. You said, ``We need an orderly, strong, 
independent Consumer Protection Bureau.'' You said that today, 
and I think we have a very strong, independent consumer 
protector in you, so, again, I am very pleased that you are 
proving that today. They are throwing a bunch of crap at you 
oftentimes here, and you have defended yourself and your Agency 
quite well. I appreciate that, even obvious stuff, like, of 
course, it is at the Court. The Court will decide. It is the 
Supreme Court, and I think you defended yourself well on 
something that was obvious.
    One of the things I did find kind of odd today is the issue 
of guidance versus enforcement. Before I came to Congress, I 
was a vice president of a Fortune 500 company in their 
corporate legal department. We had lots of lawyers. We had 
outside counsel. So whenever an issue came up, of course, we 
were lawyering all over the place. Small companies don't have 
that, and that is why I think it is a good idea to give them 
guidance. I don't understand the issue on the other side, why 
they are so upset about it. Could you illuminate us or me on 
that?
    Mr. Chopra. You are so right about the small players, and 
when I talk to investors and especially new entrants, when they 
are raising capital, they don't have money to burn on all of 
these D.C. lawyers. So, they ideally like to have an in-house 
counsel and some outside law firms that are often general, and 
to be able to find the right types of applicable guidance and 
it is ideal when it is in plain language. And we do our best to 
be able to publish that, so that people can know what the 
expectations are. I think it actually reduces barriers to 
entry. In some cases, people might not like the law, but 
Congress sets laws and there are rules that implement them. So, 
I do think it is actually pro-competitive to create more 
clarity.
    Mr. Vargas. I agree with you, with the exception of one 
thing, don't beat up too much on those D.C. lawyers. They are 
all my classmates.
    Mr. Chopra. Sorry.
    Mr. Vargas. And the last thing I would say is it was very 
interesting being at that company, because one of the things we 
attempted to do as a large company is not only follow the law, 
but also be a good citizen. We did try to promote women, and 
people of color. I think we did a pretty good job of that. The 
large companies aren't always the bad people. In fact, 
oftentimes, they are not at all because they want to be a good 
citizen and they want to grow even larger, and the way to do 
that is to follow the law and be a good corporate citizen. So 
anyway, I know everybody likes to beat up on these big 
corporations, but I was with one of them, and I thought it was 
a good corporation. I still do.
    I do want to talk a little bit today about cryptocurrency. 
You said it is just payments, but people are getting ripped 
off, and as I said yesterday, I don't get the point. I really 
don't get the point of this whole system, just to be honest 
with you. I think it is going to be a little bit like the tulip 
mania. The Dutch is going to collapse at some point. There is 
going to be no value there. But that being said, people are 
losing money. What can you do to help here?
    Mr. Chopra. Most of the activity right now in digital 
assets is really on speculative trading. Of course, that has 
come to a tumble. I think, of course, the markets regulators 
are really the ones that do trading and exchanges. That being 
said, we have done recently an enforcement action against Loan 
Doctor, which was essentially baiting people into a high yield 
savings account. They were making all sorts of 
misrepresentations.
    And on our side, we are investing in very speculative 
things, including crypto. That is an example of where crypto 
intersects with consumer financial products when you are 
advertising like a savings account. That is not really a 
trading account in the same way that others are. So, we try and 
make sure that where the law implicates our authorities, we are 
looking at that. And I think the biggest concern I would have 
is making sure that the regulators are ready. If some of these 
digital currencies like a stablecoin really scale, like on a 
Big Tech platform or a card network, and really working with 
the other regulators and all of you to make sure there are not 
runs and that people can get their money when they need--
    Mr. Vargas. My time has almost ended here. Again, I want to 
thank you. I think you are doing an excellent job. I wish you 
the best on your case before the court. Thank you. I yield 
back.
    Chairwoman Waters. Thank you. The gentleman from Michigan, 
Mr. Huizenga, is now recognized for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman. One comment: In 
constant dollars, cars and trucks costs have increased 
dramatically, and you have to ask why, right? It is a 
combination of a number of things: government mandates; 
customer expectations; and manufacturing costs. Coming from 
Michigan, I represent all of the Tier 1, Tier 2, and Tier 3 
automotive suppliers, and no wonder people are borrowing more. 
So, mystery solved on that one. Quickly, though, kind of 
returning to crypto, I saw that the Bureau released the 
bulletin in November analyzing the rise in crypto asset 
complaints. Do you anticipate expanding your enforcement in 
this area?
    Mr. Chopra. I think the existing place in crypto is that it 
is really, again, mostly used for speculative--
    Mr. Huizenga. I understand what it does. Are you planning 
on increasing your enforcement?
    Mr. Chopra. And by the way, just to be clear on this--
    Mr. Huizenga. I will accept, ``no.''
    Mr. Chopra. I think it is important. Crypto is not a 
product.
    Mr. Huizenga. Okay. Hold on.
    Mr. Chopra. So, if it is used for a savings--
    Mr. Huizenga. I understand what it does. We just had a 
whole hearing about this. My next question on that is, have you 
received any criminal complaints or enforcement actions, or 
have you been involved in any of those regarding FTX or Sam 
Bankman-Fried or his parents or anybody else?
    Mr. Chopra. We are not a criminal enforcement service--
    Mr. Huizenga. No, I understand that. Have you received any 
of the complaints or you have been involved in any of those 
complaints or any enforcement? Has anybody pulled you in?
    Mr. Chopra. No.
    Mr. Huizenga. Okay. Stop right there. Good.
    Mr. Chopra. No, but--
    Mr. Huizenga. That is all I need to know.
    Mr. Chopra. No, but just the word, ``complaints,'' 
consumer--
    Mr. Huizenga. Okay. Reclaiming my time, Director Chopra, in 
your testimony, you said the CFPB is working to ensure that Buy 
Now Pay Later lenders adhere to the same protocols and 
protections as other similar financial products, and it looks 
like you released a study in September on Buy Now Pay Later, 
correct?
    Mr. Chopra. That is correct.
    Mr. Huizenga. Okay. And you are planning on releasing what 
the report calls, ``interpretive guidance.'' Is that correct?
    Mr. Chopra. We are looking at various things and working 
with industry to--
    Mr. Huizenga. You are planning on it or you are not?
    Mr. Chopra. We are considering it. We don't have any final 
plans yet. The process--
    Mr. Huizenga. Okay. Good. Stop right there. By the way, I 
will note, this is why we get frustrated because you just burn 
time. You would be great in the Senate.
    Mr. Chopra. I am trying my best to answer--
    Mr. Huizenga. Okay. Moving on. As an interpretive rule 
exempt from the notice-and-comment rulemaking requirement of 
the Administrative Procedure Act, is it your intent to avoid a 
lengthy rulemaking process?
    Mr. Chopra. No, I think your new product that--
    Mr. Huizenga. Okay. Great. So, here is what I am getting 
at. The Bureau seems to follow a pattern to not release a rule, 
but rather to issue opinion ladders, release blog posts, and 
take enforcement actions as an alternative to the rulemaking 
process. And this strikes me, frankly, as strange given your 
most recent budget request, which goes by quarter to increase 
your budget, which, what are you going to use it for? It would 
make some sense. You could make the argument you are going into 
rulemaking or enforcement. You need that rulemaking. So 
quickly, why do you need additional dollars?
    Mr. Chopra. We can provide you with more information. There 
is some seasonality to our expenditures by quarter. We are 
happy to look at that data. I don't think--
    Mr. Huizenga. I appreciate that, and I would like to yield 
the rest of my time to my friend from Kentucky.
    Mr. Barr. Director Chopra, revisiting the March Unfair, 
Deceptive, or Abusive Acts or Practices (UDAAP) exam manual 
revision, one analysis says that your action vastly expands the 
reach of its anti-discrimination enforcement beyond the limits 
of the Equal Credit Opportunity Act (ECOA). Do you agree?
    Mr. Chopra. No.
    Mr. Barr. Okay. And if you disagree with that analysis, why 
then did you say that you are breaking new ground?
    Mr. Chopra. I think in the way we are telling and 
articulating what the FDIC, the OTS, and others have already 
said, with some more specificity about what will our examiners 
look at when there are complaints--
    Mr. Barr. Okay. Reclaiming our time, where did Congress 
authorize you to expand UDAAP authority to anti-discrimination? 
Where and when did we do that?
    Mr. Chopra. The law prohibits unfair practices. Some 
discriminatory practices may also threaten the legal 
definition. It is common that--
    Mr. Barr. Director, reclaiming my time, you were at the 
FTC. You know history. When Congress gave unfairness authority 
to the Federal Trade Commission in 1938, it did not intend to 
give the FTC authority on discrimination. That is why in 1974, 
Congress passed the ECOA, which created the anti-discrimination 
laws. Congress and Dodd-Frank gave the CFPB the same unfairness 
authority that it gave the FTC in 1938.
    Mr. Chopra. No, that is not correct.
    Mr. Barr. That is correct.
    Mr. Chopra. No, it is not.
    Mr. Barr. That is correct.
    Mr. Chopra. In 1994--
    Mr. Huizenga. My time has expired, Madam Chairwoman.
    Mr. Barr. I want to talk to you offline about this 
because--
    Chairwoman Waters. The gentleman's time has expired. Mr. 
Barr?
    Mr. Chopra. --the unfairness standard was promulgated in 
1994.
    Chairwoman Waters. The gentlemen has yielded back.
    Mr. Chopra. I am happy to talk to you about this.
    Chairwoman Waters. The gentlewoman from New York, Mrs. 
Maloney, who is also the Chair of the House Committee on 
Oversight and Reform, is now recognized for 5 minutes.
    Mrs. Maloney. Thank you, Madam Chairwoman, and thank you, 
Mr. Chopra, for your public service. In 2009, this committee 
passed a bipartisan bill called the Credit Card Bill of Rights, 
which the CFPB said saved consumers roughly $16 billion, that 
is, ``billion,'' with a, ``b,'' a year. Under the former 
President, they stopped keeping records, I was told, on the 
savings that it was making for people. I think it is important 
that when we pass important consumer protection bills, we 
continue to track that.
    What was interesting about your research is it showed that 
it did not in any way hinder banks. If anything, they got 
stronger, possibly because people trusted them more, the 
abusive practices had stopped, more people were using them, so 
it helped the financial industry get stronger, and helped the 
consumer keep $16 billion in its pocket. My question is, are 
you still keeping records on the effectiveness of the CARD Act, 
the Credit Card Bill of Rights?
    Mr. Chopra. We are gearing up right now to conduct our 
statutory-required CARD Act report, and I have taken your 
feedback about what type of metrics we should be putting in it, 
and I am going to do my best to respond to what you are saying 
in the way that it was previously done. It is so important to 
have a competitive credit card market. We have been working 
with community banks and credit unions on how they can also 
enter the credit card market to provide more options. It is the 
core way in which small-dollar lending happens in our country.
    Mrs. Maloney. And you issued a report earlier, or your 
Agency did, on the Overdraft Protection Act, and I believe the 
report showed that roughly $15 billion was taken from consumers 
with unfair and deceptive practices. Is that correct?
    Mr. Chopra. I think we released an analysis of the total 
amount of deposit charges based on the sample of accounts, and 
I believe you are right. It was $15 billion, but that is really 
just the total charges. We have started to see a number of 
banks across-the-board compete more. Many are lowering their 
overdraft fees. Some are even eliminating them, so we have 
continued to look at the institutions that are most dependent 
on these. In some cases, we found pretty significant 
noncompliance with existing rules. There is no question that we 
want to make sure that when there is any overdraft or other 
charges, that it meets the requirements of the law, and 
hopefully, we will see banks and others continue to compete on 
making their charges more competitive.
    Mrs. Maloney. It is true that a lot of banks have on their 
own started initiating, really eliminating overdraft fees, but 
it would be less confusing to consumers if we had one standard, 
would you agree, a standard across-the-board for protection 
from unfair and deceptive overdraft fees?
    Mr. Chopra. We are continuing to supervise institutions, 
and work with other regulators on the question of deposit 
charges, so we will continue to work on that. I am really 
encouraged to see where the market has moved. I think where the 
competition we are seeing is going to decrease billions of 
dollars and still give people access to their funds, and that 
is very positive.
    Mrs. Maloney. We passed a bill out of the committee and the 
subcommittee on overdraft protection. Could you review that and 
let us know what your feelings are on that particular bill? It 
would be less confusing to consumers if we at least had a floor 
of protections for them.
    Mr. Chopra. And I would be remiss if I didn't say overdraft 
and credit cards are really linked in many ways. We want people 
to be able to get the lowest-cost way of accessing credit. And 
in many cases, a credit card in a competitive market would be 
much cheaper, especially given post-CARD Act than the 
protections it affords.
    Mrs. Maloney. Thank you for your testimony, and I yield 
back.
    Chairwoman Waters. The gentleman from Arkansas, Mr. Hill, 
is now recognized for 5 minutes.
    Mr. Hill. Thank you, Madam Chairwoman, for this hearing. 
Director, thanks for being with us today. I echo the concerns 
Mr. Williams expressed about 1071. Think about it this way: 
This is a chance for you to actually turn a page. I know what 
Dodd-Frank said, but under President Obama and President Trump_
as Charlie Munger frequently says, ``It was put in the too-hard 
pile.'' I really think 1071, while well-intended, is not 
implementable in a cost-effective way, and I don't believe the 
public policy, the theoretical benefits of that data will 
actually produce results. I think it will reduce participants 
for small-business lending, cause higher prices, and be just 
the opposite of what well intentions are, so you don't need to 
comment on it. I just want to echo that I agree with Roger 
Williams, and I think you could be the Director who just brings 
an end to it by saying, ``After 12 years of debate, thought, 
lots of hearings, and consideration by my staff, it is 
unworkable. And I recommend black, something completely 
different and just take a pass on implementing it.'' In all of 
the laws we pass, sometimes we don't get them right. And we are 
not robots here and we don't expect you to be one. Well, you 
passed it, I want to do it. All of your predecessors have 
struggled and failed in that capacity, so let me change the 
subject.
    Mr. Chopra. Sir, I do want to just say, though, for the 
record, we are under a court order to complete it now, as the 
Bureau was sued under my predecessor.
    Mr. Hill. Yes, fair point.
    Mr. Chopra. And I am happy to talk about that with you 
further.
    Mr. Hill. We should. You are not a lawyer, and I am not a 
lawyer, but maybe we can think about a response there. I hear 
the point.
    Let me shift gears to 1033, this open data rulemaking. You 
released that in October. It is an outline of proposals and 
alternatives in the consideration of rulemaking. Personal 
financial data rights are required to implement Section 1033 of 
Dodd-Frank. And I thought it was really notable that the 
Bureau's proposal would cover only depository accounts and 
credit cards from regulated depository institutions, but would 
not apply the rule to services provided by non-banks. And the 
CFPB itself acknowledges that many non-bank data providers 
offer numerous consumer financial products and services, like 
mortgages and auto loans, and yet they wouldn't be subject to 
this proposal. So, why is the scope of the 1033 rulemaking 
narrowed to just depository institutions and credit card 
accounts?
    Mr. Chopra. I want to make sure I get the statutory 
provisions on this right, but just on the question of the 
proposal, the proposal is really all transaction and deposit 
accounts, and we are starting there. We going to keep going and 
go into more products. The reason why we are going first here 
is really based on what we are hearing from industry about 
where is the most valuable data to get in order to be able to 
underwrite or help people access new products. And they say it 
is the transaction data--I'm sorry, the ledger data.
    Mr. Hill. No, let me ask you to pause there, and say that 
you are going to pursue non-banks in a second tranche. You 
don't really address liability for data breaches or other data 
security, non-compliance that happens once a consumer's data 
leaves the financial institution or other covered entity. Is it 
the Bureau's assumption that banks have the liability for data 
breaches or other security risk for data that they have no 
control over, while non-banks and other data users have no 
oversight?
    Mr. Chopra. No, that is not at all where we are trying to 
go, and, in fact, this is a place where we might need some of 
your help. We really want to make sure that if there is more 
data and very sensitive financial data moving around about 
people, it is safe and secure from end to end. I think we are 
looking at how to build in the appropriate data safeguards. And 
by the way, I think a lot of those non-banks don't necessarily 
have the same supervision for data security, and we need to 
make sure they don't create an underworld of data resharing.
    Mr. Hill. I agree with that. This committee has had many 
hearings on data protection, data privacy, and I hope we can 
have a bipartisan data privacy bill in the new Congress.
    Mr. Chopra. And as I shared in my testimony, I think that 
is the place where we really need to do something.
    Mr. Hill. Yes.
    Mr. Chopra. Financial data is very sensitive.
    Mr. Hill. I am going to send you some additional questions 
on that, if you could follow up for the record.
    I was looking at your statute. It says, ``The Board of 
Governors shall transfer to the Bureau from the combined 
earnings of the Federal Reserve System the amount determined by 
the Director to be reasonable and necessary.'' It says, ``the 
combined earnings.'' The Federal Reserve has no earnings. A 
plain reading of the text means that Congress should act to put 
the CFPB on appropriations, in my view. The Fed's earnings are 
negative. In fact, they will cost the Treasury $100 billion 
this fiscal year. Do you support the Bureau being on 
appropriations as opposed to being dependent on something 
unreliable like Fed earnings?
    Mr. Chopra. I need to look closer at that language, but the 
views of the United States and the Executive Branch are really 
in that petition that the Supreme Court has received. We are 
happy to share that with you. It is a matter of public record, 
and it articulates the full legal views.
    Chairwoman Waters. Thank you. The gentleman from Illinois, 
Mr. Casten, who is also the Vice Chair of our Subcommittee on 
Investor Protection, Entrepreneurship, and Capital Markets, is 
now recognized for 5 minutes.
    Mr. Casten. Thank you, Madam Chairwoman. It's a pleasure to 
see you again, Director Chopra. I am sitting here listening to 
some of the comments, and I am reminded of about 10 years ago 
when I was running an energy company and doing a debt raise on 
Wall Street. I had done this sort of rehearsal with the 
investment banker we retained, and she cut me off and she said 
the definition of an ugly American is someone who travels to 
Europe, meets someone who only speaks French, and yells at them 
in English, and she said when you are talking to a banker, 
don't yell at them, an engineer. And I share that story because 
I am grateful, and I encourage you to continue speaking to 
consumers, and not just yelling at them in regulatory law, 
notwithstanding that some of my colleagues in here prefer that.
    Moving on from that. When we talked last April, I asked you 
about creditors and social media companies, specifically 
Facebook, and how their algorithms may violate fair lending 
laws. I was very pleased to see since that conversation in May, 
you released a statement of policy confirming that Federal 
anti-discrimination law would require companies to explain to 
applicants the specific reasons for denying an application for 
credit. I realize it has only been a few months, but since that 
guidance was issued, have you witnessed any changes in 
financial institutions who are using black box algorithms to 
make lending decisions?
    Mr. Chopra. Yes. What we are seeing, and it is informal 
right now, is that entities that use advanced computational 
methods, algorithms and others, are actually working to make 
sure that they can explain clearly why someone got an adverse 
action because that is what congressional law requires. And I 
think we are still trying to see where there might be 
additional questions about the adverse action notice. We are 
doing our best, but ultimately, I think you have seen a number 
of developments, the AI Bill of Rights, and other things 
happening internationally, that really are putting a premium on 
explainability. Because often these algorithms can just 
completely shut out a group of users.
    Mr. Casten. No doubt, and it has to be auditable somehow.
    Mr. Chopra. That is right.
    Mr. Casten. I am glad to hear that on the bank side. When 
we talked last April, I also asked this question. You said what 
if the bank is not using the algorithm, but the ad for their 
credit card is being promoted through a Facebook algorithm or 
something like that. And when I asked you if CFPB had the 
authority to look inside those black box algorithms, but they 
are not held by the banks, I think you said you weren't really 
sure.
    Mr. Chopra. Yes. We have looked into this further, inasmuch 
that they are a service provider, material services, like 
offering products, would be subject to our authority. And we 
know that many banks and other financial firms are really 
taking a hard look at how they use some of these third parties 
to do targeting and algorithmic targeting.
    Mr. Casten. I guess what I am still trying to understand 
is, if I am a credit card issuer, and I put an ad on a Facebook 
site, and that ad, unbeknownst to me, and not disclosed by the 
algorithm is preferentially targeting rich White people because 
they are most likely_and I am making up the example. Do you 
have the authority right now to query the algorithm, the 
Facebook in that example?
    Mr. Chopra. Yes, if it is providing a material service to 
the financial firm.
    Mr. Casten. And have you exercised that authority?
    Mr. Chopra. I am not going to comment on where we are 
investigating or supervising on that, but certainly, our 
authority would cover the service part. You can outsource your 
liability on that, and, in some cases, the service provider is 
of greater interest to us, especially those serving a lot of 
firms.
    Mr. Casten. Okay. Let me maybe reframe the question then, 
recognizing that you can't comment on the specifics. I have 
introduced a bill with Congresswoman Trahan and Congressman 
Schiff, specifically to give the FTC the authority to query, 
and we have done it that way because there was some concern 
with some of the social media companies that that algorithm is 
a trade secret that they don't want in the broader public. If 
we were to do that, without asking you to comment on the 
specific legislation, is there information that you would like 
to get about that black box that you are limited because of 
trade secrets that would be helpful to have some agency, FTC or 
otherwise, with the authority to ask those hard questions about 
how the algorithms work?
    Mr. Chopra. Yes, it is a great question. I do think trade 
secrets--we seek to protect and all agencies seek to protect 
confidential information, but you do worry when that is 
cloaking necessary information to ascertain compliance. So, I 
don't have any immediate worries, but it is true that sometimes 
firms will not provide information, and sometimes we need to go 
to court. Agencies may need to go to court to get it.
    Mr. Casten. Okay. Obviously, I share your goal to make sure 
that we do not discriminate in our lending practices, and if we 
can work together to close that barn door, I look forward to 
continued conversations. Thank you. I yield back.
    Chairwoman Waters. Thank you. The gentleman from South 
Carolina, Mr. Norman, is now recognized for 5 minutes.
    Mr. Norman. Thank you, Madam Chairwoman. Director Chopra, 
do you agree that small medical providers in underserved areas 
deserve to be paid for medical care?
    Mr. Chopra. Of course. I think small medical providers in 
especially rural areas, many of them, it is hard to stay afloat 
and they need to get paid.
    Mr. Norman. Then why are medical debt and student loan debt 
different from all other types of debt, and is it the 
government's role to be rewriting contract law? To be honest 
with you, the biggest complaint I have with your Agency is a 
frustration with you rewriting rules, kind of being a one-man 
marching crew out, forgetting Congress, but would you agree you 
are rewriting the contract law?
    Mr. Chopra. No, can you say more about contract law because 
where we have focused on medical debt is really credit 
reporting. What we see in our complaints are huge inaccuracies 
of medical debt. We see places where there is not documentation 
when third-party collectors are called out for acting on it, 
and often, there is a lot of paperwork between the insurance 
company and the provider. I really want to make sure that 
medical providers can get paid, but that debt collectors are 
not using the credit report and putting inaccurate information 
on it in ways when a person might have already paid it.
    Mr. Norman. Let me ask you this. What has changed that 
would allow the CFPB to pick certain types of debt, such as 
medical debt, rental debt, and student loan debt to not be 
accurately reported, or I guess your interpretation of that?
    Mr. Chopra. No, accuracy is the standard that is put forth 
in the Fair Credit Reporting Act. So, when you are putting any 
information on any background screening or credit report, there 
are obligations to make sure that it is correct. We don't want 
data brokers and credit reports to be a tool of extortion. We 
want to make sure that people are getting the right accurate 
information about their performance or nonperformance, and you 
really worry when there are lots of inaccuracies, and we see it 
all the time.
    Mr. Norman. Per the Bureau's website and notice in the 
Federal Register in November of 2022, your office is collecting 
information about the auto lending market. The Bureau also held 
a non-public meeting for stakeholders on the issue, yet not all 
of the relevant stakeholders were invited. Can you explain what 
criteria your Bureau is using to decide who is a stakeholder 
and who is not?
    Mr. Chopra. W have many meetings. I am sure there will be 
more. We meet with industry groups a lot. Most of the 
participants were industry groups. We talked about what auto 
lending data is currently being used in the marketplace. Unlike 
mortgages, there is less availability of public data. We are 
looking at how small banks and credit unions can have public 
data access, so they know--
    Mr. Norman. Let me ask you. My time is running out. Are 
independent automobile dealers involved in meetings when it 
comes to car repos?
    Mr. Chopra. Are they involved with car repos?
    Mr. Norman. Do you involve independent dealers when you 
meet with other creditors?
    Mr. Chopra. I have met with a number of dealer 
associations. While we don't have any legal authority to bring 
enforcement or supervision, I certainly talk to them. I have 
spoken at their conferences because there are issues in the 
broader auto market that they will want to be interested in. 
One of the things they tell us is that often when they are 
involved in the process of credit reporting or others, it is 
good for us to always be in touch with a broad array, not just 
banks and credit unions.
    Mr. Norman. So you believe in transparent communication?
    Mr. Chopra. We try our best to meet with these industry 
groups. We don't actually always meet in public. It is normal, 
actually, for them to come and speak with us, so we try our 
best.
    Mr. Norman. According to my information, in the first 10 
months that you have been in office, you met with the industry 
28 times. Your predecessors, Mr. Cordray and Mr. Mulvaney, met 
with the financial services industry over 100 times 
collectively.
    Mr. Chopra. We have met with more small banks and small 
credit unions.
    Mr. Norman. Have you met with them?
    Mr. Chopra. What we have done is we have had a series of 
town halls or group discussions organized with--
    Mr. Norman. So, the 28 times is not accurate?
    Mr. Chopra. Well, that is not 28 banks. I don't know what 
number you are referring to. All I can say is that our industry 
outreach to small financial institutions far exceeds our 
predecessors.
    Mr. Norman. That is not a--
    Mr. Chopra. Okay. Well, I am happy to share more data 
directly.
    Chairwoman Waters. Thank you. The gentlewoman from North 
Carolina, Ms. Adams, is now recognized for 5 minutes.
    Ms. Adams. Thank you, Chairwoman Waters, for holding the 
hearing today, and thank you, Director Chopra, for being with 
us today. Like I said when you testified before us in October, 
it is nice to have you behind the wheel of the CFPB. The work 
that you are doing is critical, from protecting our consumers 
to making sure that our financial regulators mirror the 
diversity of our nation, so thank you for your efforts.
    I am extremely concerned with the levels of student debt in 
this country, which amounts to $1.8 trillion, so I believe we 
need to cancel $50,000 in student debt for Federal student loan 
bonds. And I was proud to join my colleague here on Financial 
Services, Nikema Williams, along with Representatives Deborah 
Ross and Haley Stevens, in introducing our Clean Slate 
legislative series to make real steps and to take real steps 
toward helping students. But in particular, I agree with you 
that we need a concrete plan on student loan debt relief before 
payments restart in September. My question to you is, can you 
discuss why it is so critical for us to have a plan in place 
for student loan debt forgiveness, one way or another for our 
students, the services of that debt and our economy?
    Mr. Chopra. Thank you for the question. The CFPB's role is 
oversight of the financial firms which are engaging in 
practices implicated by the laws that we administer. The 
Education Department and the Biden Administration are going 
through a process which is subject to appeal on student debt 
cancellation. We are looking to make sure that when payments 
restart, whenever it happens, that people are ready, that 
everyone is ready. We don't want a messy return. So, we are 
really hoping and we are trying our best and working very 
productively with the industry and others to make sure that 
when the payments restart, if and when, that they know what 
their options are if they can't pay. We have done some analysis 
to suggest that there are borrowers with student loans 
struggling now. We released a report on that. We know that some 
of the economic uncertainty is out there, and what we don't 
want to see is a huge spike of defaults. We want to see 
servicers work with borrowers so they know their options if 
they can't make the full payment and can get into a repayment 
plan that gets them on the road to paying off that debt.
    Ms. Adams. Thank you, sir. The OMWI and the CFPB released a 
report a year ago examining diversity and inclusion across your 
regulated entities, including both depository and non-
depository institutions. Why is it important for these 
institutions to share this data publicly? And is there a link 
to sharing this data and having a diverse workforce that 
improves consumer protection or service?
    Mr. Chopra. It's a great question. I believe it is Section 
342 which establishes the OMWI programs. We take what is in 
that statute very seriously. I know Chairwoman Waters has been 
very active on this, as well as Congresswoman Beatty. We have 
published a set of reports and also want to make sure that we 
are fulfilling all of those obligations. I didn't catch 
specifically, Congresswoman, the specific question on consumer 
protection, but I just wanted to convey that we are actively 
fulfilling those mandates.
    Ms. Adams. Thank you, sir. Are you aware of any specific 
impacts on the credit reports and scores of the consumers who 
utilize the company's debt relief services?
    Mr. Chopra. Yes. I think over the course of many years, 
both of my predecessors have also done work on debt relief, and 
sometimes there is phantom debt relief. Sometimes, there is 
outright fraud. Sometimes, things are put on the credit report 
that are outright false in order to induce people to pay. That 
has been the subject of a lot of law enforcement, and often, 
what is a real frustration is that even when you catch these 
guys, they often don't have the money or it's too late.
    One of the things we have recently proposed is a registry 
of non-bank firms that have one of these law enforcement orders 
under them. Debt relief providers is a big space where this 
occurs. It will also help States see if another State put in an 
order against one of these bad actors, and they are coming into 
their State, it might help them respond more quickly. We are 
working through that process now.
    Ms. Adams. Great. Thank you. I hope that they can expect to 
see their checks in the mail soon. Thank you very much, and, 
Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you. The gentleman from Ohio, Mr. 
Davidson, is now recognized for 5 minutes.
    Mr. Davidson. Thank you, Madam Chairwoman, and Director 
Chopra, thank you. Clearly, you have differences of opinion 
with Republicans, and you and I would have many differences of 
opinion. I think a lot of those have been aired by my 
colleagues, but I think it's important that where we can find 
common ground, we ought to appreciate it. So, I have been 
encouraged by some of your comments respecting privacy and the 
importance of protecting that for consumers, and, frankly, kind 
of the distinction that you have recognized in terms of how a 
lot of tech firms are monetizing that data. And really, in a 
way, it is kind of an arbitrage where they are taking value 
that for any one consumer isn't necessarily worth a lot. They 
are kind of giving it away for free access, but it is meant to 
add quite a few billionaires. It has created some real 
asymmetries, and I think our laws are long overdue in 
addressing that adequately with a comprehensive privacy law. 
So, that is where I have been particularly appreciative of the 
Section 1033 rulemaking that you have undertaken.
    You said that the CFPB will publish a report in the first 
quarter of next year, and subsequently propose a rule later in 
2023. You finished by saying that the rule will be finalized in 
2024, and you also mentioned that during this process, you will 
convene panels comprised from smaller entities to seek 
feedback. How are you deciding who gets to participate in those 
panels, and could you talk a little bit about the process of 
getting to a final rule?
    Mr. Chopra. Sure. The Small Business Administration is very 
involved. They are actually going to produce the report with us 
about what small entities are saying. We have tried to hit the 
broad set of stakeholders from, for example, fintech companies, 
to small banks and credit unions. We have worked through their 
industry associations, and many of them have put forward 
people. We are doing our best to make sure it is very 
inclusive. And then in terms of finalizing a rule, the goal 
would be to make sure we figure out how to protect data, while 
also giving more competition and innovation for new players. I 
would love to see a market where there is competition on more 
privacy protection too, because we don't want just a few 
entities engaging in surveillance and doing what they want.
    Mr. Davidson. Yes, I would like to see a big shift in the 
surveillance capitalism, and I appreciate the perspective that 
you bring to that. Obviously, I am rooting for a major law from 
my colleagues. In fact, I hope Republicans make H.R. 4, since 
the Fourth Amendment is there, a major privacy bill that 
recognizes a property right in our data that is individual, and 
in that sense, then the individual can consent. There would be 
a whole different architecture. I am not sure if we will get 
all the way there with the rulemaking, but I look forward to 
collaborating with you to get as close to that as we can, 
within the bounds of current law.
    You mentioned fintech firms. And we have had some feedback 
that just looking at your calendar, you don't meet directly 
with a lot of fintech firms or a lot of specific players. I 
guess my question is, what are the primary sources of 
information as you go about your job and you go about 
overseeing this rulemaking? How do you get input on the state 
of fintech, the state of innovation, yes, the practices that 
are really abusive versus the practices that are actually 
innovative and protective of privacy?
    Mr. Chopra. Yes. One of the things we make a point of is to 
go to a lot of fintechs, and they don't have Washington, D.C. 
staff, so we try and go to the industry associations that 
represent a lot of them, especially in payments. We attended 
and brought a delegation of CFPB employees to the main fintech 
conference. I spoke there. We met with a wide range of people. 
I will take the feedback, though, if you have input too. We 
want to continue to find ways to get new players in the 
business. It is one of the reasons we also talk to investors, 
to analysts, because they often are the ones deploying capital 
that helps firms get off the ground, but we always welcome 
input on how we can reach more of those new firms.
    Mr. Davidson. Yes, thank you, and obviously the state of 
tech makes all kinds of things possible. But from your 
perspective, thinking about the consumer, why do you think 
there is so much demand for all this fintech in the market?
    Mr. Chopra. I think it is great. We are really tech-
forward. We have set up a chief technology office. We have 
changed our innovation approach from instead of picking one 
fintech as a winner-take-all, we are trying to find out what 
can we issue so that all the fintechs or all the banks involved 
can benefit and they can compete against each other.
    Mr. Davidson. But aside from the firms, if you think about 
the individual consumer, what is it that all of this innovation 
is driving at? It seems like there is a void in the marketplace 
that they are trying to address, and I wonder how you could 
play into that?
    Mr. Chopra. I think part of it is, as we have gotten out of 
the pandemic, people want more digital services. They are 
demanding it and we want to see it being fulfilled, and I 
think, Congressman Davidson, that is why we want a lot of 
decentralization, small players. We don't just want a handful 
of the Big Tech firms dominating it. That is not a good market 
structure.
    Mr. Davidson. Thank you, and my time has expired. I yield 
back.
    Chairwoman Waters. Thank you. The gentleman from Illinois, 
Mr. Foster, who is also the Chair of our Task Force on 
Artificial Intelligence, is now recognized for 5 minutes.
    Mr. Foster. Thank you, Madam Chairwoman. Director Chopra, I 
am very impressed by the observation that out of the wide 
purview of issues under the CFPB's mandate, over 70 percent of 
all consumer complaints filed with the CFPB relate to credit 
reporting. On October 2nd of this year, the Wall Street Journal 
reported that Equifax provided incorrect credit scores for 
potentially millions of customers applying for credit, 
including home, credit cards, and auto loans. Two days later, a 
class action lawsuit was filed against Equifax led by attorneys 
representing Nydia Jenkins from Florida, who allege that an 
Equifax error landed Ms. Jenkins with a substantially pricier 
car loan. According to the suit, Ms. Jenkins was pre-approved 
for a car loan in January but denied in early April because her 
reported credit score from Equifax was off by 130 points. And 
because this loan was denied, Ms. Jenkins was allegedly forced 
to buy a car from a different dealership at a much higher 
interest rate and now pays about $2,300 more per year than she 
would otherwise have been had she been correctly qualified for 
the initial loan. First, in your view, were Equifax actions in 
violation of the Fair Credit Reporting Act (FCRA)?
    Mr. Chopra. I can't comment on that matter. We don't 
comment in public on any of these specific company matters. I 
will say, of course, the three credit reporting conglomerates 
have a lot of impact on all Americans in their ability to get 
credit when you have an error.
    Mr. Foster. I understand that you can't comment directly on 
that, but we often hear back from the credit reporting agencies 
that although some credit scores and reports may get reported 
inaccurately, they virtually never adversely affect a consumer 
before they are corrected. However, in the case of Ms. Jenkins, 
this certainly seems to have affected her adversely, so do you 
agree in general that with the credit agencies, almost all 
credit errors are benign?
    Mr. Chopra. All credit reporting agencies?
    Mr. Foster. Are benign that these--
    Mr. Chopra. No, I don't.
    Mr. Foster. Okay.
    Mr. Chopra. I think they can be very severe. We have seen 
situations where background reports and credit reports have 
actually blocked people from getting an apartment or a job 
because they are falsely matched with someone else. We have 
seen how it leads to a much higher cost of credit where there's 
a material error, and the list goes on and on.
    Mr. Foster. Yes, and according to a CFPB advisory opinion 
that was published in October of this year, the FCRA was 
enacted to protect consumers from the transmission of 
inaccurate information about them. The opinion further explains 
that while consumer reporting agencies like Equifax are 
preparing consumer reports, they are held to certain legal 
standards, including a requirement to, ``follow reasonable 
procedures to assure maximum possible accuracy of the 
information concerning the individual about whom the report 
relates.'' Do you believe that Equifax and the reporting 
agencies in general have appropriate procedures and controls in 
place to ensure the maximum possible accuracy, and what is the 
standard to prevent instances like Ms. Jenkins?
    Mr. Chopra. Again, I need to be careful. The law is very 
clear in the statute about reasonable procedures to assure 
maximum possible accuracy. I can commit to you that where we 
find that, we will, in our supervision and our examination and 
enforcement, take that very seriously. I have been part of a 
number of enforcement actions involving tenant screening where 
that provision has not been followed, and, look, it is a huge 
issue. Consumers are not the customer of these companies. They 
are the product, and so much about their life can be dictated 
by what is in those reports, and we need to use accuracy as our 
lodestar.
    Mr. Foster. Yes. Do you believe that we have set the 
correct balance in regulatory actions to make sure that we 
minimize consumer suffering from bad credit scoring?
    Mr. Chopra. Of course. I think this is a classic example of 
a market failure where the consumer reporting companies don't 
have a market mechanism for them to make sure they obtain the 
highest levels of accuracy. And that is why Congress made the 
decision in 1970 to have the Fair Credit Reporting Act, and I 
would welcome working with all of you on how we can continue to 
address the modern problems of credit reporting, especially 
with Big Tech brokers, data brokers, and others.
    Mr. Foster. Thank you, and my time has virtually expired, 
so I will yield back.
    Chairwoman Waters. Thank you. The gentleman from Georgia, 
Mr. Loudermilk, is now recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman. Director 
Chopra, thank you for being here. I want to talk about peer-to-
peer (P2P) payments for a moment. We know that the CFPB has 
begun exploring pathways to expand its authority to address the 
peer-to-peer payments platforms by changing its interpretation 
of the Electronic Fund Transfer Act (EFTA) and the CFPB 
Regulation E to hold banks liable for payments from consumer 
accounts to scammers over P2P platforms. Now, coming from the 
IT industry and working in similar fields, I have come to know 
that most criminals require consumers' confidence to perpetuate 
most common scams, and that education and awareness are the 
most effective tools for preventing these crimes from happening 
in the first place.
    My first question regarding is, do you agree that consumer 
education is the most effective way to protect consumers from 
becoming victims of this type of fraud and scam?
    Mr. Chopra. I think it is a very core and important way. I 
think it goes hand in hand with transparency, too, but there is 
no question that as we have shifted to more real-time payments, 
peer-to-peer apps like Venmo and PayPal are now moving so much 
money. And we want to make sure, and a lot of banks tell us 
that when fraud occurs on some of these P2P apps, and they are 
responsible for investigating it, they can't even control 
necessarily what information they are getting from those apps. 
So, we are working to make sure that we do want more real-time 
payments, but what is the right role for the P2P app when it 
comes to making sure that consumers know what is going on, and 
that we can protect them from errors and fraud.
    Mr. Loudermilk. Right, and I understand the difference of 
making whole versus the protection aspect of it. Education has 
proven time and time again that the most effective way to help 
keep someone from being scammed to start with, and we know that 
some scammers have sophisticated knowledge of EFTA and 
Regulation E liability protections. If you are going to engage 
in this type of criminal activity, you are going to know 
basically how to get around this, so if the Bureau shifts its 
liability so that banks must refund a consumer for any P2P 
payment scam, isn't it true that a scammer could just assure a 
consumer that their bank is required to refund them no matter 
what, and then this creates an additional hazard?
    Mr. Chopra. Yes. First of all, we have not made any 
changes, but it is true that we are studying the role of the 
P2P apps and other payment players, and actually, the banks are 
very supportive of this. I take your point very seriously that 
we don't want to create any situation that actually creates 
different fraud, or may even increase fraud, so I think there 
are some steps that are happening on their own. The banks and 
other financial firms operate the kind of routing rules, 
payment rules_they have made certain changes. We are looking at 
those changes, and I think we are cautiously optimistic about 
it. But you are right that we also want users, especially in a 
mobile device, when there is some indicia that something is 
off, many times you will get an alert and we hope that UX and 
UI designs can also be a way that we reduce the level of fraud 
too.
    Mr. Loudermilk. I know you have made changes, but as I said 
in the beginning, in exploring this area, have you given 
serious consideration to consumer education as a key element of 
this?
    Mr. Chopra. Yes, and in fact, we are trying to understand 
what are the customer segments that are most likely to be 
affected by it. One of the things we have identified is a rise 
in romance scams, which sounds kind of clever, but it is 
actually disproportionately harming veterans and older 
Americans. So, we are doing work with the Department of 
Defense, and we are doing work with others to figure out what 
are the best channels to reach people so that they know how to 
spot a scam, and for older Americans in particular who are 
suffering from any sort of cognitive impairment, we especially 
worry about how they might fare.
    Mr. Loudermilk. I commend you on that. I think that is an 
important aspect of this. One final question in the remaining 
seconds I have is, have you considered using the almost $10.5 
billion in unspent funds of the Civil Penalty Fund to 
compensate consumers?
    Mr. Chopra. We are actually only using it for redress right 
now. So, the only eligible expenditures from that fund are for 
consumers who are involved in an enforcement action where we 
have obtained a penalty, so we can't kind of hand it out in 
general. It has to link to a specific case that we worked on if 
we are giving consumers redress.
    Mr. Loudermilk. I would just say that is something to 
consider. Thank you.
    Mr. Chopra. Consider the scam and fraud area?
    Mr. Loudermilk. With P2P, yes. I yield back.
    Chairwoman Waters. Thank you. The gentleman from New 
Jersey, Mr. Gottheimer, who is also the Vice Chair of our 
Subcommittee on National Security, International Development 
and Monetary Policy, is now recognized for 5 minutes.
    Mr. Gottheimer. Thank you, Madam Chairwoman, and thank you, 
Director Chopra, for being here. Earlier this year, I announced 
my senior security strategy to ensure we are doing everything 
we can to end financial scams targeting our seniors. I was very 
proud to have two bipartisan, bicameral senior protection bills 
pass the House this Congress: the Empowering States to Protect 
Seniors from Bad Actors Act; and the Senior Security Act. These 
bills would support grants and Federal coordination to protect 
seniors from financial scams and help crack down on fraudsters 
targeting the retirement savings of older Americans.
    Director, the CFPB stood up its Office of Financial 
Protection for Older Americans in 2011. To ensure the Bureau is 
serving senior citizens effectively, my bill, the Senior 
Security Act, would establish a senior investment task force at 
the SEC to report on topics related to senior investors. From 
your experience, how has the Office of Older Americans' 
specialization on seniors helped the Bureau protect senior 
citizens from financial abuse, and do you think other financial 
regulators would benefit from having an office or panel 
dedicated to those issues?
    Mr. Chopra. Our Office of Financial Protection for Older 
Americans has been a huge success, and, Congressman Gottheimer, 
thank you for your support of the CFPB in this work. One of the 
things that we did this year, led by our Office for Older 
Americans, is we identified a particularly pernicious issue 
involving nursing home debt collection. This is where someone 
may be in a nursing home, but then their family members are 
actually chased after and coerced into paying money that they 
may not even owe.
    We have also looked at the issue over the years of 
financial designations and certifications and how that might 
affect older Americans. We certainly look at it in terms of 
housing, because we have so many seniors often living on their 
own in housing, and what is happening to them when they are 
targeted in certain neighborhoods. Again, we strongly support 
focusing on older Americans, servicemembers, students, and 
other special populations. We think it has given us a lot of 
good insight into really where we should focus the Bureau's 
attention.
    Mr. Gottheimer. Thank you. Are there additional resources 
or training authorities that law enforcement and financial 
institutions need to increase the number of cases that are 
reported and resolved favorably? Is there anything you 
recommend?
    Mr. Chopra. Yes. I do think we need to work more to get 
some of this fraud addressed criminally. One of the things we 
have seen is that some of these players bounce from State to 
State to State, and when they are under investigation, they go 
someplace else. It is one of the reasons we have proposed a 
registry of those violators. We also think that there is more 
enforcement cooperation we need when it comes to swindling 
seniors out of their retirement savings. That is not a place 
where we directly have enforcement authority, but we really 
worry about those who have saved up but then get baited into 
sudden and often very, very sophisticated scams, so looking 
upstream and how we see the purveyors who are trafficking that 
and have knowledge of that illegal activity is critical.
    Mr. Gottheimer. Thank you so much, Director. Last time you 
were before the committee, I don't know if you remember, but I 
shared my concern that the CFPB's public-facing consumer 
complaint database could be used by firms to publish unmerited 
complaints about their competitors, based on their competitors 
using it as a way to stick it to them and file false 
complaints. And often, the database_the concern is that it is 
not checked, and there is no way to know that these complaints 
that are filed are actually real and that can cause problems 
for competitors or for companies particularly small businesses. 
What steps have you taken since we last spoke, if you don't 
mind me asking, to ensure that the complaints publicly 
displayed in the database have merit and are not misleading to 
consumers and to protect our small businesses?
    Mr. Chopra. Yes, I appreciate that. After we spoke last 
time, I did look into whether we think there is an issue there. 
And one of the things that is important is we are limiting the 
set of complaints that go in the public database, and it often 
includes a company response, and a company can also say, this 
is not my customer. So, I think we can brief you more on that, 
but we do think it is fairly limited and reduces the likelihood 
of non-customers filing complaints.
    Mr. Gottheimer. So, the company can file and say, that is 
not me or not my business, or not our customer. Is that then 
removed or is the complaint removed--
    Mr. Chopra. I would need to look at the exact protocols, 
but I think that may not be published if it is misdirected to 
the wrong company. So, we can respond to you and check back.
    Mr. Gottheimer. I would love to follow up with you on that.
    Mr. Chopra. We have not heard or seen any systemic evidence 
of this being an issue, but I appreciate you bringing it to our 
attention.
    Mr. Gottheimer. I have heard about it, so I would love to 
talk to you more. Thank you so much. I yield back.
    Chairwoman Waters. Thank you. The gentleman from West 
Virginia, Mr. Mooney, is now recognized for 5 minutes.
    Mr. Mooney. Thank you, Madam Chairwoman. Many agencies 
under the Biden Administration completely lack accountability 
and transparency. One of the worst offenders is the Consumer 
Financial Protection Bureau (CFPB) which has taken actions that 
raise the cost of credit, while reducing access to credit, with 
few ways for Congress to intervene. My constituents are largely 
rural blue-collar workers who are the most impacted by the 
CFPB's costly actions.
    Director Chopra, you have chosen to ignore the traditional 
rulemaking process, instead regulating by press release and 
blog post. One example is the CFPB expanding the definition of, 
``unfair,'' in its unfair, deceptive, or abusive acts or 
practices section of the examination manual to include 
disparate impact or unintentional discrimination. This expanded 
definition is not found in statute. Banks and credit unions 
have said that this change is unworkable, opaque, and costly, 
and will only serve to reduce credit options for those who need 
it the most; in other words, hurting the very people that you 
are intending to help.
    Director Chopra, you have testified before that you do not 
recall whether anyone in the Bureau advised you to seek the 
Administrative Procedure Act (APA) rulemaking with respect to 
this examination manual change. Is that still your 
recollection?
    Mr. Chopra. No, it was in a manual. It was not a 
rulemaking. I just want to make sure I understand the question.
    Mr. Mooney. Okay. Do you know whether anyone in the Bureau 
that you work for advised you to seek an Administrative 
Procedure Act (APA) rulemaking? Did anyone advise you to seek a 
rulemaking--
    Mr. Chopra. That has never been in an exam manual from any 
regulator that goes through notice and comment. The exam 
manuals are guidance for our examiners so that they can 
consistently conduct supervisory exams. They are existing law. 
They don't create any new obligations. And if anything, 
Congressman Mooney, we are trying our best to respond to the 
concerns that people don't know how we will exercise authority. 
We are trying to put more in public, and I get concerned when 
you say, oh well, we are issuing more things on our website or 
our press release. We are trying to put out more information so 
that people know, especially people who are small businesses or 
consumers, so that they understand and don't have to 
necessarily hire a lawyer to deal with it. I understand that 
there may be some places, and I am happy to talk to you further 
about it, but our goal is transparency.
    Mr. Mooney. Okay. I think I have a follow-up question to 
that. Thank you for that answer. I would say, unlike other 
financial regulators, the CFPB is under a sole Director rather 
than a bipartisan board. Given the significant criticism of 
this change and the organization to the examination manual from 
industry and consumers alike, do you believe that a bipartisan 
board of directors with diverse opinions would better serve 
consumers rather than a sole Director?
    Mr. Chopra. I would say this. For about 150 years, the 
Office of the Comptroller of the Currency, which has far more 
employees, a far bigger budget, and a far bigger remit has been 
led by a single Director. I think that is part of the reason 
why Congress modeled the CFPB after them, and I think that, 
really, Congress decides how it wants to create the governance 
of its agencies. There are many single Directors. There are 
many multi-member boards. I think there are a lot of cons of 
multi-member boards, having served on one before, but I think 
that is really for Congress to decide.
    Mr. Mooney. Okay. Thank you for that answer. My last 
question is, would you vow today to not bring an enforcement 
action against any financial institution for a violation not 
expressly laid out in statute or in APA rule?
    Mr. Chopra. Again, we cannot bring enforcement actions 
unless we plead a violation of law or regulation. That must 
have specific reference to what Congress has enacted, and the 
President has signed into law and regulations that are codified 
into the Code of Federal Regulations. That is how enforcement 
works. We have received input from people across-the-board. 
They want us to provide guidance. Director Kraninger created 
the advisory opinion program, which we have continued, which is 
about providing guidance and helping people understand their 
obligations under current law.
    Mr. Mooney. Okay. I only have a few seconds left. I just 
want to close by saying I have introduced legislation that 
would require the CFPB to undergo a comprehensive cost-benefit 
analysis in its rulemakings to ensure that the benefits of any 
rule outweigh the costs. Thank you, Madam Chairwoman. I yield 
back.
    Chairwoman Waters. Thank you. The gentlewoman from 
Massachusetts, Ms. Pressley, who is also the Vice Chair of our 
Subcommittee on Consumer Protection and Financial Institutions, 
is now recognized for 5 minutes.
    Ms. Pressley. Thank you so much, Madam Chairwoman, and, 
Director Chopra, it is so good to see you. Thank you for being 
here today, especially in this moment, at a time when consumers 
are being embezzled by FTX, and are subjected to junk fees. I 
am deeply grateful for your leadership, particularly as it 
pertains to the issue of medical debt. The CFPB's report 
earlier this spring highlighted the devastating challenges that 
can occur when an individual incurs medical debt.
    I want to lift up an example of one of my constituents, 
whom I will call Jamal for the purposes of this hearing, a 
young man working a full-time job like millions in our country, 
but still living paycheck to paycheck, experiences a 
catastrophic accident, and receives medical attention in a 
nearby hospital. And now, Jamal cannot afford to pay the bill, 
to pay out of pocket since he lacks insurance, and so he is 
forced to incur thousands of dollars in medical debt. Director 
Chopra, let's say this medical bill ends up on Jamal's credit 
report. Yes or no, is it fair to say that this could result in 
reduced access to credit for Jamal, in your opinion?
    Mr. Chopra. Yes.
    Ms. Pressley. And could this lead to Jamal avoiding medical 
care in the future even if he needs treatment? Yes or no?
    Mr. Chopra. Yes.
    Ms. Pressley. And could this medical debt make it more 
difficult for him to secure future employment?
    Mr. Chopra. Yes, we have seen how employment background 
checks and background reporting has a huge impact on people.
    Ms. Pressley. And if this medical bill is inaccurate, would 
Jamal still be penalized with a lower credit score?
    Mr. Chopra. If the score includes it and it is inaccurate, 
yes, generally speaking, it would, and it is a huge problem. It 
is one of the reasons the CFPB has focused a lot on medical 
debt, especially credit reporting, and the huge amount of 
inaccuracies and the impact on the lives of people like Jamal.
    Ms. Pressley. Yes, thank you, Director. Again, it is a 
systemic issue. Jamal is no anomaly. It is the reality of tens 
of millions of households and individuals across this country. 
Roughly 20 percent of the American public are people with 
medical debt who are disproportionately representing 
marginalized communities who are struggling with their health 
issues. But on top of that, they are further inflicted with 
lower credit scores, resulting in financial hardship, and that 
is an injustice.
    Director Chopra, I am so pleased that following the CFPB's 
report, Equifax, TransUnion, and Experian announced they would 
make policy changes that would remove 70 percent of medical 
bills from credit reports. This is really welcome news, but I 
am still concerned about the 30 percent of medical bills that 
won't be removed and the impact that this will have on low-
income consumers in my district. In order to build on the 
Bureau's work thus far, what further steps is the Bureau 
considering to protect these vulnerable consumers, many of whom 
may be facing catastrophic or chronic medical issues?
    Mr. Chopra. We are certainly considering rulemaking under 
the Fair Credit Reporting Act to address the issue of medical 
debt. I am really worried that credit reports can be used as a 
tool of coercion into having people pay debt they already paid, 
or that they really never owed in the first place. I think I 
see this as a privacy issue to being able to slander someone, 
and basically say they haven't paid something that they may not 
have even owed. This is out of control, and I think it is a 
place where we continue to be seriously worried, especially for 
medically-necessary debt.
    Ms. Pressley. Thank you so much. Certainly, our credit 
score is our reputation, our financial reputation, and our 
credit reporting system is a broken one, and we have to 
legislate and act in such a way to address it. Our medically-
vulnerable and disabled neighbors, many of whom are struggling 
with the devastating impacts of medical debt, and I only see 
that growing, working on the issue of a long COVID in that 
there is a growing community of those who are living with the 
symptoms of COVID, or COVID long-haulers, and I only see this 
continuing to be an issue. Again, I thank you, Director Chopra, 
for your leadership on the issue of medical debt at the CFPB, 
and I thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you. The gentleman from North 
Carolina, Mr. Budd, is now recognized for 5 minutes.
    Mr. Budd. Thank you, Madam Chairwoman, and thank you, 
Director, for being here today. It is good to see you. Today, I 
want to touch on an issue related to transparency and 
encouraging innovation and competition. Previously, CFPB 
Directors recognized the importance of fintech innovation for 
both providers and consumers. In fact, this was the original 
focus of Project Catalyst, I believe, under Director Cordray. 
In contrast, you have terminated the fintech sandbox program 
that issued no-action letters. Instead, you are now asking 
startups in the public to file rulemaking petitions to ask for 
clarity. How does your process provide consumers with more 
choices and create an environment for the best products to win, 
while at the same time allowing new firms to enter the market, 
to give us greater competition?
    Mr. Chopra. Basically here, the biggest thing we are 
thinking about is how to invite new players in. The old CFPB 
approach, I think, was about picking winners and losers. It was 
about choosing one company that would get the benefits and not 
anyone else. You mentioned filing petitions for rulemaking. 
They can also make requests for advisory opinions and other 
information, and the key, sir, is that it is broadly 
applicable. So, we want to make sure it is not just one firm 
that is becoming the winner, but many of them.
    We have also put a lot of attention on proposing Section 
1033 rules, and we have received a huge response from fintechs 
on it, about how they will be able to compete against the big 
guys and be able to challenge incumbents. We have talked to 
investors, and to analysts, about what is the way in which 
there can be consumer-friendly innovation and how do we invite 
them in. We have also identified some places where existing 
players may be blocking new entrants in order to resist that 
competition, so I think we are working on all fronts and trying 
not to pick winners and losers.
    Mr. Budd. Thanks, Director. I want to go back to the 
fintech sandbox. I want to dig a little deeper into that before 
we get too far afield. In your view, can regulatory sandboxes, 
like the ones in my State of North Carolina and others across 
the U.S., reduce barriers to innovation, help us keep pace 
while providing the necessary guardrails?
    Mr. Chopra. Yes. I think there are lots of ways in which 
the regulators can work with those who are creating new 
products. I think sometimes sandboxes have a real goal. What 
are the obstacles we are trying to topple over? How might a 
product structure need some additional information about how to 
comply with the rules of the road? We totally embrace that, and 
we actually look pretty carefully at how the sandboxes are 
working overseas, and how they are doing in the States. While 
we don't call ours a sandbox, we are really trying to reinvent 
how we are promoting innovation and more entry.
    Mr. Budd. Thank you. Committee Republicans sent you a 
letter earlier today, which I would like to ask for unanimous 
consent to submit for the record.
    Chairwoman Waters. Without objection, it is so ordered.
    Mr. Budd. Thank you, Madam Chairwoman. The letter expresses 
our concern with the Bureau's recent actions over non-banking 
entities that both exceeds CFPB's statutory authority and harms 
the very consumers that the Bureau was established to protect. 
What I would like is, I would like to have your commitment that 
you will substantively respond to the letter by its deadline of 
December 30th. Do you want me to do that?
    Mr. Chopra. You have not sent me the letter.
    Mr. Budd. Asking you just to review it and subsequently 
respond.
    Mr. Chopra. Yes, we will try our best to make sure we 
accommodate whatever you are looking for.
    Mr. Budd. So, we can count on your response by December 
30th?
    Mr. Chopra. I will work to make sure that we are responsive 
to the letter as best we can. I don't know what is in it.
    Mr. Budd. We are just asking for a substantive response to 
the best of your ability.
    Mr. Chopra. I will give a substantive response.
    Mr. Budd. Thank you. I yield back.
    Chairwoman Waters. Thank you. The gentleman from 
Massachusetts, Mr. Lynch, who is also the Chair of our Task 
Force on Financial Technology, is now recognized for 5 minutes.
    Mr. Lynch. Thank you, Madam Chairwoman, and welcome, 
Director. It's good to see you again. The last time you were 
here, we actually had a discussion about the urgent need for 
policy changes to protect consumer data. And as Chair of the 
Task Force on Financial Technology, we have had a number of 
hearings exploring the need for a more robust consumer data 
rights framework, and we actually had considerable agreement 
from the Republican side as well, so it is one of those areas I 
am eager to work on.
    I was pleased to see that the CFPB published an outline of 
proposals being considered in advance of the rulemaking that 
would implement Section 1033 of the Dodd-Frank Act in October. 
I was wondering if you might be able to expand a little bit on 
some of those proposals? I know that it was a general outline, 
but are there certain avenues that you prefer or favor?
    Mr. Chopra. Yes. I think that we are looking to propose a 
rule that would require financial firms to provide, in a 
machine-readable, secure way, people's personal ledger data, on 
their transaction accounts, and that the goal would be that 
they could permission that to other entities that they might 
want products or services from. And I think the goal would be, 
we want people to be able to switch more seamlessly. I think 
when consumers can switch more easily, that gives them the 
ability to get better pricing, it gives them the ability to 
say, I want better customer service. And ultimately, that is 
how the competitive market will work best. Data protection has 
to be part of that.
    And we are really thinking through how to make sure that 
this rulemaking, and more data sharing, doesn't create an 
underworld or a surveillance-type market, and I think that is a 
place where we are going to see the authorities we have. But of 
course, as I mentioned in my testimony, we really need to 
update these financial privacy laws too. I think they can be 
much more robust, and I think they can create issues with 
discrimination and other issues as well.
    Mr. Lynch. That was my next question. The Gramm-Leach-
Bliley Act (GLBA)--I think in previous hearings, you might have 
indicated a need to update that. What could we be doing? Apart 
from the rulemaking that you are proceeding with, what can we 
do to sort of enhance or supplement some of the things that you 
are doing, which I think is on the right track? If you empower 
the consumer to control their own data, it gives them leverage 
in this whole process and portability, obviously, because they 
can vote with their feet. But GLBA, what is--
    Mr. Chopra. There are two main pieces of the GLBA: the 
privacy framework; and the security framework. The privacy 
framework is where we have rulemaking authority. The Congress 
specifies that financial institutions provide a notice of what 
they are collecting, and then consumers can opt out. But I 
think consumers in this digital world, in some ways are feeling 
like, what is the point of all of these? Everyone is collecting 
data on me. How come there aren't any substantive limitations 
on what data can be collected? Sometimes it is very sensitive 
data, and who is it being shared with, and do we have 
confidence that who it is being shared with isn't being further 
re-shared and re-shared again and bought and sold and combined 
with other information. So, I think we are seeing a number of 
places where State privacy laws are happening. There is work at 
the Federal level. We think it should be all-of-the-above, so 
we can protect people.
    Mr. Lynch. Is there a way to right-size the demand? If a 
consumer is making a transaction, buying a pair of socks, I 
think I have referred to it in the past, something as simple as 
that, you should not have to get naked from a data privacy 
standpoint just because you want to buy a pair of socks. Is 
there a way to sort of modulate what a business can ask for? 
Obviously, if you are going for a mortgage or something like 
that, there is a deeper dive that they have to do to protect 
their own interest, but if it is just a hand-to-hand 
transaction, there is no need for someone to deliver every bit 
of information that they have about themselves personally to 
make some minor purchase.
    Mr. Chopra. Yes, including their social map, their list of 
contacts, and I fear that in the metaverse, this is going to 
happen on steroids, so the key is thinking about substantive 
limitations and really, how do we get there?
    Mr. Lynch. I would appreciate working with your staff in 
terms of trying to find the contours of that, and where the 
outlines and the guardrails might be in that process, so thank 
you. Madam Chairwoman, I yield back. Thank you for your 
courtesy.
    Chairwoman Waters. Thank you. The gentleman from Tennessee, 
Mr. Rose, is now recognized for 5 minutes.
    Mr. Rose. Thank you, Chairwoman Waters, and I also thank 
Ranking Member McHenry for holding this important hearing 
today. And thank you, Director Chopra, for being with us.
    The Bureau has been operating at warp speed. Even in just 
the last quarter, it has proposed an extensive rulemaking on 
non-bank financial firms. It has taken numerous enforcement 
actions across the consumer finance landscape and seems to be 
operating on all cylinders. It has issued guidance on consumer 
reporting companies and junk fees, published bulletins and 
reports on cryptocurrencies, and student banking products, and 
so much more, and it doesn't look like you are slowing down at 
all. We have a lot to catch up on, Director Chopra, so I will 
dive right in.
    It has come to my attention that the Bureau has been 
demanding that non-bank financial companies turn over attorney-
client privileged information during the course of its 
supervisory examinations. You should know that the attorney-
client privilege is one of the oldest and most respected 
privileges in our legal system. It prevents a lawyer from being 
compelled to testify about his or her clients, and courts are 
very protective of the need for that to ensure that legal 
advice can be useful to clients. It has been reported that some 
organizations have raised concerns about your practices in this 
area, particularly where Congress has never legislated with 
regard to the Bureau or its prior regulators, like with respect 
to non-banks. Director Chopra, what is your statutory authority 
to demand such information from these entities?
    Mr. Chopra. I am not actually aware that there is a new 
issue related to this. My understanding is that years ago, by 
my predecessors, there was some publication about privileged 
logs. For example, at a law enforcement investigation, when 
producing documents, they might include a log with it. I am 
happy to look into that more--
    Mr. Rose. Please do. If you will check and see, it is very 
much a concern to me as a recovering lawyer, and I would like 
to know what the current stance is. And if the Bureau believes 
that you have authority there, we would like to know exactly 
what the basis for that is.
    I wanted to follow up on a statement that you made earlier 
to Mr. Lucas about the CFPB being subject to adequate oversight 
because the Financial Stability Oversight Council (FSOC) can 
overturn CFPB rulemakings. Director Chopra, how many CFPB 
rulemakings has the FSOC vacated?
    Mr. Chopra. To my understanding, none, because I don't 
think any of the CFPB's rules have met the standard for 
threatening the safety and soundness of the financial system. 
Part of what we are required to do under the statute is consult 
with the other agencies before promulgating any sort of rule to 
understand any sort of impacts on safety and soundness. So, 
that is an important check, but it is one clearly where it has 
affected the way the CFPB has analyzed information about 
impacts on insurance.
    Mr. Rose. In any event, though, doesn't it take a two-
thirds vote of the FSOC to overturn a CFPB rulemaking?
    Mr. Chopra. Yes, I believe that is what the statute says.
    Mr. Rose. And you are a member of FSOC, is that right?
    Mr. Chopra. That is right.
    Mr. Rose. Okay. Director Chopra, would you be surprised to 
hear that before today, the Democratic Majority has only held 
one hearing with government officials as witnesses in the last 
146 days?
    Mr. Chopra. I don't actually track that. I know since I 
have taken office, in 14 months, I have appeared 5 times. That 
is all I can say.
    Mr. Rose. And I wonder, do you expect that to change here 
in just a few short weeks when there is a new Republican 
Majority?
    Mr. Chopra. I don't want to predict what hearings are going 
to be held, but we have always cooperated and worked 
productively with Congress.
    Mr. Rose. Would it be safe to say that you are excited to 
spend more time visiting with us here--
    Mr. Chopra. If you ever want to meet with me, I am happy to 
do it, sir, and, of course, we will continue meeting with you.
    Mr. Rose. One of our former colleagues, and your 
predecessors, Mick Mulvaney--I frequently used his testimony 
before this committee to highlight ways in which the Bureau 
could be improved, typically calling attention to the CFPB's 
funding mechanism and the fact that the Director is not 
required by statute to testify before this committee, but is 
merely required to appear before the committee. Director 
Chopra, could you please provide some suggestions for improving 
the CFPB, to bring it more in line with other Federal agencies?
    Mr. Chopra. Yes. The number-one issue really, and this has 
been supported by my predecessor, Director Kraninger, as well, 
is we do not have an equivalent whistleblower protection kind 
of system. And in terms of rewards and protections, I think 
that is a place where there has been bipartisan agreement, and 
that would be a good improvement.
    Mr. Rose. Thank you. I see my time has expired, and I yield 
back.
    Chairwoman Waters. Thank you. The gentlewoman from 
Michigan, Ms. Tlaib, is now recognized for 5 minutes.
    Ms. Tlaib. Thank you so much, Chairwoman Waters. I want you 
to know that this has been an incredible experience being on 
this committee with you as the chairwoman. I am actually eager 
to see your portrait in this room. I understand that will be 
much later. But, again, it has been an incredible experience to 
have your mentorship and your leadership as a new member on 
this committee, as well as choosing to do the hearing on one of 
my favorite agencies, which is really the people's advocate 
agency.
    These are folks, residents who have to take on the big 
banks, the mortgage companies, the credit card companies, the 
credit reporting agencies. These are big, mega-billion-dollar 
corporations. These people can't afford a lawyer, and the CFPB 
is their advocate. They might not be in the courtroom, but they 
are there to ask the right questions and demand accountability 
for unjust actions by a lot of these corporate entities.
    Dr. Chopra, something that you have always shared 
personally about why the protection of folks experiencing 
medical debt is so important to you, and I just want to 
acknowledge and appreciate so much that you have made it a 
priority to address the medical debt crisis in our country, 
have brought it up a number of times. But what I also 
appreciate is that your team decided to issue a report 
highlighting the complicated and burdensome nature of the 
medical billing system in our country.
    On August 2nd of this year, the Wall Street Journal had 
reported that Equifax provided incorrect credit scores for 
potentially millions of customers applying for credit, 
including home loans, credit cards, and auto loans. And then, 
even hearing that complication with some of the credit 
reporting agencies, they decided, I think, after the report 
that they would take out some of the medical debt from people, 
and I appreciate that. I think it impacted like 70 percent of 
folks, which is a huge, tremendous thing. But I also read, and 
you can correct me, is it 40 percent of Americans filed 
bankruptcy because of medical debt?
    Mr. Chopra. One of the major contributors to bankruptcy 
filing is an illness and resulting financial trauma from that.
    Mr. Tlaib. And addressing that, we need more to be done 
regarding this crisis. I know so many folks have concentrated 
on certain other debt, but medical debt, for me, is through no 
fault of our families and residents experiencing it, but when 
you hear things like Equifax doing that, I think 2 days later, 
there was a class action lawsuit that was filed against them 
led by attorneys representing Nydia from Florida and an alleged 
Equifax error which landed Ms. Jenkins with a substantially 
pricier car loan and so forth.
    According to the lawsuit, and I know you read all of these 
things, but Ms. Jenkins was pre-approved for a car loan in 
January and was denied in April. And then, because in her 
report, Equifax made a big mistake_I think it was off by 130 
points_and because of that, she was denied and then allegedly 
forced to buy a car from a different dealership, and do you 
know she now pays about, I think, $2,000 or more per year than 
she would have if she qualified. In your view, were Equifax's 
actions in violation of the Fair Credit Reporting Act?
    Mr. Chopra. I have to be careful on this one--
    Ms. Tlaib. I know.
    Mr. Chopra. --because they are subject to our entity, but 
let me just be clear on it.
    Ms. Tlaib. But I think the American public needs to know. 
This is huge.
    Mr. Chopra. The Equifax data breach was really an egregious 
violation of law. We are concentrating on actors that cause 
widespread harm. We are not focused on little players, and the 
extent to which the market mechanism doesn't work, again, 
consumers don't choose Equifax, Experian, or TransUnion--
    Ms. Tlaib. I know.
    Mr. Chopra. It is chosen for them, and I think that really 
is a core part of the issue.
    Ms. Tlaib. Do you think Equifax had the appropriate 
procedures and controls in place to ensure accuracy? They are 
controlling whether or not somebody becomes a homeowner, can 
get a car to go to work, and so much more. Even families that 
tell me they have to get loans to send their kids to college, 
and all of it has been impacted if they are not accurate, It is 
a monopoly, right? These are three major agencies that control 
whether or not my residents not only survive, but thrive.
    Mr. Chopra. There are a handful of data firms, and I would 
say it is not just the three credit reporting companies, but 
also increasingly other tech data firms have enormous power 
over all of us. And that is why we need laws to be enforced to 
make sure that consumer rights are protected.
    Ms. Tlaib. I think in the next session, I do want to work 
on some sort of way to figure out, especially with the credit 
reporting agencies, and I, of course, will continue to work 
with our chairwoman on this, but it is being used for so many 
things, such as auto insurance rates. Whether or not somebody 
has a high credit score has nothing to do with whether or not 
they are a safe driver, but it actually is now disparate 
impact, and is impacting the majority of Black drivers across 
our nation. With that, I yield back. Thank you, Madam 
Chairwoman.
    Chairwoman Waters. Thank you. The gentleman from South 
Carolina, Mr. Timmons, is now recognized for 5 minutes.
    Mr. Timmons. Thank you, Madam Chairwoman. Director Chopra, 
welcome. Thank you for being here. In April, I asked you a 
number of questions about the CFPB Fellows Program. I still 
have a lot of concerns about the appropriateness of it. The 
chairwoman was very concerned with the last Administration 
having 10 political appointees. While you only have 8, you have 
21 fellows, most of them making over $214,000, and all of them 
making more than you. I do want to say thank you, though, 
because we asked questions, we sent a letter, and 2 weeks later 
you responded, on May 27th, that you were working on it, and 
then on October 14th, you sent really a large amount of 
information regarding all of the ethics requirements that the 
fellows were subjected to, so I really do appreciate it. I have 
some follow-up questions, but before I get there, you all took 
the website down. Do you know why you took the website down for 
the Fellows Program?
    Mr. Chopra. The CFPB website?
    Mr. Timmons. Yes.
    Mr. Chopra. Okay. The section on the Fellows Program?
    Mr. Timmons. Yes, sir. It is gone.
    Mr. Chopra. I think it was a job posting.
    Mr. Timmons. Okay.
    Mr. Chopra. Maybe that is why, but if there was a different 
section, I will take a look.
    Mr. Timmons. Okay. That is very interesting.
    Mr. Chopra. But just to be clear, I think it was a job 
posting that is on a job.
    Mr. Timmons. No, it described everything, and we can follow 
up with that too. The House of Representatives and the Senate 
have financial disclosure requirements for Members of Congress 
and their spouses. And any staffer making over $135,000 also 
has this financial disclosure requirement. The reason that we 
have those, theoretically, is that we have inside information 
that could impact publicly-traded companies' values, and we 
could theoretically profit off of that. People allege that 
happens with certain individuals. I don't own any publicly-
traded company, so I don't have this concern for myself, but 
there is talk of banning Members from even owning publicly-
traded companies at all, and that would not only apply to 
Members, but to their spouses, and to staff making more than 
$135,000 and their spouses. And I have been here for 4 years, I 
don't have any inside information that I could have traded on 
if I wanted to, so that is not really true for your 21 fellows. 
You all issue guidance. They have advance notice of that 
guidance. That guidance generally impacts publicly-traded 
companies' values. Is that fair?
    Mr. Chopra. No, I think they must adhere to the same exact 
requirements. For example, on our prohibited holdings list, 
they are not allowed to hold any of those--
    Mr. Timmons. That does not apply to their spouses. It 
doesn't. What you sent me says it does not, so--
    Mr. Chopra. Okay. I will look into that, but I don't see 
it. As I understand it, there is no difference between those 
who are hired_there is no differences in employee types who are 
not subject to the same--
    Mr. Timmons. The information that you sent us says that 
your 21 fellows and their spouses have no financial disclosure 
requirements. So, we have no idea whether they are using inside 
knowledge of guidance you are about to issue that is going to 
impact publicly-traded companies, to trade on and to make a 
whole bunch of money. We have no idea. There is no way of 
knowing. I think that we probably should fix that. There is 
lots of talk of people benefiting off of information. I am not 
saying anybody is. I am optimistic they are not, but generally 
speaking, we want to give the public maximum confidence, 
especially when there are a lot of detractors from your 
organization that happens. But it is fair to say that we should 
have a high degree of confidence that your fellows or their 
spouses are not trading on advanced notice of guidance to make 
a whole bunch of money. That is fair. Do you agree with that?
    Mr. Chopra. I do agree, and, in fact, the Federal Reserve 
System has had a number of major issues related to trading of 
securities. The Fed's Inspector General (IG), which is also our 
IG, has provided us, and we have gone above and beyond to make 
sure that our folks are not engaged in any similar activity. I 
want to look into this issue about spousal coverage. My 
understanding is that all employees really are under the same 
rubric. There are some higher standards for those who make over 
a certain amount, but I don't think there are any differences 
among that. And I would, by the way, support more--
    Mr. Timmons. We will get some legislation written to make 
sure that anybody who has access to information that they could 
benefit from has financial disclosures.
    Mr. Chopra. And by the way, I would tell you, we would 
absolutely report any of our employees to appropriate civil and 
criminal authorities----
    Mr. Timmons. But you would never know.
    Mr. Chopra. --if they use non-public information.
    Mr. Timmons. You would never know, because their spouses 
don't have to tell you their financial decisions. They don't 
have to tell you their trades. They don't have to tell you 
anything because that is not the law. The law, and again, in 
Congress, if you make over $135,000 as staff, or Members or 
spouses, you have to disclose everything--
    Mr. Chopra. My understanding is it applies to all of our 
employees. There is no--
    Mr. Timmons. It does not apply to your fellow's spouses. 
That is what you--
    Mr. Chopra. Does it apply to the career employee's spouses? 
I think that is what we will work on. We will work on--
    Mr. Timmons. I am just looking at the fellows. We will work 
on it. I really appreciate it. Thank you, sir.
    Mr. Chopra. Thank you, sir.
    Chairwoman Waters. Thank you. The gentlewoman from 
Pennsylvania, Ms. Dean, is now recognized for 5 minutes.
    Ms. Dean. Thank you, Madam Chairwoman, and I associate 
myself with the words of our colleague, Ms. Tlaib. It has been 
a privilege for me to serve on this committee with you, with 
your leadership, not just this Congress, but the 116th as well, 
so thank you for all your leadership. And thank you, Director 
Chopra, for testifying today, and thank you for the work of the 
CFPB.
    I thought I would start with the state of household 
finances. We know that high deposit amounts due to pandemic 
relief programs have begun to decrease, especially for lower-
income Americans. The New York Fed reported that the 15 percent 
year-over-year increase in credit card balances for the third 
quarter of this year was the largest in 20 years. They also 
noticed an increased delinquency rate across all debt types. 
Director Chopra, how concerned are you about the state of 
finances for average Americans given current economic 
conditions?
    Mr. Chopra. I appreciate the question. One of the things 
that is so key here is we started seeing a return to normalcy 
for most American households. They were spending again. They 
were borrowing again. There are certain places where they faced 
increased costs because of inflation or, say, vehicle prices. 
So, auto loans and credit cards have gone up. Delinquencies 
have returned, and in some specific segments, we see that 
delinquencies are actually above the pre-pandemic levels. It is 
a place that we are really looking at the data, working with 
the Fed and the Treasury to understand what is happening. You 
are right that at the lowest income levels, we are starting to 
see a bit more pressure on those households.
    Overall, though, I think the volume of deposits in the 
system has not gone down as much as we would have anticipated 
for those households because of the strong labor market, so I 
really feel it is not the CFPB's job to make any projections. 
My job as Director is to be paranoid and ready so that we can 
be decisive if things quickly deteriorate. There is a lot of 
uncertainty in the global economy, and we spend a lot of energy 
being prepared for that.
    Ms. Dean. In what segments are you seeing increased 
delinquencies?
    Mr. Chopra. There is a place where we have seen at the 
lowest credit tier. In auto, we see that as elevated relative 
to pre-pandemic. Obviously, the pandemic had very different 
types of contours. We have also started to look at where 
student loan borrowers who are not currently in repayment, how 
are they currently faring on their credit cards and auto. So, 
we do see that those with student loan debt are actually having 
some issues.
    Obviously, we have to look at all of these pieces together 
to see how household finance is changing, and, of course, we 
want to make sure that when it comes to housing and mortgages, 
that is the place with the most exposure to the economy. And we 
see that refinancing mortgage origination has gone down quite a 
bit, and that is having lots of effects on homeowners. 
Increased interest rates are leading to billions of dollars in 
more costs for those borrowing on credit cards and other debts, 
so we are seeing some major changes in tracking it closely.
    Ms. Dean. That connects to my next thought or my next 
concern, and maybe my own paranoia. In hearings in this 
committee earlier this year, one issue that came up is 
homebuyers' renewed interest in adjustable-rate mortgages 
(ARMs), given the rising interest rates, something that I think 
gives all of us some pause, when you consider the role that 
ARMs played in the 2008 global financial crisis. While the ARM 
share was only about 3 percent in January, it increased to 10 
percent in the spring as the Fed started raising rates. You 
noted this trend in your testimony. Director Chopra, how 
concerned do we need to be about the resurge of ARMs? Is there 
more we need to do to ensure borrowers are protected?
    Mr. Chopra. As of right now, I would not be too concerned. 
The reason why is that we have taken a look at this. Most 
adjustable-rate mortgages being originated are still following 
the ability-to-repay standard and the Qualified Mortgage Rule. 
I do think there are risks there, but I don't think we should 
equate it to what we saw in the lead-up to the financial 
crisis. That being said, I really worry that people are not 
shocked by the payments that they have to make. Fortunately, 
the reforms that Congress made to the mortgage market have made 
things safer, including for adjustable-rate mortgages. We have 
published information for consumers so that they know what they 
are getting into with an ARM. We have also been collecting 
comments on how to make sure people can refinance in the 
future.
    Ms. Dean. I see my time has expired. Thank you very much, 
Director.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. The gentleman from 
Wisconsin, Mr. Steil, is now recognized for 5 minutes.
    Mr. Steil. Thank you very much, Madam Chairwoman. And thank 
you for being here, Director Chopra. I appreciate it. As I 
listened to you, you are a man who chooses your words 
carefully, and who thinks through what you are saying. As we 
know, in the markets, words have a big impact, and, in 
particular, CFPB, we are often, we are enforcing rules against 
wrongdoing within your jurisdiction. I think it is really 
important to keep in mind how impactful the words are that we 
use in this space. And I am sometimes concerned about ascribing 
motives and using inflammatory phrases that aren't standard 
terms of art, that can have big impacts on firms, on people, 
the workers, or customers. And so, I look back at the CFPB 
ombudsman conducting an independent review of Bureau press 
releases, and they found that some may include misleading 
language. Can you describe your policies and practices that you 
put in place since the ombudsman review to ensure your press 
releases are accurate, and then, can you confirm if you are 
following those policies?
    Mr. Chopra. Yes. The ombudsman's review, I think was 
several years ago, if I am not mistaken. We make a lot of 
effort to make sure that we publish the complaint and any other 
information in an enforcement action, but absolutely, we will 
use plain language to explain what has happened. And in many 
cases, the conduct is egregious, and we need to sometimes say 
that so that people understand what exactly happened. It is 
not--
    Mr. Steil. But is it important to use terms of art in the 
industry, or are you trying to use flowery and descriptive 
language?
    Mr. Chopra. I like to speak in plain language, because--
    Mr. Steil. Okay. That is good. You like to speak in plain 
language, in particular--
    Mr. Chopra. In legal documents, we try and be very--
    Mr. Steil. Let's jump off the documents. Let's go to maybe 
some of your speeches. Are those reviewed by attorneys before 
you make them?
    Mr. Chopra. In some cases.
    Mr. Steil. In some cases, yes, but some cases, no?
    Mr. Chopra. I don't know. I can't speak to that.
    Mr. Steil. You don't know if your speeches are reviewed by 
legal people?
    Mr. Chopra. I don't know if every single set of remarks I 
have done has been reviewed by an attorney. I just don't. I 
assume--
    Mr. Steil. That would likely mean that it had, that there 
is not a policy that you have where you prepare remarks--
    Mr. Chopra. We are talking about the law. If I am just 
giving some sort of welcome or inviting people in that doesn't 
really involve policy, that may not be one that we review by--
    Mr. Steil. Yes, sir. Okay. In a previous speech, you 
referred to medical debt as a, ``doom loop.'' Is that a helpful 
term? Could you have been more descriptive--
    Mr. Chopra. Yes. I think actually--
    Mr. Steil. --or do you think, ``doom loop,'' is the 
appropriate term?
    Mr. Chopra. I think medical professionals actually use that 
term--
    Mr. Steil. Because it--
    Mr. Chopra. --where patients feel like they are in an 
endless infinite loop with the insurance company and others, 
and that is how it feels, yes.
    Mr. Steil. Okay. You refer to the credit bureaus as a 
cartel. Is that--
    Mr. Chopra. No, I did not. What I said there was that the 
way in which they made a decision was not what you would see in 
other sectors. They came together and made a uniform business 
decision. That actually concerned a number of people because it 
is not the sign of a competitive market. If banks got together 
and did that, that would raise some serious questions, so I do 
worry that those three players--
    Mr. Steil. So, you think it was an accurate description to 
call those three players a cartel?
    Mr. Chopra. I didn't call them that. I said they were 
acting in that manner.
    Mr. Steil. They were acting like a cartel but not a cartel?
    Mr. Chopra. I will read the statement again.
    Mr. Steil. Maybe we are splicing words. Maybe an attorney's 
advice might have been helpful here.
    Mr. Chopra. Let me just say this. I take your feedback 
about thinking about language, and I guess I would say that it 
is important to balance both precision and understandability. 
People need to understand what their government is doing. When 
we just speak in jargon and just speak in citations or code, 
they don't understand, and, in fact, it is businesses that also 
want it. It is consumers who want it. It is our job to be able 
to convey what we are doing and, in some cases, to be able to 
say when conduct is unlawful and egregious, and that is what we 
do sometimes.
    Mr. Steil. As I say, as we look back at that previous 
ombudsman review, I think it might be good practice that people 
review some of the comments because of flippant remarks or 
descriptive language that is not actually held in statute. The 
reason people speak in jargon is, in particular in the 
financial space, I think it is important for people to 
understand where you are coming down in any rule or regulation 
because the power invested in you by previous Congresses, not 
this Congress, is incredibly significant.
    This Congress doesn't hold authority over the 
appropriations process, which I think it should. It doesn't 
matter whether or not you think it should because you don't 
need to respond to the appropriations process. You don't even 
need to comment on it. Previous Congresses have bound this 
Congress and the operations of the CFPB. So, I would flag to 
you that the word choice you are using with the power that you 
have is quite significant, not only in the markets, but to 
consumers, to individuals who are dependent upon you doing your 
job well. I thank you for being here. Madam Chairwoman, I yield 
back.
    Mr. Chopra. And I take the feedback seriously.
    Chairwoman Waters. Thank you so very much. The committee 
will recess to allow Members to vote on the House Floor. We 
will resume immediately following this vote series.
    The committee stands in recess. Thank you very much.
    [recess]
    Chairwoman Waters. The committee will come to order.
    The gentlewoman from Texas, Ms. Garcia, who is also the 
Vice Chair of our Subcommittee on Diversity and Inclusion, is 
now recognized for 5 minutes.
    Ms. Garcia of Texas. Thank you, Madam Chairwoman, and I 
want to thank you for your steadfast leadership of this 
committee as we come to the closing days of the 117th Congress. 
Director Chopra, thank you again for being here today, and 
thank you for leading the Bureau with such drive, enthusiasm, 
conviction, and, most importantly, openness. You have been a 
breath of fresh air, knowing that you are always open to 
listening to us, taking our questions and being as transparent 
as you can in all of your answers, so thank you for that.
    Last time we spoke, I asked you about the Bureau's 
authority on the issues regarding language access, which is an 
issue that, as you know, I have been following in Congress, and 
you and I have talked about before. You agreed that language 
access for consumers is important, and that, in particular, for 
people in the district that I represent, which is 77-percent 
Latino, you assured me that you would consider the authority of 
the Bureau and what it was that you could do. I wondered if you 
could give me an update?
    I noted on page 58 of your semi-annual report that you talk 
about fair lending, outreach, and education, but nothing 
specifically about language access. And you mentioned that you 
have, through your publications that you issue, whether they 
are policy statements, requests for information, press 
releases, blog posts, podcasts, videos, brochures, website 
updates, on and on, that you are doing a lot more in terms of 
making sure that different stakeholders get this. Can you tell 
me how you have been able to implement any language access in 
any of these outreach materials that you are doing and in other 
areas?
    Mr. Chopra. Yes. There are a few things I would say. One 
is, what is the key way in which people are communicating with 
consumers from financial providers? Whether it is remittances 
or mortgages, there is all sorts of work to translate 
disclosures and other key information. We have started the 
process of publishing officially-translated disclosures that 
providers can use, and sometimes, they are marketing in a 
language other than English. It only makes sense that they can 
also provide the right information in that language as well. 
With respect to our own materials and our own website, we have 
started a process of usability testing, with Korean speakers, 
Tagalog speakers, and many others, so that we can provide all 
the digital tools as well in languages other than English.
    As you know, there are so many ways in which people feel 
intimidated or scared when it comes to financial challenges, 
and often language barriers amplify those anxieties, so we 
really see this as a long process with a long way to go. A big 
development was the change to the Uniform Residential Loan 
Application, which now is going to collect language preference 
and also include other information to help those who are not 
primarily English-speaking to navigate the mortgage process, 
including their mortgage servicer as well.
    Ms. Garcia of Texas. You anticipated my next question, 
because one important step towards building wealth is 
homeownership, so I would like to ask you about the Bureau's 
recent actions to hold two mortgage lenders accountable for 
redlining and housing discrimination. Latinos are on track to 
be the largest group of homebuyers in the nation, but they, 
along with other minority groups, face redlining and other 
systemic barriers to homeownership. I was especially pleased 
that the Bureau is standing up for consumers. I think you have 
issued some civil penalties to some of these folks, directing 
millions of dollars to supporting homeownership in the 
communities and neighborhoods where those lenders deliberately 
discriminate against Black and Latino families. My question is, 
how will you make sure that those millions that you settled on 
the civil penalties will get to people? How will you make sure 
that it is distributed and that people that you intended will 
actually get benefit of that settlement?
    Mr. Chopra. Obviously, our orders are not suggestions, and 
we did a few recent orders with the Justice Department, which 
outline how, whether it is restitution loan subsidies and 
others, need to be administered. They often submit a compliance 
plan, and we look at that carefully. I do want to acknowledge, 
though, that I think the orders in redlining, in some ways 
needs to be a little bit rethought, and we are going through a 
process to make sure that the victims of the redlining are 
actually getting benefits. I worry that some of the ways in 
which the Justice Department, and the CFPB, and others have 
remedied these in the past may not be reaching those who are 
truly the victims of redlining. And that is part of what we are 
talking about and thinking through with lots of different 
stakeholders.
    Ms. Garcia of Texas. Thank you, because that is my concern, 
that the people who are harmed get the benefit of the 
penalties. Thank you.
    Chairwoman Waters. Thank you very much. The gentleman from 
Illinois, Mr. Garcia, is now recognized for 5 minutes.
    Mr. Garcia of Illinois. Thank you, Chairwoman Waters, and 
Ranking Member McHenry, for holding this important hearing, 
and, of course, I want to thank Director Chopra for testifying 
in front of this committee again and for your strong leadership 
at the CFPB.
    Last week, a Member-elect, Maxwell Frost, tweeted that he 
had been denied an apartment because of bad credit, and his 
application fee was not refunded. Member-Elect Frost said, 
``This ain't meant for people who don't already have money.'' 
His experience is not unique. Tenant background checks make it 
harder for thousands of families to find housing. Finding 
housing is especially tough for people who have been evicted in 
the past and for people who have had criminal convictions. Just 
last month, the CFPB put out two reports about tenant 
background checks. The report found that in addition to 
contributing to higher costs and barriers to quality housing, 
tenant background checks are riddled with errors as well. 
Director Chopra, can you expand on some of your main findings 
from these two reports?
    Mr. Chopra. Thank you so much. Tenant screening reports are 
covered by the Fair Credit Reporting Act, and they must have 
reasonable procedures to assure maximum possible accuracy, and 
one of the problems we are seeing is that people are being 
falsely matched with someone who is not them, and it is 
disqualifying them from obtaining rental housing in the 
location or neighborhood of their choice. I think we have to be 
really careful when it comes to tenant screening and employment 
screening. If they are not accurate, we will be in a system 
where some people are systematically unable to get a job or an 
apartment. As we are working on data privacy, credit reporting, 
I hope we can think about tenant screening and employment 
background screening to ensure that they are fair and accurate.
    Mr. Garcia of Illinois. Absolutely, and is the CFPB working 
on any rulemaking to address the harm caused by these 
background checks?
    Mr. Chopra. Both the CFPB and the FTC have been undertaking 
a number of pieces of work. Over the last several years, there 
have been two significant enforcement actions: one against 
AppFolio; and one against RealPage. I expect there will be more 
of this going forward where there is law-breaking, but also, we 
are considering whether to launch additional rulemaking on the 
Fair Credit Reporting Act. I think a lot of focus is on the 
three credit reporting conglomerates, and it is true that they 
impact everyone, but as more data brokers and background 
screeners and Big Tech companies are forming these dossiers 
about us, we need to make sure that people's rights under the 
law are being respected.
    Mr. Garcia of Illinois. And briefly, is there anything 
Congress can do to help?
    Mr. Chopra. As I outlined in my testimony, I think there 
are a lot of important issues related to data protection and 
privacy. Obviously, the Equifax data breach had a huge impact 
on people's confidence in certain circumstances to say, where 
is my data even being held? How is it being secured? I think we 
need to work on whether there are ways to meaningfully limit 
the types of information that financial firms are collecting 
about our most sensitive information, and make sure that there 
is not an underworld of our financial data where essentially 
our sensitive information is bought and sold. I think we have 
to be more careful, and I think on both sides of the aisle, 
there is a real interest in this.
    Mr. Garcia of Illinois. Thank you. Redlining and other 
discriminatory lending practices contributed to making Chicago, 
my hometown, one of the most-segregated cities in the country. 
The Community Reinvestment Act (CRA) was enacted more than 40 
years ago to fight redlining. Despite the progress we have made 
because of the CRA, discriminatory practices still continue, 
and we have to keep fighting to get that legacy of segregation 
and discrimination out of lending practices. That is why I was 
happy to see the CFPB's recent actions to hold two mortgage 
lenders accountable for redlining and housing discrimination. 
Both the Trident Mortgage Company and Trustmark National Bank 
are required to pay millions in civil penalties. Hopefully, 
this will be a lesson to others who want to engage in these 
practices. Thank you, Director Chopra. My time is just about 
up. I look forward to continuing to work with you to protect 
consumers.
    Mr. Chopra. Thank you, and I know the Attorney General's 
redlining initiative_we are actively participating, and we are 
continuing to make progress not only in traditional redlining, 
but also the digital redlining of the future.
    Mr. Garcia of Illinois. Thank you, sir. Madam Chairwoman, I 
yield back.
    Chairwoman Waters. Thank you very much. At this time, I 
would like to thank our distinguished witness for his testimony 
today.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place his responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.
    This hearing is adjourned. Thank you so very much.
    [Whereupon, at 3:09 p.m., the hearing was adjourned.]

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                           December 14, 2022
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