Committee: Senate Committee on Banking, Housing, and Urban Affairs
Description: THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS will meet in EXECUTIVE SESSION to VOTE on the following nominations: The Honorable Caroline A. Crenshaw, of the District of Columbia, to be a Member of the Securities and Exchange Commission; and Mr. Gordon I. Ito, of Hawaii, to be a Member of the Financial Stability Oversight Council. Following the EXECUTIVE SESSION, the Committee will move to OPEN SESSION, HYBRID FORMAT to conduct a hearing entitled, “Consumer Protection: Protecting Workers’ Money and Fighting for the Dignity of Work.”\u00a0The witness will be: The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau.
Senator Sherrod Brown (D-OH)
My gut tells me we will get there, maybe not at the dollar amount requested by President Biden, which was about $98 billion, but the
The Senate Committee on Banking, Housing, and Urban Affairs will come to order. We'll be marking up later today. Attendance is always a problem when there is no bipartisan cooperation on these nominees. So we have delayed it until doing it off the floor today during the afternoon votes. I want to welcome our two new members. Senator Schiff from California is joining this committee. Adam, welcome, and your reputation precedes you of great public service. Senator Kim does not seem to be sitting there, but his does too, and I welcome both of them to the committee.
When I joined this committee in 2007, my first month in the Senate, it had a reputation of a bit of a sleepy committee. Much of Washington seemed to have reached a consensus that Wall Street ought to be left largely to its own devices, that big banks knew best, that this committee was really referred to as the Wall Street Committee, suggesting almost ownership. We know how that turned out. Less than two years later, the economy was in freefall. Banks were collapsing at the end of the Bush administration. Layoff notices, foreclosure warnings were landing in inboxes and mailboxes, ruining lives around the country.
In the wake of the crisis, we passed Dodd-Frank, the Wall Street Reform and Consumer Protection Act. It was the first time in 75 years that we reined in Wall Street and its reckless obsession with profits at the expense of everyone and everything else. That law worked. Nearly 15 years later, our banking system is safer, banks hold more capital, and they're better prepared to handle a crisis.
Of course, we know Wall Street and its lobbyists don't give up easy. After we passed Dodd-Frank, one prominent industry lobbyist said, "Now it's halftime," and they never give up. Wall Street was true to its word. They immediately went to work trying to roll back and dilute as many of the protections we put in place as possible.
When I took over as chair of this committee four years ago, Washington still called it the Senate Banking Committee or the Wall Street Committee. Until then, it's still pretty much a committee dedicated to protecting Wall Street and the financial industry and fulfilling their lobbyists' wish list, and particularly tearing down safeguards to protect Americans' money and to protect taxpayers from ever having to bail out Wall Street again. We changed that. We put the focus on the committee back where it should be: the people who make this country work. The stock market doesn't drive the economy, workers do. And on the Senate Banking, Housing, and Urban Affairs Committee, we made it our mission to serve them.
That's why we improved public transit around the country for the millions of workers who depend on the bus or the train to go to work. Cleveland is finally replacing rail cars that date back to the Reagan administration. Akron Metro got a new maintenance facility. Ohioans in Bryan, Ohio, will have a new Amtrak station. It's why we came together bipartisanly to crack down on traffickers of deadly fentanyl, which devastates working families and their communities in Ohio and across the country. Our law goes after the entire fentanyl supply chain from the chemical suppliers in China to the cartels that traffic the drug from Mexico. It's why we confirmed dedicated, talented public servants who can reflect the vibrant diversity of our country and who serve the public, the public, not the financial industry. It's why we stood up to corporate special interests, whether it's big banks or payday lenders or shady debt collectors. We had the first-ever legislative win against the payday lending lobby, protecting people from exorbitant interest rates that trap Americans far too often in a cycle of debt. We successfully pushed to remove medical debt from people's credit reports, saving them money and protecting them from higher interest rates. Again and again, we stopped corporate interests that tried to prevent the CFPB, Director Chopra's bureau, from protecting the public. We began calling the CEOs of the country's largest Wall Street banks to testify before this committee and before the American people. Never been done annually. We brought the leaders of the biggest financial institutions. They hold, they hold
Banks hold tremendous power over our economy and over people's lives. Too often that power isn't used wisely.
As effective as Wall Street reform was, surely it was incomplete. We still have an economy where hard work doesn't pay off like it should.
For decades, Wall Street has rewarded the companies that squeeze their workers the hardest. When companies raise prices, when they lay people off, when they move jobs overseas, when they bust unions, when they subcontract work to lower, to lower-paying companies with fewer benefits, Wall Street analysts, pretty much in chorus, yell, "Buy, buy, buy."
And look at the result for almost half a century. Productivity has gone up, the stock market's gone up, executive compensation has exploded, profits are up, but workers' wages have been largely flat.
It has not always been like that. When I was growing up, CEO to worker pay was about 20 to 1. That was still good money for management, as it should have been.
That ratio -- not 20 to 1, not 100 to 1, not 200 to 1 -- that ratio today, 344 to 1, CEOs to pay, average pay.
When the economy fundamentally doesn't reward work, while Wall Street continues to rake in profits, not just instead of workers, but at the expense of workers, work is far -- our work is far from over.
Some of the most crucial work happening today to hold corporate special interests accountable and level the playing field for the rest of America is at the Consumer Financial Protection Bureau.
The Consumer Bureau has been among the most successful parts of Wall Street reform. Since 2011, CFPB has returned $21 billion to 205 million Americans. These are real checks that land in people's mailboxes, dollars that might mean a little extra breathing room to buy groceries or fill up a tank of gas.
The CFPB has returned more than $363 million to service men and women and to veterans. That's money that companies took straight from the pockets of people who serve us.
And over the next four years, the CFPB will be more crucial than ever.
Last time President Trump was in office, his cabinet looked like a Goldman Sachs retreat. He tried to put the CFPB to work for corporations instead of the public.
And from what we've seen from his nominees, corporate special interests won't just have a seat at the table this time around. They'll be given free rein and encouraged to rip off workers and consumers. He's opening up our government to the highest corporate bidders embodied in billionaire after billionaire after billionaire he's nominated.
It will be up to you in this room to preserve the CFPB as one place where American -- where Americans can go, where Americans can go, that fight, that fight for them.
Most people don't have fancy lawyers. They don't have high-priced lobbyists. The CFPB is their advocate and their voice.
The public servants there fight for the people who make this country work, and so must all of us.
This committee must ready itself for the fights and challenges ahead: rising housing costs -- rising housing costs, private equity infiltrating more and more of our economy, insurance costs going up, risks building up in the private credit market, new technology that's increasingly being used in our financial system.
All these risks have one thing in common. They have the potential to take money, even more money, away from working Americans and funnel it to the same corporate elite that creates more and more and more and more billionaires in this country.
Those guys have enough advocates in this town. Our charge, whether in the Senate or out of it, is to look out for workers and put them at the center of everything.
I'm proud of the work we've done together on this committee. I want to thank Senator Scott and Senator Crapo, who was my partner, and Senator Toomey, my partner in the past.
And all the members of this committee on both sides. I want to thank especially my talented committee staff: Omer and Beth and Phil and Megan, Alicia, and Laura have been with me the entire 10 years I've been chair or ranking member. Sarah, Jeremy, and Katie in my personal office have also worked diligently for this committee over the last decade.
And Jeff and Ann and Sunny and John, Mohammed and Shannon and Emily and Ben and Matt and Erica and Jonathan, Shanna, Will, Serena, and Sean have made significant contributions during their time on this staff.
I want to thank the non-designated staff: Pat and Lena and Shelvin and Jason and Cheryl, led by Cameron Ricker, for making this committee run so smoothly.
I trust Senator Warren to carry on our mission of standing up for working Americans, standing up to corporate interests that hold far too much influence in this town. And we are about to hold a lot
Senator Tim Scott (R-SC)
more. That work continues. Senator Scott.
Senator Sherrod Brown (D-OH)
Thank
Senator Tim Scott (R-SC)
Thank you, Mr. Chairman. Thank you for your service on this committee since 2007 and the last several years as Chairman of the committee.
I will say that the cancellation of today's markup is really disappointing and, frankly, sours the tone. It is another example of the dysfunction and lack of transparency that is a last gasp of a lame-duck administration.
But now, we turn our attention to the Director of the CFPB, who also does not seem to accept the results of the November election.
As I mentioned earlier, after the November election, a historic win for Republicans and President Trump delivered a mandate for this committee and for this Congress.
I sent a letter to each and every federal agency under the committee's jurisdiction, calling on them to cease all rulemaking.
It is paramount that President Trump can begin his administration on January 20th with a fresh slate to implement the economic agenda that the American people resoundingly voted for, and this is not unreasonable.
Last month, the prudential regulators, the OCC, the FDIC, the NCUA, and the Federal Reserve agreed with me and committed to pausing rulemaking before the inauguration. Yet, as we have seen time and time again with Director Chopra, he has ignored these calls and pressed forward with a unilateral, partisan agenda.
Many of you have heard my Republican colleagues and me argue that the changes at the CFPB are absolutely necessary, that the agency is unaccountable to Congress, and Director Chopra seems intent on proving this to be true.
Despite voters' clear message on Election Day, Director Chopra has advanced his agenda at breakneck speed. He has issued a final rule expanding the CFPB's own jurisdiction, issued a proposal seeking to upend the fraud prevention industry, published multiple studies and reports to further his political agenda, and, just this week, published another rulemaking effort.
The Director has spent years at the CFPB pushing the Biden-Harris administration's partisan messaging on junk fees and seeking a boogeyman around every corner for the failed economic policies of the Biden administration.
Let me be clear: Protecting consumers and building an economy that serves all Americans are principles that guide my work in the Senate, but we can do both without weaponizing our federal regulators.
Speaking of regulators abusing their authority, the longstanding issue of debanking and Operation Choke Point have recently resurfaced. I have focused on this issue for years and the patent inequality it represents for our legal businesses.
I have consistently called out our banking agencies for weaponizing their power and private institutions for bending to the powerful here in Washington.
No legal business should ever be debanked. This message is something that Director Chopra has latched onto since the election, including direct references to debanking in his last two rulemakings.
But make no mistake: The Director is not our ally in this fight, and the career bureaucrats at the CFPB are not either.
The Director's recent actions are little more than an attempt to expand the CFPB's jurisdiction and grant the agency more authority to pick winners and losers in the financial services system. Unelected bureaucrats in Washington, D.C., should not be deciding which businesses survive or fail based on their political agendas. All legal businesses should have the opportunity to succeed in America, just like every single American.
Washington should be focused on promoting the two greatest tools that can arm all Americans: choice and opportunity.
These were the tools that allowed me, as a poor kid in South Carolina, to grow up and own my own business and now lead the Republican side of the Senate Banking Committee.
America must continue to be the bedrock of opportunity, and our regulators must work to ensure this every single day. Regulation should provide guardrails, not roadblocks.
I look forward to working with the next Director of the CFPB to increase accountability at the Bureau.
Director Chopra, I look forward to hearing that you will be resigning, effective January 20th.
It is unacceptable to have an agency with a budget of almost $1 billion outside of the appropriations process, and we must find a way to address this issue.
I will end with this: a message of hope. I am hopeful that the next Congress will allow this committee to return to regular order and pass legislation to increase opportunity for American families and small businesses across our country.
Senator Sherrod Brown (D-OH)
Thanks, senator Scott. There are there are no election deniers in my party. We accept election results even though President Trump got less than 50% of the vote, hardly a mandate. And as I leave office in 3 weeks, I just hope both parties stand up to the special interest that too often run this city. Honorable Rohit Chopra has served as director of CFPB since October 2021.
He worked at CFPB in its early days serving as assistant director and student loan arms budgeland shortly after the agency opens its doors its doors. He's also been an FTC commissioner. Director Chopra, welcome.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Thank you. Chairman Brown, ranking member Scott, and members of the committee, thank you for inviting me to this hearing regarding the CFPB semi annual semi annual report to congress. This is my 27th time testifying before congress as an executive branch official and my 10th time before the senate banking committee. And off camera, in my meetings with each of you on both sides of the aisle, I continue to find more and more areas of agreement on how we need to tackle concerns Americans are facing. Let me touch on a few of these.
1st is credit card debt. Americans owe roughly $1,200,000,000,000 in credit card debt. And in 2022 alone, paid a $130,000,000,000 in interest and fees. The CFPB's research has revealed that the credit card market is quite concentrated with a few big players dominating the market. These large behemoths have been able to push up interest rate margins considerably even when adjusting for broader market interest rate changes.
And this increase in margin and lack of competition means that Americans are paying an extra $25,000,000,000 a year compared to 10 years ago. Many borrowers are paying over 30%, squeezing their monthly budgets, and small credit unions and community banks offering lower rates find it tougher to compete against the big guys. Further consolidation amongst the biggest players, including one pending mega merger, threatens to jack up rates even further. The CFPB is taking action to crack down on credit card companies exploiting regulatory loopholes to make it easier to switch to a new card to ensure consumers can obtain and actually redeem their promised rewards and more. But many in congress are rightfully concerned that the markets not will not correct on its own, and there is growing bipartisan support for taking action.
And in particular, there are proposals to limit annual percentage rates on credit cards on both sides of the aisle, and the incoming administration has expressed support for an interest rate cap. It will be important for this committee to ensure that credit cards are a source of credit priced at competitive rates rather than what we see in today's market. 2nd is digital surveillance and data privacy at home, at work, and everywhere Americans go. We are exposed every day to stalkers, scammers, and spies due to unchecked digital surveillance across the economy. There is growing bipartisan consensus that we need to do something about all of this intrusive surveillance, and it's critical that this work moves forward.
The CFPB recently recently proposed a rule on data brokers that would curb access to sensitive financial data by foreign adversaries and others seeking to exploit Americans by spying on their personal information. 3rd, account closures and debanking. America's banking and payment system serves as essential infrastructure for our economy and society, and an account for a family with a bank, credit union, or digital wallet provider is a necessity. But, unfortunately, we have seen too many account closures on questionable grounds. Over the last few years, the CFPB has been working to make sure that banks and big tech firms are not inappropriately denying households with access to banking and payments.
We're especially concerned when funds are frozen or when accounts are closed for reasons not contemplated by federal law. We are currently engaged in litigation a bet against big Wall Street special interests to defend the agency's authority to investigate when companies unfairly debanked customers based on characteristics like religious affiliation. In addition, we finalized a rule to more closely examine digital payment apps to ensure they're following the law. The CFPB has also proposed a rule that would help to reduce account closures driven by overdraft churning. And we propose rules to update fair credit reporting act regulations to make sure that identity verification algorithms are not leading to improper account closures.
We're scrutinizing reputation based algorithms and artificial intelligence so they are not weaponized in ways that block people from banking. We will continue to to fend consumers' rights and to hold companies accountable, and it will be critical for congress to support that work. Thank you so much, and I look forward to your questions.
Senator Sherrod Brown (D-OH)
Thank you, director. I will begin the questioning with senator Smith of Minnesota.
Senator Tina Smith (D-MN)
Thank you, mister chair, and thank you ranking member Scott. Mister chair, I just wanna take a moment to thank you for your leadership on this committee. You, have never lost focus on the importance of this committee on issues that often haven't gotten a lot of attention. And particularly, I wanna mention, the importance of housing, as part of the mandate of this committee. You have brought that back.
I believe that focusing on housing, addressing housing supply issues, housing affordability is so important to the future of this country. And it also, I believe, is a is a nonpartisan issue. Certainly, it is in my home state of Minnesota. And I believe, incoming chair Scott, that as we move into 2025, there should be many opportunities for us to work together on issues of housing. I know that I'm really proud of the bipartisan work that I've been able to do with, senator Rounds and senator Lummis.
And I have high hopes that we can find ways of cooperating with one another as we, look at, continuing that what I consider to be the legacy of senator Brown. Director Chopra, I am, just really glad to have you here. And as you know, I have used my time on this committee really focused on how to help regular Americans afford their rent and afford to buy a home. And I, again, as I just said, don't see this as a partisan issue. It certainly isn't in Minnesota.
So I wanna thank you and the CFPB for your responsiveness to my concerns around predatory land contracts or contracts for deed. Colleagues, this is happening, all over the country. It's happening in my home state when unscrupulous home sellers pitch these complex contracts to people who just wanna realize the dream of homeownership. And too often these contracts are just frankly designed to fail. Director Chopra, you heard about this when you visited Minnesota this summer.
You heard about the consequences to people, families who think that they are on the path to owning their own home when in fact they are on a path to financial disaster, where one missed payment can mean forfeiting all the money that they put into, buying a home, as well as, the place losing the place that they thought was their home. And we know that these unscrupulous sellers have exploited people based on their religious beliefs. In Minnesota, they've marketed land contracts as an interest free alternative to a traditional mortgage. And that has, clearly exploited the many Somali Muslim immigrants in my home state who are limited from paying, interest under the tenants of their faith. So director Chopra, I'm hoping that you can talk to me and the rest of the committee about the actions that the CFPB has taken to stop these abusive practices, and what recourse you're seeing for homeowners, if they find themselves trapped in one of these predatory contracts?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, let me say that homeownership is supposed to be a part of the American dream, not something that is supposed to turn into a nightmare. And for many of these predatory land contracts and other types of bizarre arrangements, they are setting people up to fail. In other words, they are getting people to put down big sums of money only to put them in an arrangement where they can claw all of that for themselves, destroying that person's financial life, their family's future, and their neighborhood and community. We're doing our best to make sure that we can use the existing law to combat all of these predatory practices. But it's not just these land contracts.
We're seeing all sorts of set up to fail loans when it comes to housing, and people are sick and tired of the high cost of housing and being treated the way they're treated. And we really appreciate you for helping us see and learn more about this, and it will continue to be a focus.
Senator Tina Smith (D-MN)
Well, I appreciate that, and I hope that it will continue to be a focus at the CFPB as we move forward. This is an example of how regular people need somebody in their corner when they are going up against some really powerful, institutions that do not have their best interests at heart. So I appreciate that. I wanna just, I just have a couple of minutes, couple of seconds left. I wanna just highlight a little bit about what I think the CFPB has done for consumers in this country over the last several years.
And you're relatively short existence. You have recouped more than $21,000,000 to the benefit of over 1,000,000,000. 1,000,000,000. Sorry. I misspoke.
$21,000,000,000 to the benefit of over 205,000,000, consumer accounts. Just last week, you returned 1,800,000,000 to consumers that have been scammed by credit repair companies, and that's 50,000 Minnesotans. So these are folks that see an ad on television saying that they can clean up their credit score and then they end up following dialing that 800 number. And before you know it, they're actually worse off than they were, before they pursued that. So I wanna just thank the CFPB for your work.
That, for Minnesotans colleagues, that has been, each Minnesotan has got back, I understand, over $400 each on average for, thanks to the good work of the CFPB. So there's not a question in there. I'm out of time, but I wanted to just highlight that success, and thank you very much for your work.
Senator Sherrod Brown (D-OH)
Thanks, senator Smith. Senator Scott.
Senator Tim Scott (R-SC)
Thank you, sir. Doctor Chopra, do you have any plans to resign from the CFPB on January 20th?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, as you know, we serve and are confirmed for a 5 year term. The president can remove us at any time, any day, and we obviously completely respect that right.
Senator Tim Scott (R-SC)
In November, the American people voted for a new direction for our country and our economy. The election was a clear mandate rejecting the policies of the Biden administration calling for a new approach under President Trump.
And one of the reasons why I think that is true, is if you look at the your opening statement that there's $1.3 trillion of credit on credit cards around the country. 83 million households who've lost, on average, a little bit over $1,075 of spending power under the Biden economy.
It's $83 billion of spending power lost every month by an average American family leading to the largest credit card balance in the history of our nation.
That is why when I sent a letter on November 17th demanding that the CFPB cease all rulemaking activity, the prudential regulators agreed, but you have pressed forward with a final rule and two new proposals since receiving that letter.
Can you explain why you were ignoring both my request and the clear mandate of the American people?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, I don't think it makes sense for the CFPB to be a dead fish.
People between election day and inauguration day are still getting scammed. They're still being subjected to questionable account closures. They're still being the victims of so much wrongdoing.
Some of the things that we have proposed recently, including this week initiating a rulemaking process to help survivors of domestic violence and elder abuse, is an area where we received bipartisan letters from Congress even urging us to take action.
That process will play through, and I hope you can see that consumer protection is really not something that should be something we fight about, but something that we guard against together to make sure that people can have a fair marketplace.
Senator Tim Scott (R-SC)
Certainly believe that we should do everything in our power to protect the consumers. And I think there are a number of agencies, whether it's the OCC and others, who already have the mandate and authority to do so. I certainly look forward to having an opportunity to look at the overall structure of the CFPB and to see how we can make sure that the mission, the primary mission, not the expanding authority, will be fulfilled.
You recently issued a final rule to expand the CFPB's authority to new industry participants. You also repeatedly attempted to change policy through your seat on the FDIC board.
As much as you claim to be doing all of this in support of your mission to protect consumers, it seems to be failing.
I have spoken many times about the harmful effects of many of the CFPB's proposals, but recently we have confirmed that the CFPB has not even doing the basic jobs it was created to do as part of Dodd-Frank, which created CFPB.
When a bank transitions in assets above a certain threshold, the CFPB legally becomes responsible for direct supervision of compliance with consumer financial activities.
But a report issued just last week by the CFPB's own Inspector General reveals that the agency did not complete most of those transitions timely or effectively.
So the specific objectives under the current construct of law focus the attention of the CFPB, and within that jurisdiction, there seems to be a breakdown.
A very basic question arises from this report: how can the CFPB continue to claim that it needs more jurisdiction if it is failing to do its current job?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, that report was initiated by me. I was concerned about how those transitions occurred. Let me share with you that we've shifted our supervision away from many of the banks and toward the biggest non banks who touch almost every wallet in our country. The rule that we put in place does not expand the your our jurisdiction. We already have enforcement powers, but when it comes to some of these big tech companies and giants who have more power over our digital wallets, we wanna make sure that they're following the same laws that apply to small banks and level the playing field.
That is exactly what Congress wanted. And if you're suggesting that we should put more of our resources against smaller banks, I would just forcefully disagree with that.
Senator Tim Scott (R-SC)
Obviously, you didn't mishear what I said. Certainly, not making that kind of a statement or suggestion, but it is without question that the CFPB's authority continues to expand in your jurisdiction. And I believe that it has led to us having
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
We are not allowed to expand our authority. Only Congress is able to do that.
Senator Tim Scott (R-SC)
I wish that was true. We know that's true, but it does not appear that you can follow those rules.
Thank you for being here.
Senator Sherrod Brown (D-OH)
Director, every time, as you know, workers and consumers are forgotten in financial regulation. Hardworking Americans are the ones who pay the price every single time. We saw it during the great recession where so many Americans lost their homes and their jobs and their savings. Has Wall Street does Wall Street learned its lesson?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
In some ways, no. And that's the point. We know that they're always going to be driven by pumping up profits and their own bonuses, and that's why we have to make sure that there's some basic rules that protect the entire economy from some of those excesses. It's pretty basic to me.
Senator Sherrod Brown (D-OH)
Let let let me thank you. Let me ask it a a different way, a similar question. Should if if you were replaced by a someone that in your mind, in my mind, doesn't well, doesn't doesn't have the guts to stand up to the to the big companies, the big banks that are that are fleecing the public that that end up resolving in, you know, what happened 15 years ago. What happens? I mean, I should should they should should we trust Wall Street in that situation when when director Chopra is not there?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
One of the things that I'm really glad the law puts in place is a ban on on officials like me from going to sell ourselves to the companies we regulate. We should not have anyone leading regulatory agencies who's there to kiss up to those they're supposed to oversee. We need to make sure that they are enforcing the law other way as people across the country are cheated. Well, that revolving door is far too common in this in this state
Senator Sherrod Brown (D-OH)
in this country, as you know, and this government and this city with members of Congress and with staff, committee staff, personal staff, agencies like yours. Let me let me shift to medical debt for a minute. We've had, we've had the credit rate. We've did couple things, I'm putting several things, but 2 notably that I'm particularly proud of. We started a tradition here where we bring the bank CEOs, 6, 7, 8 of the largest bank CEOs of the largest banks regularly here to answer to to hold them accountable.
We also have done that with the credit rating companies as you know. Understanding and and focused on medical debt. Medical debt can happen to anyone. It doesn't matter if you do everything right. Anyone can get sick.
Anyone can get in a car accident. It has nothing to do with your creditworthiness or at least it shouldn't. People should not have to deal with damaged credit scores and harassment from debt collectors on top of massive medical bills and navigating a far too complicated health care system. So, director, are are medical bills generally accurate?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
We have found systemic problems with the accuracy of medical bills, particularly ones that are reported on credit reports. There's problems with coding. There is a ping ponging going on between the insurance company and the provider. Sometimes multiple co pays or deductibles are being charged, and it is why those items tend to not be predictive of your performance on loans like credit cards and mortgages.
Senator Sherrod Brown (D-OH)
So so assuming that, and you've proven that that's the case, what impact do inaccurate medical bills have on consumer credit score?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we've seen scores go down artificially, pushing up the price to borrow for a home, and in some cases, blocking a a person from maybe even getting an apartment, or a job.
Senator Sherrod Brown (D-OH)
And one of the reasons I hear my colleagues and I see, Wall Street fighting hard against your agency, and you're fighting for consumers, not corporate America is is is is a result. It has a lot to do with medical debt. So, talk to us in the last minute or so, about the rule, which would erase the medical debt burden for millions of Americans in terms of credit credit scores. Right?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we've proposed a rule that would block, the reporting of certain medical bills on credit reports to better protect health privacy. Our proposed rule also blocks creditors from securing loans with wheelchairs, prosthetic limbs, and other medical devices. We think that a lot of the rule has already been implemented voluntarily. The 3 big credit reporting conglomerates have already eliminated much of it, and states across the country have also banned it as well.
Senator Sherrod Brown (D-OH)
So why why the opposition from my Republican colleagues, to this rule and from some some of corporate America? Why why do they think it's a bad idea?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
I don't wanna paint with a broad brush, but and and many behind closed doors really support it. But I think that there is, too many debt collectors who weaponize this data in order to coerce people into paying they do not owe. I do not know, and we have looked at every single concern. We wanna protect our rural hospitals. We wanna protect access to healthcare and credit.
But we think this is a very wise path forward, as we continue to finalize look to finalize it.
Thank you, Senator Rounds. Before I recognize you, thank you for your work with Senator Smith on housing. I wish we could have convinced some others on the committee to move forward with a number of pieces of legislation that you did with people on our side that would have expanded the housing supply in rural America and elsewhere. So, thank you, Senator.
Senator Sherrod Brown (D-OH)
Welcome.
Senator Mike Rounds (R-SD)
Thank you, Mr. Chairman. I understand that this is probably the last time that we're going to be together on the dais. I will just say that I have enjoyed the banter, and I have enjoyed our opportunity to visit with one another. Although we probably disagree on a number of different areas, we've also found some areas of agreement, along with Senator Smith, with regard to improving options for homeownership, particularly with regards to areas on Native American reservations, and also with regard to the rural areas of our country that really do need to have an upgrade in how we provide mortgage services to them. So…
Senator Sherrod Brown (D-OH)
Thank you.
Senator Mike Rounds (R-SD)
I appreciate that. Thank you.
Mr. Chopra, I would suspect that you and I probably disagree on the vast majority of our philosophical approaches to the regulatory approach that we should have in this country regarding the availability of credit and so forth. But I also wish you the best in your next endeavor, and I think there's no question that you and I both know that you probably won't be here after the 20th or the 21st of January. But I wish you well in your next endeavor.
Let me begin by just working my way through some things that I really do have a concern about. I recently sent you a letter with my colleagues Senators Hagerty and Daines regarding your proposed mortgage servicing rules. The stated intent of the proposed changes is to assist borrowers who are experiencing difficulty in meeting their financial obligations. Unfortunately, the proposal will, I believe, make this process more cumbersome and confusing by offering a variety of options at different times during the loss mitigation review cycle. Confusion causes delay. It also causes mistakes and inefficiency. The intent of this rule is meant to be good, but as proposed, I believe it will be ineffective, and I think it will actually be harmful.
Regarding this proposal, did the CFPB's actions in this area stem primarily from consumer complaints, or is this an initiative driven by internal agency priorities?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
No, this was actually based on discussions with the mortgage industry. We did a look back during the COVID-19 pandemic at various different ways to create flexibilities in the loan modification process and maybe reduce some of the procedural hurdles to give servicers the ability to modify loans, lower costs to do so, but at the same time preserve consumer protections. So what we have proposed is really inspired by the learnings from the industry and others about COVID-19 loan mods.
I agree with you, and I will share with you that your letter with Senator Hagerty and others highlighted some important issues. It is a very complex way our mortgage servicing ecosystem…
Senator Mike Rounds (R-SD)
And we do need to find ways to streamline it.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yes.
Senator Mike Rounds (R-SD)
Here's what I'm getting at: I really think that when you do this type of critical rulemaking, I'm really questioning whether or not you had the opportunity, or you took the opportunity, to really engage with a lot of the stakeholders on this rulemaking. I'm concerned that a number of them who have been in contact with our offices really don't believe that they were adequately listened to, for lack of a better term, with regard to what the impacts will be. So I bring it up only because I think this is going to be critical in the next couple of weeks as we look at congressional resolutions of disapproval and so forth. This is an area where I think there could have been some common ground found, but I'm not sure that you were able to do so.
I also want to just touch base. I know there's been a lot of discussion here about medical debt. Six months ago, the CFPB proposed a rule prohibiting credit reporting agencies from including medical debt on consumer credit reports. Although consumers with unpaid medical expenses may see an improved short-term credit score, financial institutions will not be able to accurately conduct underwriting practices. This may create barriers to accessing credit. In particular, what I was concerned with was the folks who are actually making a billing—doctors and so forth. Were you able to actually get feedback from them in terms of how they're going to be looking at providing services if they believe that they're not going to get paid in the first place, and whether or not those reports are going to be made available to them? Did you get feedback on that? And what was the sense that you got from these physicians?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
We did. In fact…
When we looked broadly at different practices within the industry, we actually find that many providers, many facilities do not even engage in credit reporting.
I think the question sometimes becomes where, in as much as the debt is sold or reassigned, there may be firms that are putting information on credit reports that is badly inaccurate.
So I think we'll have serious concerns that people are paying debt that they may not even owe in the first place.
And there's a broad recognition that medical bills are very different than the application process you go through when it comes to a mortgage or a credit card.
Senator Mike Rounds (R-SD)
And my time is expired, but I just want to say, first of all, thank you, Mr. Chairman, for your service on the committee.
And I would just say, I think that while the intent of this was right, I think the implementation of this may be doing some harm, and I'm hoping that we'll be able to review this and perhaps make some modifications.
Because, while we don't want that debt to ever be misinformed because of the time it takes for insurance companies to pay back and forth and to pick up debt and so forth, I really am concerned that this may do more harm than it does good for some of those individuals that are perhaps looking to get services that physicians may actually decline to provide or suggest they go elsewhere.
But with that, Mr. Chairman, thank you.
Senator Jack Reed (D-RI)
Well, thank you very much, Mr. Chairman.
Let me begin by commending you and saluting you for your great leadership here.
We all understand that you're the chairman of this committee because of the generosity of one senior member.
That's a joke.
You're the chairman of this committee because you care deeply about the issues that affect working men and women.
Senator Mike Rounds (R-SD)
Because I have two grandchildren in Rhode Island, I will visit your state even more, and thanks to thank you to you for doing that.
Senator Jack Reed (D-RI)
Well, you're welcome. But let me say, thank you very much.
Director Chopra, we passed on a bipartisan basis in 2006 the Military Lending Act to protect our men and women in uniform, and everyone on this dais and on Capitol Hill takes pride in everything we do to protect service men and women.
What is the role of CFPB in supervision and enforcement, particularly supervision?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we are responsible for making sure that that law is faithfully administered. Not only do we enforce it, but we also take a look at how banks and non-bank companies are honoring the rights of service members. We know that they must follow for a set of loans a cap, an APR cap, and where we find any violations, including if they insert illegal arbitration clauses in contracts, we can take those companies to court, and we have done so repeatedly.
Senator Jack Reed (D-RI)
And, approximately how many enforcement actions and and how much money is the return to servicemen and women
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
for the tenure? I believe it's been 100 of 1,000,000 of dollars. I I need to get the exact numbers. In many cases, we have taken action against repeat offenders, those who have routinely violated the law. And these consist of firms who have violated this are are largely outside of the chartered banking and credit union industry.
Senator Jack Reed (D-RI)
And how integral is supervision to enforcement? Can you can you Yeah.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
I I think it's that that examination of companies is really what prevents the problems from spreading. When it comes to the Service Member Civil Relief Act, the Military Lending Act, companies really should be looking to see if they are serving an active duty service member and not breaching the law. And I think that that supervisory process helps people prevent a lot of the rip offs that may even happen unintentionally.
Senator Jack Reed (D-RI)
There's another issue that we've talked about, previously. That's the buy now, pay it later loan, which, are increasingly popular and particularly in the holiday shopping season when people are looking for gifts and, trying to stretch their spending as much as possible. Can you give us an update on what your agency is doing to ensure that these the the buy now, pay later loans are consistent with, all the rules?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yeah. We don't want we want to see new types of products and services, but we don't wanna see companies exploit loopholes or arbitrage around congressional, mandates. So one of the things that we did is we put forth, an interpretive, rule that will help those buy now, pay later companies understand how the existing law applies to them. We've gotten some very good cooperation, and many are being looking to be transparent and really serve consumers fairly.
Senator Jack Reed (D-RI)
And over the next few weeks, is it possible to publish updated data that shows what you've been able to do to help improve the buy now, pay later process and also available to support additional rulemaking, if necessary?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, unlike banks, the buy now, pay later companies don't put forth regular data, but we are in constant communication with states who license many of them. So, I'll look to see what we can do on that front.
Senator Jack Reed (D-RI)
Thank you very much. And I want to thank you also, Director. You've done a superb job. Thank you very much.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Thank you so much.
Senator Jack Reed (D-RI)
Thanks, sir.
Senator Tillis of North Carolina.
Thank you, Mr. Chairman. Mr. Chopra, thank you for coming before the committee.
Mr. Chair, I would like to seek unanimous consent that I had some letters expressing, from the banking industry, Consumer Bankers Association, and others, about some of the concerns with the regulatory overreach of Mr. Chopra and his current position.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Objection, Senator.
Senator Jack Reed (D-RI)
Thank you. Mr. Chair, before I get started, I also want to thank you for the time that we've spent together on the committee. The Chair and I enjoy a good personal relationship that includes a couple of jabs from time to time over the weekend. I know that you're moving out of the Senate, but I hope we can keep those missives going. And I also want to welcome Senator Schiff to the committee.
Mr. Chopra, I want to get right to -- I was trying to figure out how I could ask this question. To what extent do you feel comfortable with the cost-benefit assessment on the dozens of regulations that your agency is putting out and imposing on industry and ultimately consumers?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, what we do is, we take very seriously the requirements, and it's subject to quite a bit of scrutiny --
Senator Thom Tillis (R-NC)
But at the end of the day --
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
-- across the --
Senator Thom Tillis (R-NC)
Let me --
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, if I could finish.
Senator Thom Tillis (R-NC)
No. Let me, let me use my time, and we'll let the Chair, if he wants to, let you expand later on. I'm thinking more in terms of: if I took your cost-benefit analysis, and I brought it to a staff that used to work with me at PricewaterhouseCoopers, and take a look at how extensive that was. Let's say that your cost-benefit analysis was not something you're reporting to members on this panel and to Congress, but something that would be subjected to the scrutiny of a C-suite board of directors. I just don't see the cost-benefit analysis rising to a level of quality that I would expect out of a first-year staff at PricewaterhouseCoopers. I don't want you to respond to it here, but it would be great if you could submit for the record why you believe that you've produced an analysis of the impact of the cost of these regulations that ultimately are borne by consumers, so that we have a better understanding of just what your regulatory overreach was. I know you do a good job of filibustering, so I'm just asking you to get some of that for the record, so that I can move on. But I'd particularly like to get an understanding of -- let's just use your cost-benefit analysis. Can you give me an idea, since you've been leading the agency since 2021, what, in your assessment, is the underlying cost of the regulations that you've been responsible for putting in place since 2021, for the purposes of the record?
Mr. Chopra, tell me about why I should reject the notion that you may be one of the most polarizing, partisan figures to actually assume your role. And I'm going back to McWilliams. I want to go back to the queue. I want to go back to what I think is: you may get the MVP for making financial regulators outside of the Fed the most partisan agencies in my time watching this. Tell me why I'm wrong. Tell me why the queue with McWilliams was appropriate. And tell me why some of the behaviors and the other financial regulators, and your role in influencing them, was appropriate, and to what end did it serve the American people?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, all we are doing is trying to discharge the duties under the law. You asked about the FDIC. Chairman McWilliams resigned amid a DOJ investigation. We were clearly --
Senator Thom Tillis (R-NC)
And so you had no fingerprints on it?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Oh, well, certainly, we wanted to make sure that the law which specifies how votes should be counted.
Um, we wanted to make sure it was
Senator Thom Tillis (R-NC)
Someday in the future, I would love, Mr. Chopra, for you to share that table with, uh, with former Chair McWilliams so that we could have a fulsome debate about that because I have a different interpretation of the facts.
Uh, look, Mr. Chopra, I don't like, and and I've told other regulators, I get no, uh, no joy out of, uh, going after witnesses in this or any other committee.
Uh, but as somebody who has tried to work across the aisle, and as somebody who has taken tough votes that have put Republicans out of their comfort zone with me, I take exception to people who come before this committee, uh, with some sort of a righteous mandate to be absolutely partisan.
If you can give me one example of where you've actually stepped up and led and made people of your ideology and your party nervous because you were doing the right policy thing, that would be something if the chair will give you time, I'd like to hear from you.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, certainly, I took a lot of heat from people who share a lot of my views when it comes to banking and debanking.
A few years ago, we actually led efforts to stop people, big tech companies and banks, from purposely closing accounts or freezing funds based on people's political speech, and that, to me, was totally inappropriate.
Senator Thom Tillis (R-NC)
Probably got to have to
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
We have
Senator Thom Tillis (R-NC)
Well, that's fair, but that's sort of a lob at the net. That's that's
No. It's not. I can keep going and going.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
No.
Senator Thom Tillis (R-NC)
I'm saying that, of course, you did that. That was at Alhabi.
That's a defensible position that I think any reasonable minded Democrat could get behind.
But for you to suggest that you didn't start issuing policies, de facto policies with the FDIC in your post as the CFPB, is a weak argument to me.
Thank you, Mr. Chair.
Senator Sherrod Brown (D-OH)
Thank you, senator. Tell us senator, I wonder if Virginia is recognized.
Senator Mark R. Warner (D-VA)
Well, thank you, mister chairman. Let me, first of all, just say, how much I've enjoyed working with you not only on this committee but across the We've not always agreed. We've been able to disagree respectfully, and, I think you've done an extraordinary job. I think then this body will be lesser, and and, a whole lot of folks are gonna think back about who stood up for folks who don't always get a fair play time and again, and it's been a a real honor to work with you. We're gonna miss you.
Obviously, we miss senator Tester. And, I also just have to say, my friend, senator Tullis, we work on a whole lot of stuff together, and, you know, and, director, you know, I've had disagreements, but I actually think, you know, the record of the CFPB under under your tenure, or knows it's been attacked a lot. The constitutionality has been attacked a number of times. Again, I'm glad the court stood up for the funding mechanism we have. But I think about some of the things that you've done and what it's actually doing to for Americans and Virginians.
You know, recently CFP announced that it was returning about $1,800,000,000 to 4,000,000 consumers who've been misled. I can tell you that the bureau is now in the process of distributing $55,000,000 back to Virginians. That's money back in your pocket. I'm not sure that, those Virginians who are getting those refunds are gonna say, gosh, that that that CFPB, that must be some over the top partisan entity. You know?
And and something you're working on now, that, again, I think probably has some opportunity for broad bipartisan. The proposed rule on on data brokers. This is something that, again, I don't think there's a democrat, republican view. We we, we've looked recently about the my head's been exploding about the so called salt typhoon and how the telecoms have all been penetrated by China to get all this information, but the truth is sometimes our adversaries can buy this information from data brokers and particularly when you're thinking about even members, I think it was Duke came out with a study around getting critical information about our members of the armed forces, about willingness to go also go after those who are not undercover in the intelligence community. Can you share a little bit about how, these data brokers how adversarial countries like China and Russia use our existing rule structure?
They're not they don't have to hack into us. They can actually just use the existing marketplace and what kind of valuable information is is then, potentially put at risk.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
We used to, a long time ago, think about data breaches about, you know, hackers getting into your accounts, taking your money. But when you look at Equifax, Anthem, Marriott, it has all been Chinese Communist Party, Chinese People's Liberation Army, other state and non state actors designing a way to collect information about us for their purposes. But now you don't even need to hack in sometimes. You just go and buy it. You can also, if you're a stalker, go buy information about the person who is trying to escape you.
You can also, as a scammer, buy lists of people who are vulnerable, maybe suffering from, cognitive decline. But it is clear that we received a lot of input to make sure that guarding people's privacy from data brokers is increasingly a national security imperative too.
Senator Mark R. Warner (D-VA)
Well, again, I think this is an area that that does fit clearly, squarely into consumer financial protection, and and, I know there's a lot of interest bipartisan wise even on legislation, so I hope we will pursue that. I wanna raise one last topic because it's a topic that my my friend, Senator Kennedy, and I have worked on. As somebody who was here, proud to be part of the Dodd Frank proud to be part of the Dodd portions of Dodd Frank legislation. We're actually bipartisan, title 1 and title 2. You know, one of the things that came out of that was FSOC, this notion of creating an entity that looks above the, the silos.
And candidly, under both democrats and republicans, I don't think FSOC has been what I hoped it was gonna be. And this is much an appeal to incoming administration, but senator Kennedy and I have got a bill. If there was ever a topic that seems to be made for an FSOC type review, it would be AI and the ability to have AI manipulate the public markets? I know you don't have much time, but if you could just touch on the importance of FSOC and also, this still overhang we have with the AI and financial market
Senator Elizabeth Warren (D-MA)
I agree. I think what you and Senator Kennedy have put forward, I really worry about disruptions to our treasury markets, which could really dislocate us and have serious effects on our economy.
I think it's true that the Financial Stability Oversight Council, it's good at writing reports, but it's not really been fully exercising how to make sure that these systemic, potentially dangerous systemic events are avoided. So I think we'll want to keep working with you and Senator Kennedy and others to make sure that those are not just initials, but it's actually doing something to protect our financial system.
And again, thank you, Mr. Chairman.
Senator Sherrod Brown (D-OH)
And I know you're good at, like, cutting off when I try to steal that after 30 seconds. Today, I would let you go as long as you want, Mark.
Senator Elizabeth Warren (D-MA)
Thank you, sir.
Senator Sherrod Brown (D-OH)
Senator Kennedy from Louisiana is recognized.
Senator John Kennedy (R-LA)
Thank you, Mr. Chairman.
Just a point of personal privilege, Sherrod. I've enjoyed working with you and I wish you well.
I mean that.
I still remember one of our earliest hearings. I was brand new, green as a gourd, and you and Senator Tillis and I got into a meatloaf lyrics discussion.
It's one of the highlights of my life.
Mr. Chopra, can the President of the United States fire you?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yes, of course.
Senator John Kennedy (R-LA)
Okay.
Have you had any discussions with the new administration?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
That's really for you to discuss with them. But, no. We serve at the pleasure of the president.
Senator John Kennedy (R-LA)
Okay. Here's one of the things that I have always wondered. Why haven't you take a taken a look at what our universities have been doing in terms of tuition? I I was reading a study the other day put out by the the the the New York Fed. It's a little dated.
Things have probably gotten worse. But 60¢ of every dollar that our kids borrow has been diverted into higher tuition payments. And and and universities have gotten more and more and more expensive, so kids borrow more and more and more money, so universities can hire more and more people and raise tuition to pay for. And that doesn't seem fair to me. Why haven't you ask your people, or maybe you haven't, I don't know about it, to take a look at at what, if any, nexus there is between us.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yeah, well, we have found some nexus. When I was a regulator at the CFPB 10 years ago, we actually went after some of these schools, what they were doing. You went after
Senator John Kennedy (R-LA)
for-profit schools.
I'm talking about some of our more prominent universities that, that, uh, that, that clearly keep raising their tuition as kids borrow more money.
I, I'm not talking about for-profit, but I'm talking about the not-for-profit universities.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
I agree. I agree that there are serious problems with how some universities can steer people into loans to borrow more, and more, and more.
And I think, as we think about fixing our student loan system, I don't know if the existing one is one we want to keep, because not only is it burdening a lot of people, but it may be creating the incentives for some universities to really be pushing up the costs.
And that's actually a bad cycle, and we have seen it. Um, we have seen it a lot with some of the for-profit schools, but also some of the nonprofits as well.
Senator John Kennedy (R-LA)
We had a former president of LSU who was asking for yet another tuition increase from our legislature.
I'm paraphrasing that.
Um, and, and a legislator asked him, he said, "How, how, how do you determine how much to increase tuition?"
And in a rare moment of candor, he said, "I just go out in the parking lot, the student parking lot, and count the BMWs."
Um, he's no longer president, by the way.
Nor should he be.
Um, I, I just, I mean, I understand President Biden's approach has been to forgive the debt, but it seems to me that at least a partial root of the problem is universities have gotten greedy, and, and they're, it's costing more.
Kids are spending more to learn less, and we, the rubber is about to meet the road because kids are just saying now, "It's not worth going to college."
The, the, the numbers are declining.
At, at some point, I mean, the demand is not completely inelastic, and I sure would like you folks to take a look at that.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, well, we'll keep doing that, and I'll, I'll follow up with you directly.
I will share with you that we got to do something for the 40 million people who have student debt, but we also have to make sure there's not another 40 million who are really going to get into too much debt because of this cycle that you've described.
Senator John Kennedy (R-LA)
me ask you one last question in my 8 seconds. You're on the FDIC board?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yes, sir.
Senator John Kennedy (R-LA)
How many people from Silicon Valley Bank and Signature Bank went to jail? How many executives did y'all put in jail?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, I can't comment on any investigations, but we try our
Senator John Kennedy (R-LA)
No, I've asked how many. It's been a couple years. How many of them went to jail?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
If you if you are worried that there is not enough accountability, I share that worry, and
Senator John Kennedy (R-LA)
They stole money. How many of them went to jail?
How many did the FDIC -- the Justice -- the FDIC can't put them in jail, but the Justice Department has put zero in jail so far. Zero.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
So, I -- we are going to make sure that -- I can't disclose everything, but it needs to be fully investigated, the role that every individual --
Senator John Kennedy (R-LA)
You better, hurt,
because I think it's unconscionable.
Thank you, Mr. Chairman.
Senator Sherrod Brown (D-OH)
Uh, thanks, Senator Kennedy.
And you know, and you worked on our RECOUP Act, which we had a strong vote here and couldn't get it moved on the -- on the floor because of industry opposition, as you know.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Mr. Chairman, can I just make one comment?
I will share that it's pretty upsetting when there are large banks or CEOs who are able to get off scot-free, even when there is emergency measures.
So I just share what many of you have shared with me, that there has to be some basic level of accountability, including for those at the top.
And that's something that I've put as a priority at the CFPB, of looking at the individuals, especially when it comes to these repeat offenders, and many of them need to be banned from the industry altogether.
Senator Sherrod Brown (D-OH)
Senator Warren from Massachusetts is recognized.
Senator Elizabeth Warren (D-MA)
Thank you, mister chairman. Mister chairman, you have led this committee as a fierce fighter for consumers and someone who has pressed all of America to recognize the dignity of work. And I speak for myself and for millions of people across this country to say we are grateful for your leadership. Thank you. So President Trump spoke to the concerns of 1,000,000 when he said he would put a 10% cap on credit card interest rates.
That is the kind of big structural change that will make a big difference to families across America. Over the last decade, giant credit card companies have jacked up interest rates to historic levels. Average interest rates have nearly doubled from 13% back in 2013, to 23% in 2024. Now, the highest on record. Much of that increase has been driven by credit card companies tacking on just a few extra percentage points of interest to pad their profits.
To the tune of an average of about $2.50 extra straight out of the pockets of every credit cardholder in America in just last year alone. Director Chopra, thank you for being with us today. Just give us a quick summary about what the CFPB has been doing to help Americans struggling under the weight of credit card debt.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we've put into place some rules that will stop credit card exploitation of loopholes to the tune of 1,000,000,000 of dollars a year in penalty fees, making it we're gonna make it easier to switch. We're gonna ensure that people can actually get those rewards they were promised and so much more.
Senator Elizabeth Warren (D-MA)
Good. So, Director Chopra, let me ask you. Would President-elect Trump's plan to lower interest rates to 10% do more to help unrig the credit card market? And if such a cap were enacted, does the CFPB have the expertise and the capacity to enforce that cap?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we certainly have the capacity to enforce it. We enforce other types of interest rate caps.
And by the way, federal law already has an interest rate cap on credit cards offered by credit unions, and that seems to work just fine.
Senator Elizabeth Warren (D-MA)
All right. And let me just ask, because I have the rest of this, and that is, would a 10% cap on credit card interest rates, as the President-elect has proposed, would that help unrig the credit card system and help consumers across the country?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yes.
Senator Elizabeth Warren (D-MA)
Good. That's a short answer. Do you want to add any more?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, I think there's room for debate on where to set the number, but certainly we have found that other rate caps have allowed the market to function.
But as the market has grown more and more concentrated, and that there's even more mega mergers potentially on the horizon, we need to make sure that those credit card companies aren't coordinating, even subtly, to jack up rates even higher.
Senator Elizabeth Warren (D-MA)
Okay. And that concentration means less competition.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
That's right. And that's part I think that has contributed to these fat margins. We we have found that Americans are paying an extra $25,000,000,000 a year compared to 10 years ago even when controlling for market interest rates.
Senator Elizabeth Warren (D-MA)
Wow. $25,000,000,000. So let me ask. When the president-elect takes on the big credit card companies and lowers credit card interest rates to 10%, will he have a strong partner at the CFPB?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, the CFPB will enforce the law as written, and that's exactly what we would do.
Senator Elizabeth Warren (D-MA)
Okay. So I understand that some people on team Trump are trying to undermine the president-elect. Billionaires who profit off cheating people are begging him to delete the agency. They're asking president-elect Trump to go back on his promise of a 10% cap on interest rates and instead put billionaires' profits ahead of the needs of working people. The CFPB has been in the trenches fighting for working families for over a decade.
And so far, it has forced Wall Street Banks to return over $20,000,000,000 directly to families they cheated. Now with a single move, president-elect Trump can smash that record, saving American families tens of 1,000,000,000 of dollars in interest payments. And when he does that, he will have a strong partner at the CFPB. So I just want to say thank you, Director Chopra, for your extraordinary record of service to people all across this country. Thank you for all you've done.
Thank you, Mr. Chairman.
Senator Sherrod Brown (D-OH)
Thank you, Senator Cortez Masto from Nevada is recognized.
Senator Catherine Cortez Masto (D-NV)
Thank you, mister chairman. I I wanna welcome our new senator, senator Schiff and senators Kim to the committee. Welcome. Look forward to working with you. Chairman Brown, I too.
I I have to just say a few words about you, my friend. I wanna thank you for your years of leadership, your commitment, not only to this committee, but the work that you've done. But most importantly, everything, what you constantly talk about and believe in, which is the dignity of work. I I can't stress how much I truly believe in these words. You said it, and you say it always that the dignity of work is the belief that hard work should pay off for everyone, no matter who you are, where you live, or what kind of work you do, whether you punch a clock or swipe a badge, earn a salary or make tips, are raising or raising children or caring for an aging parent, you deserve financial stability.
And I couldn't agree more. Since I joined the Banking Committee, I've been inspired by your fight for people not just of Ohio but across this country. I am grateful, for your leadership, and I have to thank you for everything that you have done. You are leaving an incredibly enduring legacy, and I thank you for that. Director Chopra, I too wanna thank you for being here today.
We've had many conversations. I I I have to say also, I just thank you for standing up for Nevadans. You and your entire team, thank you for for defending them against junk fees, high cost financial products, illegal debt collection, all of the above. Thank you. I do wanna talk to you a little bit about the data broker proposed rule.
And last week, as you well know, the consumer bureau requested comments from the public for the proposed rule to prevent data brokers from selling sensitive personal data to scammers, stalkers, and spies, and I think we can all agree that it's an important first step here. Can you talk a little bit, however, I've been hearing from law enforcement in my state and across the country. What what responses from law enforcement have you heard as part of the public comment, and how do we find that balance that you're what you're trying to do is protect the the the data and the the privacy of individuals today, but also give law enforcement still the tools they need to go after the bad guys, those scammers.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yeah. We want to make sure that law enforcement can locate witnesses, suspects, and ultimately discharge their duties to stop crime and fraud. We think many of the things we're doing as part of this will also increase accuracy of these databases, which will help fight crime even better. We have not the the notice has not yet been published in the federal register. It's coming soon.
But as part of that process, we're gonna hear from all parts of the public and the law enforcement community will will need to share more with us. We've also heard, though, senator Cortez Masto from law enforcement who are concerned that currently data brokers are used to docs, police officers. We had one tragic situation in New Jersey where, the child of a judge, was murdered after information was obtained about them, through a data broker. We know that these data brokers are also vectors of how crime can be committed. So we wanna make sure that we're also preserving those legal pathways for legitimate uses by law enforcement.
Senator Catherine Cortez Masto (D-NV)
Thank you. And and for purposes of of the law enforcement have reached out to me, you're open to talking with them, hearing from them, working with them as you move forward.
This is an important issue.
I agree as well. The other thing I have to thank you about is the work that the CFPB does to really protect our service members.
In your report, you note that the Bureau secured $363 million in monetary relief from 45 public enforcement actions that involved harm to service members and veterans. You and I have talked about this. I've been working for a long time with the CFPB. I've seen it in action at Nellis Air Force Base
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yeah.
Senator Catherine Cortez Masto (D-NV)
talking to our service members, figuring out how we get them the information to protect them. I can't thank you enough for the work that you do.
And I have to stress, it is important because without the CFPB doing this, who else is doing it? AGs, but who else?
And so I would love for you to talk a little bit about how the Bureau's work, holding financial institutions accountable for illegal fees, high interest loans, false advertising, and other violations of the Military Lending Act, affect our service members and veterans, and what the CFPB does to be there as that enforcement.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yeah. During the George W. Bush administration, there was an important report about how financial readiness really contributes to force readiness and how many people were separating from active duty service because of issues related to debt, how debt collectors were calling commanding officers. So it's not just the Military Lending Act. It is also other key laws.
And we saw how in the financial crisis, the mortgage crisis, those service members who were ordered to move had some of the biggest challenges, and they were the canary in the coal mine for the rest of the population.
Senator Catherine Cortez Masto (D-NV)
Thank you. Thank you again for everything that you've done, to you and your staff.
Senator Sherrod Brown (D-OH)
Senator Britt of Alabama is recognized.
Senator Katie Boyd Britt (R-AL)
Thank you, Mr. Chairman. Thank you so much for taking time to be here today.
I want to start by just underscoring the need for serious reform at the CFPB. It's something that I've obviously discussed with you. I have been willing to put in writing, and so just want to take this last hearing to really cement that.
What we've seen over the last four years is just, I feel like, blatant misuse and a politicization of the agencies in ways that I believe it wasn't intended.
The CFPB has transformed into a regulatory nightmare for the exact people and businesses that it's supposed to look out for.
When you look at the way it's structured, you have one director, you have no board, you have no votes, and really, outside of our opportunity to ask you questions in this setting, no real Congressional oversight.
And when you have just one solo director with nearly unlimited leeway to push his or her own agenda, that's where I have a real issue.
We've seen over the last several years, and we're seeing even now after the election, that despite a clear repudiation of this administration's policies from the American people, that the CFPB is the only financial agency that has continued to push out last-second rulemaking.
In my opinion, it's unacceptable, and reforming the CFPB should be an immediate, immediate priority for the next Congress.
I also want to note again my serious concern with some of the regulations that have been promulgated under your direction -- your efforts to eliminate medical debt from credit reports, for instance.
I know we had a conversation about this, and we talked about the accuracy of those, and I want to make sure that those are accurate. But we also talked about what this could do to rural hospitals in my state and in states all across the country that are hanging on by a thread.
And so, taking these things into consideration -- not just conversation, but really understanding the cumulative impact of the things we're doing, and understanding that the people that you are trying to help, this may actually hurt.
Looking at things in a more comprehensive way, I think, is imperative. And in this instance in particular, if more of our rural hospitals close their doors, it's going to leave thousands of people without medical care within hours of their home.
Or if you look at your 1071 rule that you and I had a good back and forth on at a previous hearing, the compliance costs alone are literally putting at risk community banks in a multitude of ways.
And so when we look at how these things affect the big guy, I always talk about what is the trickle-down effect to Main Street, what is the trickle-down effect to the community bank, the relationship banking that they get to do.
And so I want to make sure that the agency continues to look at those cumulative impacts and how rules like this immediately hurt truly the most vulnerable.
Meanwhile, we have financial fraud issues that are running rampant. Americans are being scammed out of almost $9 billion per year, and I believe our own consumer protection agency seems to be nowhere to be found.
And so I want to talk to you about that and give you an opportunity to maybe show me where you have been doing some things. So when were you confirmed at the CFPB?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
I believe it was September 30, 2021.
Senator Katie Boyd Britt (R-AL)
Love that you've got the exact date right there. So per my review of the CFPB's website since that date, you've published 78 of your speeches as director. Do you know how many of those speeches focused on financial frauds and scam education?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Scam education? Well, I don't know how many of them, but certainly, we have done so much when it comes to cracking down and combating fraud. Just last week, senator Britt, we sent $38,000,000 to 93,000 Alabamans My apologies. Who are involved in a in a very harmful scam. And we are also looking upstream at where these scammers can really get some of the key data to to perpetrate their crime.
Senator Cortez Masto just asked me about data brokers where we know people can buy data about older Americans and others who are vulnerable.
Senator Katie Boyd Britt (R-AL)
One of the things that I'm concerned about is when I looked at your speeches, I found just one that actually addressed that. And then when I went back and looked at your blog post, which we know is extremely controversial depending on who you ask and kind of regulation by plot blog post, which I think is inappropriate, I also only found one when it came down to this. And when I look at the core functions on your website that say, what is the CFPB about? One of your core functions says it is to enhance, you know, financial education. And when I looked at your budget that you put out, it looked that you requested, in addition to the 700,000,000 about a 142,000,000, so about over $840,000,000 to be used at your discretion.
But when I looked at the actual investments that were made, in, and I know I'm out of time, so, but in, in actual education, it looked at it was only about 5,700,000. And so as the agency moves forward, I feel like actual education of consumers that are being scammed and harmed has to be of the utmost priority.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, if I could just respond for a bit. One of the things we've also tried to do is cut a lot of waste and drive efficiencies. So for example, when it comes to disasters, our materials and information are bundled with information that FEMA provides. I think we don't wanna inundate people with different pieces of paper from different agencies, but study specifically where are people consuming information and how can we get them at the right moment. So I don't want the CFPB to be judged by the number of brochures it passes out.
We should be judged on how we can arm people with the ability to spot scams and to crack down when it when it takes place. But thank you.
Senator Sherrod Brown (D-OH)
Thank you, Senator Brown. I appreciate the work you've done, especially for veterans, to both warn them, educate them, and recover money for veterans that are cheated. It's particularly impressive.
Senator Van Hollen from Maryland is recognized.
Senator Chris Van Hollen (D-MD)
Uh, thank you, Mr. Chairman. I do want to start by thanking you for your leadership on this committee and all the work you've done in the United States Senate on behalf of working people.
On this committee specifically, of course, it's the Banking, Housing, and Urban Affairs Committee. Thank you for putting the housing and urban affairs piece back into the conduct of this committee, including all the affordable housing issues and the transit issues. So I want to thank you.
I know our colleague Senator Tester is not here, but we're going to miss his voice as well.
And welcome to Senators Schiff and Kim as new members of the committee.
Director Chopra, I just want to thank you and the CFPB for what you have done on behalf of consumers, including a lot of Maryland consumers.
I looked at the distributions out of the Civil Penalty Fund. These are funds that you collect from organizations engaged in fraudulent activity, cheating people out of their money, and I see that it's been over $3.3 billion, including $71 million to over 144,000 Marylanders. So thank you for your efforts to get that money back because a lot of the powerful organizations that cheat them out of the money, they have the ability to have some of their own lawyers. You are the people's sort of watchdog and lawyer on this. So I want to appreciate that.
And thank you for mentioning the most recent efforts. I think it was going after credit, so-called credit repair organizations, which really prey on those who really are struggling. These are people who are trying to fix their credit, and there's some organization out there representing that they're going to be able to do that and return their credit to a good place, only to cheat them out of more money. So thank you for those efforts as well.
There's a lot to cover. You've been very effective when it comes to the student loan issue. We need to do more on that.
On the medical debt piece, I think the evidence is pretty clear that people who get sick and all of a sudden have a big bill to pay should not have their credit ratings negatively influenced because of that one-time need. We should be finding ways to reduce the burden of medical debt.
And thank you for your work on veterans and folks in the military.
I wanted to just zero in, in my final minutes here, on the important work that you do with respect to the non-bank platforms because, as you indicated in an earlier exchange in this committee, we have small banks that are governed by all sorts of important regulations, but then you have these massive platforms that lend to millions and millions of Americans who do not have the same kind of oversight, and that is a major role of the Bureau. And if you could just elaborate a little bit more on why that piece is so important going forward.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we saw in the lead-up to the financial crisis that it wasn't just issues with the banks. It was also these non-bank mortgage companies that were engaged in subprime lending that set people up to fail.
And just recently, we finalized a rule to make sure that those digital payment apps that tens of millions of people are using, and whose use exploded during the pandemic, that they too are not engaging in illegal privacy intrusions, that they're making sure that fraud and errors are minimized, and that they're not improperly freezing people's funds or closing their accounts.
We need to understand that these big firms, some of them touch millions of people across the country, and they too should hold up their end of the bargain.
Senator Chris Van Hollen (D-MD)
I appreciate that. If if you could also just recap quickly where things stand on some of your student loan efforts.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we have taken a major law enforcement action against Navient, formerly known as Sallie Mae.
Our order bans Navient from ever again reentering the federal student loan servicing world. We need to make sure that loan servicers actually provide service, and that's going to continue to be a place where we know that people when they cannot get an affordable repayment plan that they're entitled to, if they're steered into a more expensive option, it's not just bad for them. It's bad for our whole economy.
Senator Chris Van Hollen (D-MD)
Well, thank you. And thank you, Mr. Chairman, for holding this hearing.
And again, I can tell you that my Maryland constituents appreciate the fact that at the federal level, um, there's someone looking out to better protect them and provide redress when they get cheated out of their money. Thank you.
Senator Sherrod Brown (D-OH)
Senator Van Hollen. Senator Warnock of Georgia is recognized.
Senator Raphael G. Warnock (D-GA)
Thank you so very much, Chair Brown, and it's been a real honor serving with you on this committee.
Um, thank you for recommending me to serve, and I feel like we've done a lot of great work together over the past four years. You're an incredible example of public service.
I want to echo what Senator Van Hollen has said. Thank you for putting housing and urban affairs back in this committee.
And, um, I can't say enough about your leadership, and grateful for your friendship.
Thank you so very much, Director Chopra. It's always good to see you.
Thank you for all of the actions that you've taken to improve the financial lives of all Americans. You really have been an advocate and champion for the people.
Under your leadership, the CFPB has returned more than $6 billion to harmed consumers. $6 billion.
You've been focused on reducing excessive junk fees, ensuring student loan companies are not taking advantage of borrowers, and putting money back in the pockets of hard-working Americans.
I see the impact of this work up close, not only as a senator, but as a pastor, and as someone who had to depend on these student loans to get through my own education, I know the importance of the work that you do.
I especially commend your extensive work to protect consumers in rural communities and underserved communities.
And this is critical work that must continue during the next administration.
Also look forward to working with our incoming chair, Senator Scott, on issues we both care about, like ensuring access to affordable housing and expanding economic opportunity for working families.
I look forward to working with Chairman Scott.
Director Chopra, when you appeared before this committee in June, we discussed the consequences of medical debt, especially for those who are living in rural communities. A medical emergency can literally just change people's lives in deeply consequential ways.
And that's why yesterday Chair Brown and I sent you a letter emphasizing the importance of finalizing the CFPB's proposed rule to block medical debt from appearing on most Americans' credit reports. I think this is so critical and so important. It's an issue that you and I have worked closely on. Medical debt is often unanticipated, it's unplanned, and it can be high even if someone is insured. In a word, it's something that could happen to any one of us. It could happen to anybody.
Medical debt also disproportionately affects those living in states like Georgia, where Medicaid has not yet been expanded.
Director Chopra, how would the CFPB's proposed medical debt rule protect Americans from the unfair consequences of medical debt on their credit report, and why is this rule so important?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, when I think especially about, you mentioned rural areas in Georgia, um, you may know that there are people who have a serious emergency and sometimes need to have an air ambulance.
And that air ambulance, they don't get to shop around. They get the one that is available, or even just a regular ambulance. It's not something that you search online and choose.
And what happens is they sometimes are in situations where their insurance company, and there's in-network, out-of-network, they get enormous amounts of debt, and medical issues are a huge driver of bankruptcy, including in rural areas.
We do not want our health care system leading to people being financially ruined.
And I think our efforts and our proposed rule to restrict how some of that information gets on credit reports, we don't want there being further impacts on higher rates on loans, not passing an employment verification check, not being able to get an apartment. We shouldn't be kicking people when they're down, and we shouldn't let debt collectors weaponize that credit reporting system.
Senator Raphael G. Warnock (D-GA)
Thank you so much. There's so much more I could say about this, but I want to quickly get to another topic.
In July of last year, I held a hearing in my Consumer Protection Subcommittee on unfair overdraft fees charged by some banks, shedding light on how these unnecessary fees harm Americans' wallets.
Last week, the CFPB announced it would begin to send refund checks to Americans who were charged illegal junk fees by a group of credit repair companies, credit repair companies.
How much money will this put back in Americans' pockets?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Just that one action, I believe, is about $2 billion, and I think we sent over 240,000 checks just to Georgia.
Senator Raphael G. Warnock (D-GA)
That's right. $2 billion, 240,000 checks to Georgia, equaling more than $103 million. This decision should be a warning, it seems to me, to any financial services company that is illegally charging junk fees to any consumer.
What lasting change do you think aggressive enforcement like this will have?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we need to make sure that not only are we catching it when it's happening, but we're stopping it before it takes place. It's why we've done other work to put into place stronger safeguards to stop illegal junk fees from permeating the American consumer.
Senator Raphael G. Warnock (D-GA)
Thank you so much for your work. I look forward to you finalizing rulemaking on this issue, and we look forward to the work that we will do ahead in protecting consumers.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Thank you, sir.
Senator Sherrod Brown (D-OH)
Thanks, Senator Warnock. Senator Schiff, welcome. Senator Schiff from California, glad you're here.
Senator Adam B. Schiff (D-CA)
Chairman, thank you. I'm thrilled to be on your committee, and I want to begin by thanking you for your extraordinary service and how you have been just an indefatigable champion of working families.
You have been the Senate's canary in the coal mine, sounding the alarm whenever the dignity of work was threatened.
Senator Sherrod Brown (D-OH)
Thank you, sir.
Senator Adam B. Schiff (D-CA)
Well, thank you. Truly grateful.
And, Director, thank you for your very important work. In particular, I want to thank you for the efforts you're making to combat the sale of Americans' personal, private, sensitive data, in particular to foreign adversaries.
I appreciate you're using whatever authority you have to combat that, and whatever authority you don't have, we need to act by statute to make sure that we're protecting the privacy of the American people.
I want to concentrate my few minutes, though, on really the top challenge that Californians are facing, and that is housing.
And I want to drill down in particular on one issue we discussed a bit earlier, and that is the use of algorithms or AI to set rent when large holders of real estate use these new tools.
On the one hand, it's, I'm sure, been a historic practice to try to figure out what the market will bear on rent, as is any other good or item or necessity.
At the same time, now with the use of this technology, it feels a little like calling around to your big competitors and saying, "What rent are you going to charge so that I can charge the same rent, or we can all charge a higher rent?"
Where does market research cross the line into price fixing, and what should we do about it?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, we have seen, Senator Schiff, so much use of algorithms and AI in housing. When Chairman Brown started, we talked about how technology should help people get housing, not actually make it worse.
We've seen algorithms actually mismatch people using just their last name and first initial. So imagine S. Brown or A. Kim falsely matched with someone and blocking them from getting an affordable apartment.
But those same software companies also offer arrangements to help you track rent, and we should not allow that to be a vehicle for price fixing. The Department of Justice has sued RealPage for algorithmic price fixing. The complaint details about how the company set up the algorithm in order to push up rents across the country.
In California and across America, people are dealing with rent that is just too damn high, and we need to make sure it is not the result of price fixing or gouging enabled by technology.
Senator Adam B. Schiff (D-CA)
And has that been measurable? That is can you see in markets where they use these algorithmic tools, what the rent increases have been compared to other places that have not used utilized that technology?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
I don't have it off the top of my head, but I believe the DOJ's complaint and some other research has showed how it can lead to collusive practices. And we need to also look at how certain types of owners of real estate. There has been concerns about certain private equity funds, buying all the rental housing in certain places, or buying single family homes, leaving them vacant, waiting to push up rents. So this is not just there's important supply issues. I agree.
But we gotta look at these business practices as well to make sure they're not gouging renters.
Senator Adam B. Schiff (D-CA)
And on that issue of corporate ownership of housing, which has become more and more prevalent, what kind of work are you doing in this area?
And where you're seeing the greatest impacts of that new investment focus of Wall Street?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, our focus really is on mortgage. We want to make sure that people have lots of options to refinance their mortgage. But you're right, corporate ownership of real estate after the financial crisis. There were so many homes foreclosed on, and many got swallowed up by deep-pocketed investors.
Many thought that this would help the market correct, but we haven't seen that. And in fact, we've seen many people facing rental markets that are so tight that rents just keep going up and up.
Senator Adam B. Schiff (D-CA)
Director, thank you.
Thank you, Chairman. I yield.
Senator Sherrod Brown (D-OH)
Thank you, Senator Schiff.
Senator Kim of New Jersey, welcome. Welcome to the committee. Welcome to the Senate. Glad you're here.
Senator Andy Kim (D-NJ)
Yeah. Thank you, Chairman. And it's an honor to be able to overlap with you, to be able to
have a chance to be able to serve together, however brief. But just the incredible work that you've done over your career. And it certainly puts a lot on us to make sure that we're continuing this fight.
And Director, great to see you. I wanted to just kind of get into a few things.
One of the biggest things I've tried to wrap my head around in this work is this kind of concept of what I call customer service governments. You know, just trying to make sure that we're being responsive to the people, trying to think through all the different ways in which people interact with government, and how do we make those interactions as frictionless as possible?
And one thing I was intrigued by is the work that your organization does direct to, for instance, the people of New Jersey. I think you fielded nearly 100,000 complaints from people in New Jersey, returned over $60 million just in the last year. I guess I want to get a sense from you, you know, how that component of CFPB is working. Is there something there that can be scaled? Is there more that we can be doing to ensure that people are getting their returns, getting the resources that they deserve?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
I love this question because we want government to be responsive to real problems, not fake ones.
And one of the things that we do is we have a consumer response center, and it's not just a place where you send an email and it goes into a black hole. We, since 2021, we've seen cases surge to about 200,000 a month, and we require financial institutions to respond.
And that means without the CFPB spending any resources, people are getting refunds, their credit report corrected. And we have a dashboard that shows where people are complaining and about what.
So in New Jersey, we know the types of complaints people have and the companies who are the subject of those complaints. This is all shared with law enforcement.
And people tell me that when they file a complaint, get a response, sometimes get a refund, they think, "Wow, actually their government is doing something for them."
And we want, we have been working with other agencies to replicate that.
Senator Andy Kim (D-NJ)
Now one of the biggest complaints that I constantly hear, and I hear not just from my constituents, I hear it from my mother, my father about, you know, about scams that are targeting elderly, in in our countries targeting our seniors.
I guess I just want a gut check from you. I know there's certainly steps that we've been trying to take on this, but, like, are we making any progress here? Because it feels so overwhelming sometimes just in terms of the sheer volume of these attacks, and I imagine they're getting more and more sophisticated.
So I guess I wanted to just ask you, are we at the scale that we need? Are we moving in the right direction, or are we still falling behind?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, it's pretty tragic because a lot of older Americans actually get texts and calls that seem so authentic. And with generative AI, they can even clone voices of their family members.
These are so sophisticated that we need to look upstream. One of the places where a lot of scam texts come from is actually in Southeast Asia, and it is actually those who are victims of human trafficking that are sending those texts.
We have to make sure we're sanctioning
Senator Andy Kim (D-NJ)
The victims of human trafficking that are sending these texts and are being forced to do this?
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Yes. They are being forced to scam people in America.
And we have to make sure that we are sanctioning. The Treasury Department has done some of that. We have to make sure that our big telecom carriers are blocking some of these scam texts. And we also need to make sure that digital payment services are really identifying fraud and errors earlier.
I worry we sometimes are playing a game of whack-a-mole, but need to go upstream to combat this at scale.
Senator Andy Kim (D-NJ)
And I think that that scaling component is what I'm trying to fixate on because, you know, no doubt that we're taking some steps forward. But, again, just the sheer volume. And as you said, with, you know, the advent of AI and other technologies that are out there.
I guess I just wanted to get a sense from you. You know, as you're seeing this across your portfolio, where are we heading here in terms of the capacity for AI to be used in those nefarious ways?
I just imagine that you can see things in terms of trajectories that are important for this committee to hear about, to know about so that as we're trying to make decisions, we have a sense of what it is that we're trying to try to stop down the road.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Well, I think this committee played a big role in making sure that reports, dossiers about consumers are not being misused or weaponized.
It's one of the reasons the CFPB is proposing rules to update the Fair Credit Reporting Act regulations to rein in some of the worst data broker abuses who often sell this data to scammers who are ripping off older Americans.
Senator Andy Kim (D-NJ)
Great. Thank you so much.
Senator Sherrod Brown (D-OH)
Thanks, senator Kim. Director, thank you for joining us. Thanks to thanks to the witness. Thanks for all of you. For senators who wish to submit questions for the hearing record, those questions are due 1 week from today, Wednesday, December 18th.
To the witnesses, please submit your responses to questions, for the record 45 days from the day you receive them.
The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
And if I could, in addition to welcoming, and thanking senator Kim and senator Schiff, I also, wanna offer my huge gratitude to senator Tester and especially to you, chairman Brown. I think I've sat before you many, many times, over the decade, and you have been an enormous champion for every single consumer in America. And you have taught me so much, and I'm forever grateful.
Senator Sherrod Brown (D-OH)
Thank you. As you have taught this committee a great deal and both jobs that I've seen you do, you've done spectacularly well. Thank you, and the committee is adjourned.