Transcripts For CSPAN Hearing 20240704 : vimarsana.com

The gym before wisconsin is recognized for five minutes. I think the chair. Me start , mr. Johnson. The cfpb can see that it quote lacks sufficient information of ■substantial number of known Market Participants necessary to estimate their larger participant status, end quote. In other words, they dont know the data can then have the data. It of how much the rule really consult with the full market impacts could be. Cfpb uscirf under cfpb. With this the unusual in your professional opinion . I think would be unusual and certainly present a challenge risk. In some ways this is bureaus response to an executive order and revise guidance or omb regarding the relaxing of standards for costbenefit analysis. I appreciate that. I continue to have concert cfpb isnt doing a proper costbenefit analysis and the fact we dont have data that swl ethic is currently concerning. Let me continue on which if i can mr. Johns. The law authorizing the cfpb says the bureau shall consult with the federal trade commission■w define covered person under larger participant rules that the bureau has said its consulting with or provide an opportunity for which could e ftc did not actually wait in. Can you explain briefly for the record why consult with the ftcf white would be a problem if the cfpb actually did not fulfill its regulatoryments . The doddfrank act creates clear distinctions and boundaries between the ftc and cfpb. And the cfpb inherited certain Consumer Protection authorities but not antitrust authorities from the ftc. So its vital importance the cfpb consult regular basis and caucus require them to compel other agencies. I think for the return of establishing their not intruding upon the jurisdiction boundaries the ninth of in the doddfrank act. Appreciate that. Let me jump over to you, mr. Solway. To say that correctly . Yes, sir. Thank you much. Filibustered about how sweeping recoveries under the cfpbs authority would impact the cost of Payment Services to consumers. And so how does insert about the la cost impact the lpr impact of petition and innovation in the payments industry . I think uer adds cost come even just the initial legal fee is to do with the ambiguity of whether or not a Market Participant is a should be covered. Then your further uncertainty when it becomes hard to budget for those compliant risks. All of those issues take away precious time, capital and attention to only make it harder for folks to innovate. When that is the case consumers can miss out on new and important technology. Thank you. Let me turn to you, mr. Holshouser, if i can. Lets take a broader view of the cfpbs expansion impacts are a kind of workers. At added some high inflation pe can afford thinks any. The bureau has targeted a Competitive Industry with innovators coming from across the globe. I am concerned overbearing and poorly considered regulations from the cfpb will make the u. S. Less competitive and pushing jobs overseas. Can you talk about how the lpr and that the cfpb efforts may discourage innovation and investment here in the United States. Us great question. You got to promise the safeguards within five and for innovation comes , redtapee Innovative Companies that are the envy of the world we have here in the u. S. , innovators and the american spirit and our laws and regulation that allow innovation in two floors. You just look at the eu. Theres been a 40 decrease in investment and started since t gdpr, showing an onerous topdown regulation has a huge constriction effect on innovation and investment. In this country are mostly created by startups and Small Businesses. They are going to really see the impact and burden much more than larger platforms, and to think its misguided to think this rule only targets what is being seen as big plays. Little ones are the ones that need to help and this is going to constrict their ability to grow and stifle innovation. I share your concerns. I met currently concerning the cfpb is going to continue to stifle innovation did love it here and the United States. Our witnesses. Mr. Cir adjustment from california is recognized. I have redone my questions. I w another five. The chair recognizes himself. Also with this but i think since about the larger participant abroad we have the opportunity to explore its impact for the today. First lets begin with refresher what the larger participant ruld categories of supervisory jurisdiction pursuant to doddfrank the number one, Financial Institutions with over 10 billion i assets. Number assets. Number two, mortgage companies, payday lenders and student lenders. Company number three, companies quoteunquote larger participant in the Consumer Financial market, and the before, companies by cfpb as a potential risk to consumers. If unchecked that third category the larger participant category is sufficiently broad as to potential to expand the cfpbsrr time. I fear we are seeing that with this rule today. One example of how this will expand cfpbs which hasnt gotten much discussion as it relates to merchants. Cfpb is explicitly barred from supervising merchants pursuant to doddfrank when they are selling nonfinancial goods. This is a common sense guardrail. Cfpb is a financial regulator. They dont havethority over nonl merchants in the country, and they shouldnt. However, i go this proposal takes the boundary and pushes it away. One piece of visual claims if at any time the merchant uses Consumer Payment information for something other than completing the transaction including for nign purposes like research, they go from selling a nonfinancial good to a Financial One and are therefore within the scope of the rule. Lets step back and think about that for just a moment. When a completely nonfinancial merchant conducts research on their payments of data, even for good reason like conducting research totop future fraud, they could be subject to cfpb supervision or for example, if a consumer buys a recliner chair at an Online Furniture store, whether not the transaction is considered a financial transaction by the cfpb would depend upon exactly how have merchant treats the information. According to this interpretation the fact we are talked about a merchant selling a of First Venture is relevant. Cfpb still have jurisdiction anyway. To delay for the cfpb this could extend the Supervisory Authority to merchants selling any and all kinds of goods. Them to go from a financial regulator to regular to the could of authority over anything sold online. Another way the rulemaking expand cfpbs authority is not just overuse dollar transactions but Digital Asset transactions. Again, this would be a broad expansion of their power. Mr. Johnson, in your testimony you connected the cfpbs jurisdictional wrap over Digital Asset transactions to major questions doctrine from the landmark West Virginia versus case. Do you believe the cfpb has clear congressional authorizatn for its claimed authority over Digital Assets . And please explain why or why not. I dont believe it has of ause congress didnt give it that the authority and didnt give it that authority expressly in title x of the doddfrank act. Y that because the members of the smith at the work of delicate authority to regulators over Digital Asset for your pet will be rather discouraging if cfpb could simply claim authority over the space with the stroke of the pin and very little legal basis. I would like to close today bute proposed rule. It completely failed to assess its potential impact on Small Businesses pursuant to t rules l not have Significant Impact on small entities but does so with no serious analysis. This is despite the fact Small Businesses and Sole Proprietor for some of the most common uses of thirdparty Payment Technology that could be clearly mr. Holshouser, to mention the lack of analysis regarding the rules potential Small Business impact in your testimony. Ul on this topic. Was id be happy to. I think small and mediumsize businesses have noted whether not theyre covered under this proposal is that in itself is the problem. Were very investment of 17, at first but it think it estimates could be well in hundreds. Making decisions between spending money on compliance cost to do with this new propose regime versus innovating new products and then selling them, which is the lifeblood of creating a new business, you are going to see real headwind in your ability to maintain and grow. Hink if you limit and define the scope of this proposed rule in and more targeted basis, you will certainly give more certainty businesses were really confused but whether they would be caught into this and what that means for their abilityising money to. Thank you very much for your testimony. I never make it as a general from north carolina. Thanks to our church and a Ranking Member under witnesses for being here. I represent north carolinas 13th district, and i have said this before, the work of the cfpb is incredibly important. The mission of protecting consumer professor george americans regardless of political party. Cfpb recently released their larger participant rule for digital Consumer Payment apps in november or kindest and the goal of this rulemaking as millions are now using Digital Payment apps. However, im concerned thisul is overly broad and lacks clarity. Mr. Holshouser, as my colleagues have making the cfpb indicated that 17 companies would be covered by this role. However, they refuse to say which companies. Is that Standard Practice . What purpose is served by keeping the list of companies who would be impacted by this rule secret . This is not instead of this serves. Have no idea what certainty is what businesses need in order to operate their businesses and know how to plan. And this lack of specificity is a real■zp concern. Mr. Holshouser, again to you, given ten certainty this role, companies we discussed offering Payment Services to consumers and how will this impact competition and innovation. Absolutely unthinkable decrease the players in the market■x and reduce new entrant. It will cause those that are in it might be caught up in this role to retract from this market lessen the number of products and, therefore, hurt competition. Mr. Ken, next question to you. To justify the role that cfpb only perform a costbenefit analysis of peertopeer products, however the road cover products like express checkout that have nothing to do w future. Costbenefit analysis is a right for the cfpb to propose such an allencompassing when you dont have adequate data to justify it . I agree the proposed rule conflates very separate and distinct payment products and functionalities. It doesnt explain why it does so. And not explaining why conates them, theres a costbenefit or any sort of empirical analysis to support that kind of overly broad definition. Mr. Kim, i came to you. How is this larger participant role compared to previous larger participant rules . Ell, with prior ones we were not asking these questions like with service, and when who the big players were i dont think people debated by much concern about whether the threshold would capture the large ones versus the small ones. I think todays hearing highlights how theres a lot of uncertainty about the scope of the rule and its potential impact. Mr. Kim, again to you. Can you walk us through what a a typical supervisor examination by the cfpb would look like for firms identified as larger participants and describe what powers the cfpb has over an entity once it has been designated as a larger participant . W they sin examiners santa. Its at a minimum several that easily 20 to 30 who are logiTech Companies, i would imagine the cfpb would bring it socalled a game and bring as many as it can. It would be probably a combination of hosting an onsite but also hybrid or virtual. And these■t■ms. So were talking about wave after wave of information requests and followup requests, and then Companies Often field of those questions for over a year and then maybe you might get an exam report a year or two later. So its significant. People have to kind of dropped their day jobs to respond torma. Thank you, and i yield back. Gentleman yields back. Gentleman from florida is like a. Thank you, chairman. Y hearing. I say often in this room that the first thing i ever watched as a as a citizen of this country was the Financial Services hearings when doddfrank was being created. I was in the finance world, not a member and to be blunt and no disrespect to the staff on capitol hill, not a staffer of writing memos about the financial wor doing it. A lot of the things in doddfrank concerned me. Most overall overarching was the cfpb a■gnd cfpb will be this overarching agency with no real oversight that which is roam the fruited plains trying to figure out what they can meddle in. Today. Mr. Holshouser, we get very technical in Financial Services for the pe what actually our Digital Payment systems . What are theut that will apply to the American Consumer . Thats an incredibly complex and diverse question with a lot of different aspects to it just give me an example. But you are running Financial Transactions through large digital pipe a bunch of data sent back and forth between merchants and banks with other regular entities and payment ecosystem also involved in that. Would cryptoware be part of that. Was subject to interpretation but yes. On a consumer i go on my phone i download a digital wallet. I put crypto stablecoins potentially even cash in this wont work with that ill be subject to the cfpbs role . Under the proposed rule, yes. Okay. Mr. Odinet, professor odinet, question for you. Even in this infancy when doddfrank was being created, did thebers i will see Democrat Members because they are going to voted for, did actually think it would make it possible that the cfpb would regulate consumer transactions so i wasnt involved in that process. Like you i was much younger. But what again is congress intended for the cfpb to have jurisdiction over nonbank, not depository institutions involved in the provision of Consumer Financial products and servicesn representative but im short on time. You know why they did that . Because of the lending market because i was a lender at the time. In the lending market, home mortgages specifically where you could jump itself want to buy this house, you have no credit report, no Income Verification and a nonbank issues you a mortgage to go buy a house that you cant afford, isnt that so i think the subprime mortgage crisis was at the forefront of congress at the time but that doesnt mean that the bureaus authority is limited to the Mortgage Market to contact the text of the act of forgot that into multiple different types of Consumer Financial products. Professor odinet i would like to opine on the part thats when doddfrank is trashed and what are the worst piece of legislation ever contemplated by this body. But let me move on. Do you think the digital wallets poses a systemic threat to the United States of america . By justin is the bureau is not making this will make on the basis of systemic threat but of the threat of consumer harm and offering of is there consumer in americans being able to actually use the resources to buy goods and services from a business, a merchant from another individual . Under the limited facts of the questions, no. Is it plausible that an american citizen needs a license or neede cfpb under to transact business income . No, but the business that facilitated do. You said inqou that and i want to say quote, businesses could discriminate based upon information that they take down in the normal course of business. Is there any evidence at all that theres been any discrimination with the use oft . I think proper supervision will reveal whether or not that is the case. M of these Tech Companies or Fintech Company actually allowing for these products to be used by consumers . Not that im aware of for loss of data within the cfpb jurisdiction. Heres a question for you. Do you tvidence to the factor might be discrimination with use of any of these products by consumers . I think the bureau is articulate concern the kk to speculative concerns rather than actual observations of marketplace behavior. For the people watching at home the cfpb i looking for something to do because they are busybodies. There is funded for them to regulate into space. Mr. Chopra once again is way beyond his bounds which is why this agency needs to go away permanently. I yield. The gentleman from illinois is recognize. Thank you, mr. Chairman, to witnesses. Mr. Odinet come in your test what you don■nt many of the friends we expect to be covered of the larger participants role our large nontech bank friends. And as a slice of benefit from the mass collection of consumer data. Typically we think of this through the lens of marketing usually insights from interactions with your favorite Search Engine associated out toe more likely to get you to buy something or others have relationships with third parties also access to consumers information. As you note large Market Participants<\/a> necessary to estimate their larger participant status, end quote. In other words, they dont know the data can then have the data. It of how much the rule really consult with the full market impacts could be. Cfpb uscirf under cfpb. With this the unusual in your professional opinion . I think would be unusual and certainly present a challenge risk. In some ways this is bureaus response to an executive order and revise guidance or omb regarding the relaxing of standards for costbenefit analysis. I appreciate that. I continue to have concert cfpb isnt doing a proper costbenefit analysis and the fact we dont have data that swl ethic is currently concerning. Let me continue on which if i can mr. Johns. The law authorizing the cfpb says the bureau shall consult with the federal trade commission\u25a0w define covered person under larger participant rules that the bureau has said its consulting with or provide an opportunity for which could e ftc did not actually wait in. Can you explain briefly for the record why consult with the ftcf white would be a problem if the cfpb actually did not fulfill its regulatoryments . The doddfrank act creates clear distinctions and boundaries between the ftc and cfpb. And the cfpb inherited certain Consumer Protection<\/a> authorities but not antitrust authorities from the ftc. So its vital importance the cfpb consult regular basis and caucus require them to compel other agencies. I think for the return of establishing their not intruding upon the jurisdiction boundaries the ninth of in the doddfrank act. Appreciate that. Let me jump over to you, mr. Solway. To say that correctly . Yes, sir. Thank you much. Filibustered about how sweeping recoveries under the cfpbs authority would impact the cost of Payment Services<\/a> to consumers. And so how does insert about the la cost impact the lpr impact of petition and innovation in the payments industry . I think uer adds cost come even just the initial legal fee is to do with the ambiguity of whether or not a Market Participant<\/a> is a should be covered. Then your further uncertainty when it becomes hard to budget for those compliant risks. All of those issues take away precious time, capital and attention to only make it harder for folks to innovate. When that is the case consumers can miss out on new and important technology. Thank you. Let me turn to you, mr. Holshouser, if i can. Lets take a broader view of the cfpbs expansion impacts are a kind of workers. At added some high inflation pe can afford thinks any. The bureau has targeted a Competitive Industry<\/a> with innovators coming from across the globe. I am concerned overbearing and poorly considered regulations from the cfpb will make the u. S. Less competitive and pushing jobs overseas. Can you talk about how the lpr and that the cfpb efforts may discourage innovation and investment here in the United States<\/a>. Us great question. You got to promise the safeguards within five and for innovation comes , redtapee Innovative Companies<\/a> that are the envy of the world we have here in the u. S. , innovators and the american spirit and our laws and regulation that allow innovation in two floors. You just look at the eu. Theres been a 40 decrease in investment and started since t gdpr, showing an onerous topdown regulation has a huge constriction effect on innovation and investment. In this country are mostly created by startups and Small Businesses<\/a>. They are going to really see the impact and burden much more than larger platforms, and to think its misguided to think this rule only targets what is being seen as big plays. Little ones are the ones that need to help and this is going to constrict their ability to grow and stifle innovation. I share your concerns. I met currently concerning the cfpb is going to continue to stifle innovation did love it here and the United States<\/a>. Our witnesses. Mr. Cir adjustment from california is recognized. I have redone my questions. I w another five. The chair recognizes himself. Also with this but i think since about the larger participant abroad we have the opportunity to explore its impact for the today. First lets begin with refresher what the larger participant ruld categories of supervisory jurisdiction pursuant to doddfrank the number one, Financial Institutions<\/a> with over 10 billion i assets. Number assets. Number two, mortgage companies, payday lenders and student lenders. Company number three, companies quoteunquote larger participant in the Consumer Financial<\/a> market, and the before, companies by cfpb as a potential risk to consumers. If unchecked that third category the larger participant category is sufficiently broad as to potential to expand the cfpbsrr time. I fear we are seeing that with this rule today. One example of how this will expand cfpbs which hasnt gotten much discussion as it relates to merchants. Cfpb is explicitly barred from supervising merchants pursuant to doddfrank when they are selling nonfinancial goods. This is a common sense guardrail. Cfpb is a financial regulator. They dont havethority over nonl merchants in the country, and they shouldnt. However, i go this proposal takes the boundary and pushes it away. One piece of visual claims if at any time the merchant uses Consumer Payment<\/a> information for something other than completing the transaction including for nign purposes like research, they go from selling a nonfinancial good to a Financial One<\/a> and are therefore within the scope of the rule. Lets step back and think about that for just a moment. When a completely nonfinancial merchant conducts research on their payments of data, even for good reason like conducting research totop future fraud, they could be subject to cfpb supervision or for example, if a consumer buys a recliner chair at an Online Furniture<\/a> store, whether not the transaction is considered a financial transaction by the cfpb would depend upon exactly how have merchant treats the information. According to this interpretation the fact we are talked about a merchant selling a of First Venture<\/a> is relevant. Cfpb still have jurisdiction anyway. To delay for the cfpb this could extend the Supervisory Authority<\/a> to merchants selling any and all kinds of goods. Them to go from a financial regulator to regular to the could of authority over anything sold online. Another way the rulemaking expand cfpbs authority is not just overuse dollar transactions but Digital Asset<\/a> transactions. Again, this would be a broad expansion of their power. Mr. Johnson, in your testimony you connected the cfpbs jurisdictional wrap over Digital Asset<\/a> transactions to major questions doctrine from the landmark West Virginia<\/a> versus case. Do you believe the cfpb has clear congressional authorizatn for its claimed authority over Digital Asset<\/a>s . And please explain why or why not. I dont believe it has of ause congress didnt give it that the authority and didnt give it that authority expressly in title x of the doddfrank act. Y that because the members of the smith at the work of delicate authority to regulators over Digital Asset<\/a> for your pet will be rather discouraging if cfpb could simply claim authority over the space with the stroke of the pin and very little legal basis. I would like to close today bute proposed rule. It completely failed to assess its potential impact on Small Businesses<\/a> pursuant to t rules l not have Significant Impact<\/a> on small entities but does so with no serious analysis. This is despite the fact Small Businesses<\/a> and Sole Proprietor<\/a> for some of the most common uses of thirdparty Payment Technology<\/a> that could be clearly mr. Holshouser, to mention the lack of analysis regarding the rules potential Small Business<\/a> impact in your testimony. Ul on this topic. Was id be happy to. I think small and mediumsize businesses have noted whether not theyre covered under this proposal is that in itself is the problem. Were very investment of 17, at first but it think it estimates could be well in hundreds. Making decisions between spending money on compliance cost to do with this new propose regime versus innovating new products and then selling them, which is the lifeblood of creating a new business, you are going to see real headwind in your ability to maintain and grow. Hink if you limit and define the scope of this proposed rule in and more targeted basis, you will certainly give more certainty businesses were really confused but whether they would be caught into this and what that means for their abilityising money to. Thank you very much for your testimony. I never make it as a general from north carolina. Thanks to our church and a Ranking Member<\/a> under witnesses for being here. I represent north carolinas 13th district, and i have said this before, the work of the cfpb is incredibly important. The mission of protecting consumer professor george americans regardless of political party. Cfpb recently released their larger participant rule for digital Consumer Payment<\/a> apps in november or kindest and the goal of this rulemaking as millions are now using Digital Payment<\/a> apps. However, im concerned thisul is overly broad and lacks clarity. Mr. Holshouser, as my colleagues have making the cfpb indicated that 17 companies would be covered by this role. However, they refuse to say which companies. Is that Standard Practice<\/a> . What purpose is served by keeping the list of companies who would be impacted by this rule secret . This is not instead of this serves. Have no idea what certainty is what businesses need in order to operate their businesses and know how to plan. And this lack of specificity is a real\u25a0zp concern. Mr. Holshouser, again to you, given ten certainty this role, companies we discussed offering Payment Services<\/a> to consumers and how will this impact competition and innovation. Absolutely unthinkable decrease the players in the market\u25a0x and reduce new entrant. It will cause those that are in it might be caught up in this role to retract from this market lessen the number of products and, therefore, hurt competition. Mr. Ken, next question to you. To justify the role that cfpb only perform a costbenefit analysis of peertopeer products, however the road cover products like express checkout that have nothing to do w future. Costbenefit analysis is a right for the cfpb to propose such an allencompassing when you dont have adequate data to justify it . I agree the proposed rule conflates very separate and distinct payment products and functionalities. It doesnt explain why it does so. And not explaining why conates them, theres a costbenefit or any sort of empirical analysis to support that kind of overly broad definition. Mr. Kim, i came to you. How is this larger participant role compared to previous larger participant rules . Ell, with prior ones we were not asking these questions like with service, and when who the big players were i dont think people debated by much concern about whether the threshold would capture the large ones versus the small ones. I think todays hearing highlights how theres a lot of uncertainty about the scope of the rule and its potential impact. Mr. Kim, again to you. Can you walk us through what a a typical supervisor examination by the cfpb would look like for firms identified as larger participants and describe what powers the cfpb has over an entity once it has been designated as a larger participant . W they sin examiners santa. Its at a minimum several that easily 20 to 30 who are logiTech Companies<\/a>, i would imagine the cfpb would bring it socalled a game and bring as many as it can. It would be probably a combination of hosting an onsite but also hybrid or virtual. And these\u25a0t\u25a0ms. So were talking about wave after wave of information requests and followup requests, and then Companies Often<\/a> field of those questions for over a year and then maybe you might get an exam report a year or two later. So its significant. People have to kind of dropped their day jobs to respond torma. Thank you, and i yield back. Gentleman yields back. Gentleman from florida is like a. Thank you, chairman. Y hearing. I say often in this room that the first thing i ever watched as a as a citizen of this country was the Financial Services<\/a> hearings when doddfrank was being created. I was in the finance world, not a member and to be blunt and no disrespect to the staff on capitol hill, not a staffer of writing memos about the financial wor doing it. A lot of the things in doddfrank concerned me. Most overall overarching was the cfpb a\u25a0gnd cfpb will be this overarching agency with no real oversight that which is roam the fruited plains trying to figure out what they can meddle in. Today. Mr. Holshouser, we get very technical in Financial Services<\/a> for the pe what actually our Digital Payment<\/a> systems . What are theut that will apply to the American Consumer<\/a> . Thats an incredibly complex and diverse question with a lot of different aspects to it just give me an example. But you are running Financial Transactions<\/a> through large digital pipe a bunch of data sent back and forth between merchants and banks with other regular entities and payment ecosystem also involved in that. Would cryptoware be part of that. Was subject to interpretation but yes. On a consumer i go on my phone i download a digital wallet. I put crypto stablecoins potentially even cash in this wont work with that ill be subject to the cfpbs role . Under the proposed rule, yes. Okay. Mr. Odinet, professor odinet, question for you. Even in this infancy when doddfrank was being created, did thebers i will see Democrat Members<\/a> because they are going to voted for, did actually think it would make it possible that the cfpb would regulate consumer transactions so i wasnt involved in that process. Like you i was much younger. But what again is congress intended for the cfpb to have jurisdiction over nonbank, not depository institutions involved in the provision of Consumer Financial<\/a> products and servicesn representative but im short on time. You know why they did that . Because of the lending market because i was a lender at the time. In the lending market, home mortgages specifically where you could jump itself want to buy this house, you have no credit report, no Income Verification<\/a> and a nonbank issues you a mortgage to go buy a house that you cant afford, isnt that so i think the subprime mortgage crisis was at the forefront of congress at the time but that doesnt mean that the bureaus authority is limited to the Mortgage Market<\/a> to contact the text of the act of forgot that into multiple different types of Consumer Financial<\/a> products. Professor odinet i would like to opine on the part thats when doddfrank is trashed and what are the worst piece of legislation ever contemplated by this body. But let me move on. Do you think the digital wallets poses a systemic threat to the United States<\/a> of america . By justin is the bureau is not making this will make on the basis of systemic threat but of the threat of consumer harm and offering of is there consumer in americans being able to actually use the resources to buy goods and services from a business, a merchant from another individual . Under the limited facts of the questions, no. Is it plausible that an american citizen needs a license or neede cfpb under to transact business income . No, but the business that facilitated do. You said inqou that and i want to say quote, businesses could discriminate based upon information that they take down in the normal course of business. Is there any evidence at all that theres been any discrimination with the use oft . I think proper supervision will reveal whether or not that is the case. M of these Tech Companies<\/a> or Fintech Company<\/a> actually allowing for these products to be used by consumers . Not that im aware of for loss of data within the cfpb jurisdiction. Heres a question for you. Do you tvidence to the factor might be discrimination with use of any of these products by consumers . I think the bureau is articulate concern the kk to speculative concerns rather than actual observations of marketplace behavior. For the people watching at home the cfpb i looking for something to do because they are busybodies. There is funded for them to regulate into space. Mr. Chopra once again is way beyond his bounds which is why this agency needs to go away permanently. I yield. The gentleman from illinois is recognize. Thank you, mr. Chairman, to witnesses. Mr. Odinet come in your test what you don\u25a0nt many of the friends we expect to be covered of the larger participants role our large nontech bank friends. And as a slice of benefit from the mass collection of consumer data. Typically we think of this through the lens of marketing usually insights from interactions with your favorite Search Engine<\/a> associated out toe more likely to get you to buy something or others have relationships with third parties also access to consumers information. As you note large Payment Providers<\/a> have access to a very valuable trove of finance information about their users aty spend, where they spent it and how they manage their finances. Now, i mentioned most consumers would deem that sensitive information. What are some of the risks of nonbank Financial Firms<\/a> having access to that sort of information and what safeguards do you believe are as a naked in my written testimony one of the most important and profitable kind of information is that people spend their money, at that is exaly oe Payment Processing<\/a> payment platforms are able to generate and capture. The fear to my mind ishat kind n coupled with other types of nonfinancial consumer datasing l interactions, et cetera. And in combination engaged in activity relative to targeted marketing, price differentials on proct and services that is unlawful but is a discriminatory. Some of the ai algorithms of some of the big firms have been doing things like digital redlining that have resulted in real harm to american citizens. So how do the risk significant lines of business outside the Financial Services<\/a> sector . So i think this goes towards a question earlier about the the way in which nonbanks, not depository institutions engaged in the payment ecosystem\u25a0 placs him outside that division because theyre not depository, not falling under the bank holding act. That allows for a level of sharing and interaction and penetration between the payment side of house, if i can, and the commercial we will say the tech site of the, and its the coinaction of those lines of business and the data that they produce that a think poses the risk of creating these multidimensional very granular profiles about people and how that range of information can be used in ways that would find problematic. In recent months ive been happy to see the cfpb take steps to give consumers greater Financial Data<\/a>. Eir personal while the details are still being hammered out, the bureaus 1033 rulemaking i believe is an up or step to ensure that consumers and it is protected and that they have the freedom to walk away and move the data to another bank or Financial Institution<\/a> when to determine that they could be served better. So my question is this. How does his larger participants proposal interact with other Consumer Protection<\/a> laws and what would it rulemaking . So i think the way that supervision interacts with this idea, which generally referred to like a couple of open banking, is to ensure that those nonbank institutions that are covered by the role that are required to generate consumer data that is standardized and easily shareable which includes as controls on how much of it is shared and the need to get reauthorization on an annual basis are being complied with. Ths to impose new rules. Its to ensure that the rules already apply are being abided by. Thank you. How does the lack of Supervisory Authority<\/a> over Digital Payment<\/a> applications hinder the bureaus the ability to protect consumers Financial Data<\/a> right now . The problem is that when there are breakdowns in compliance with the consumer grammleachbliley act, or others, if the bureau does not have the ability to monitor on an ongoing basis, that level compliance of public generally does not discover misbehavior and wrongdoing. Until the consumer hormuz or havent. Its its also worth saying that there are benefits to supervision that were not mentioned at all today. One being we often hear about regulation through enforcement and the fear cfpb enforcement. Supervision happens on an ongoing basis and in a confidential capacity so that the business of the b engage in an ongoing dialogue, flag problems and resolve them before they become public. Thank you. My time is up and i yield back. Gentleman from South Carolina<\/a> is recognized. Thank you, mr. Chairman and thank you to the witnesses for being here today. Participant proposal, one cannot help but see it as another paragraph from director chopra cfpb. Since swearing in his his applied liberal academic theories with no common sense or basis in the real world. Time and time again he said theres are put into practicen s for services, and potential hurting consumers a set of protecting and promoting their best interest. What is worse is discussed which is our for siebel and even predicted by the seemingly everincreasing chorus of those of us with business experts. Our warnings are perpetually cast aside. It seems the only possible course correction will be either resist to 24 or who knows pes the supreme court. But for now i guess we will continue highlight the average cut to quinces of cfpbs proposals. This time the director is beming more cfpb Supervisory Authority<\/a> is not limited to the products or services that qualify the covered execution supervision every aspect suggesting companies fellow to provide services outside of the Financial Sector<\/a> t cfpbs oversight. Not only does this proposal appeared to be brought its incredibly ambiguous leaving many participants questioning their status. Holshouser, the cb identifies 17 firms as potential larger participant under the proposal. However, that collected data on the most 200 copies in consideration of the troll. To say the least it appears this widespread confusion among Market Participants<\/a> with many copies unsure of the designation. Given the ambiguity in the cfpbs definition of the market in this proposal are your member firms able to say with certainty whether they are covered . No. Do you think thats a problem . Market uncertainty is the bane of the existence of any business but particularly small and mediumsize businesses thats try to grow. The 17th that are mentioned dont account for the hundreds more that are in the space that are sitting wondering and likely to be covered under the scheme is on the small company,i[ maybi have 20 employees. Businesses no matter what size you want to compete on an even Playing Field<\/a> and it got to know the rules in order to compete. This is not productive. Mr. Kim defined appropriate for the children caps with both companies to facilitate transactions and those that provide a native digital wallet and what is the justification for such a broad scope . I dont see the justification in the proposed rule for combining what you think a a y different functionalities with different risk profiles. If, as every the proposal if you are payment credentials but that actually touching the money in any way, you are still covered by the rule. They then you treated and uses money. I dont think i see the explanation for treating those relationship for what it is which is just a way to expand the authority and have additional scope. Mr. This proposal the cfpb includes this Digital Asset<\/a>s. This committee has been crafting legislation that appear cfpb i trying to front run congress and expand its authority. What implications could this proposal out on the Digital Asset<\/a> ecosystem . If the cfpb were to succeed and as you put it front running congress, it would not only add additional regulatory uncertainty to an already uncertain space but when the specific risk would be the application of the filters self posted crypto want to do not exhibit the same underlying technological structure nor the same risk as more traditional Digital Payment<\/a> apps. This seems like a radical expaion of the cfpbs authorities. Could the cfpb uses novel interpretation of funds in future proposal . If unchecked and challenge they could get an addition lesst they can interpret and expand their authority broadly. Also given the unique nature of some Digital Asset<\/a>s doesnt cfpb provide sufficient guidance on which it Digital Asset<\/a>s they would consider to be funds and which would be excluded. No, they d not. Rovide little by way of guidance which is to say essentially none at all. They are very different types of Digital Asset<\/a>s out there and thn them is one of the shortcomings of the proposed rule. Im not sure what this proposed rule helps. It literally only seeks to extend the Directors Authority<\/a> and it further complicates this is his ability to compete in the u. S. And global economy. I would think it needs to be reconsidered. Again, as always i imagine that our warnings will bet take the e court or an election to change course. With that, mr. Chairman, i yield back. I would like to thank our witnesses for the testimony today. Without objection all members will have five legislative days within which to submit additional written questions for the witnesses to the chair which will be forwarded to the witness for the response. I asked eyewitnesses to please respond as probably as you are able. This hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaib conversations] [inaudible conversations]","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800209.us.archive.org\/19\/items\/CSPAN_20240314_072600_Hearing_on_Regulating_Payment_Apps__Digital_Wallets_-_part_2\/CSPAN_20240314_072600_Hearing_on_Regulating_Payment_Apps__Digital_Wallets_-_part_2.thumbs\/CSPAN_20240314_072600_Hearing_on_Regulating_Payment_Apps__Digital_Wallets_-_part_2_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240707T12:35:10+00:00"}