Transcripts For CSPAN Hearing On Consumer Financial Protecti

About a persons credit Card Transactions was enough to reidentifying the anonymous credit card data and 90 of the cases that they study. Doddfrank granted the cfpb expensive and Intrusive Authority with very little accountability or oversight. However the cfpbs Data Collection programs appear to exceed the mandate included in doddfrank. Under the guise of its supervisory monitoring and examination authorities the cfpb appears to have subordinated consumers interest with the Data Collection programs. What is more concerning for the cfpb claims to be an information driven agency it seems the cherrypicked data to justify pursuing a politicized rulemaking agenda. For publishing unverified Consumer Complaints on this web site using unreliable methodologies for auto lending the agency has proven time and time again that it will present only the most convenient of quote facts for its purposes. Not bleeding data to validate a regulatory outcome is not sound public policy. This is junk science. The cfpbs focus on responding to actual allegations of Consumer Fraud and discrimination rather than collecting data for the purposes of undertaking costly and abusive expeditions that i welcome our panel here today of witnesses and i look forward to hearing from them as they present their testimony. I nagged you five minutes to the jumo protects is the Ranking Member mr. Green for five minutes for his opening statement. Thank you very much mr. Chairman but i would like to thank the witnesses for appearing and i would like to acknowledge the presence of the honorable former speaker of the house and for our purposes today because he was the speaker i shall refer to him as mr. Speaker. I am mr. Chairman antithetical to most of what you said and i am also concerned about something that has occurred. Mr. Speaker, someone owes you an apology and someone owes you an apology because on the memos that i have received and on the witness list you are acknowledge to to have been the former speaker the former speaker of the house and indeed you should be but there is no acknowledgment of your affiliation with the u. S. Consumer coalition, and generally speaking this is what we do here. I have a document that i shall ask unanimous consent to be placed in the record. Without objection. At this document is dated july 23, 2015 on the Financial Services majority staff and its members of the committee about the doddfrank act five years later. And it indicates that we were having the to appear in the case that he was senior partner of u. S. Policy metrics and hes a former United States senator. The honorable Bradley Miller of counsel with grayson ellsworth llc and former member of congress. Im going to ask unanimous consent that the record be corrected so that it will be indicated on the memo and the witness list that you are mr. Speaker, you are associated with the u. S. Consumer coalition. I ask unanimous consent. If thats the case, without objection. I would also indicate why i have done this mr. Chairman. He wrote quite a few articles concerning this coalition, this group. It appears to be a corporate owned and subsidized synthetic grassroots organization. The activist consumer organizations know very little about it. The 501 c 4 , no way to ascertain who really funds it and i think its very important for us to know who is really coming after the cfpb, and this organization has a Mission Statement that coincides with much of what has occurred here in the congress of the United States of america. So im going to have to yield some time to the Ranking Member but i think its important for us to go into this. I have several articles that i will be entering into the record and having to use the speakers statement for today. Im going to assume that is just an oversight because nowhere in the statement does it indicate his affiliation with the u. S. Consumer coalition. This oversight has occurred or than once because it appears that the wall street journal said to issue an amplification of the result. This is something that has been called to our attention by various sources, one being media matters. But this i will now yield the remainder and residue of my time to the Ranking Member. Thank you very much. I appreciate the time. As we sit here today to talk about the cfpb Data Collection practices, the cfpb uses the dated users to collect potentially harmful products are not permeate the market to inform the agencys rulemaking effort to conduct critical supervisory oversight and to return money to consumers that have been harmed. Unfortunately my colleagues across the aisle are not here today to discuss Data Collection practices. Instead, this hearing is simply another blatant attempt to mischaracterize the bureaus Data Collections activity is harmful to consumers. How do we know this . Because the chairman of this committee previously sponsored a bill that was enacted with the authorized creation of a National Mortgage Data Repository that will collect the same individualize personalized data that republicans shamed the cfpb for collecting and thats the subject of this very hearing. Currently most of the data that the cfpb collects his public and not personally identifiable. But the gao and the cfpb Inspector General have indicated that the cfpb is generally compliant with data privacy and security laws. Nevertheless my republican colleagues are here today to again criticize and under vine and agencies that is returned more than 11 billion to 25 million americans. I yield back. The gentleman yields back the time that she does not have. The chair recognizes the vicechairman of this committee mr. Fitz patrick for an opening statement. Thank you chairman for the hearing and welcome to the witnesses this morning. Increasingly our cyber and the structure and private records are becoming targets of state and nonstate actors alike. I want to remind anyone here that the personal information from the opposite personal management and i suspect we oversee that letter were significant breaches of consumer data that occurred. Any organization especially an agency of the federal government in nine states which consumer data and stored in a single location as the cfpb does especially when according to a gao study the cfpb lacks documentation is for the security protocol to store private Consumer Information in a manner sake from hackers. Whats more it seems though that the date is off limits to the cfpb. While congress has not been provided a complete picture of these actions we know one of these collections yielded data on 173 million laws would tour to the hearing and todays witness testimony we hope that allows us to develop a better understanding of its practice and if there is a legitimate need for federal practices to continue. I yield back. The gentleman yields back. I now want to welcome our witnesses and because they do want to at what point guitar testimony and not going to spend an hour giving all of the things speaker gingrich has done. What i have realized recently though he is a fictional author and just wrote a great look which my wife is completing. Its a pageturner. I didnt realize that but i am going to stick to the basics. He was elected to congress in 1970 from the sixth district of georgia and this will now begin the speaker the house in 1995 to 1998. Speaker gingrich welcome and thank you for being here. I want to welcome mr. Wayne abernathy. The executive Vice President for Financial Institution policy and Regulatory Affairs at the american bankers association. Welcome. Dr. Calabria welcome again. He is the financial, the director of Financial Regulation studies at the Cato Institute and finally but not least mr. Deepak gupta is the founding principle of Gupta Kessler in washington d. C. Welcome panel. Each of you are going to be recognized for five minutes to give an oral presentation of your testimony. Without objection the witnesss testimony will be made part of the record following their oral remarks. Once the witnesses have finished their testimony each member the subcommittee will have five minutes within which to ask the panel questions. As her mind of many of you know this but on the table you have three lights. One is green and that means go, yellow means you have a minute left and red means youre time is up. I would note if you get a question why your light is yellow i will give you the leniency to finisher question is a goes on to read but please go on for a minute or two. The microphones are sensitive so please make sure you are speaking directly into them. In fact speaker gingrich welcome and you are recognized for your five minute presentation. Good morning and thank you for allowing me to be here. I do want to say about mr. Greens concern if either he or his staff would read the testimony they would find on page three i describe my relationship as an advisor to the u. S. Consumer coalition but the subject of todays hearing is important and that we have an agency collecting more information about americans private lives than any bureaucracy deserves for reasons unrelated to National Security. Its also important a broader sense. Today the Consumer Financial Protection Bureau is so far outside the historic american system of constitutionally limited government and the rule of law its the perfect case study of the pathologists and bureaucracies at the federal level. Its dictatorial, its unaccountable, is practically unrestrained and expanding on its expansive mandate from congress and its contemptuous for the right studies and preferences of ordinary americans. The cfpb is all of these things as are many of our large district of bureaucracies in the city, a huge problem. The cfpb is an especially good symbol of these methodologies because of its unique structure among regulatory agencies. In the doddfrank wall street performing Consumer Protection act that created the Bureau Congress berrien wisely in my opinion gave up two of its core constitutional powers for reining in executive branch agencies. First the cfpb is not subject to the annual congressional appropriations process and instead is funded out of a fixed portion of the Federal Reserves budget and ineffective at bureaucratic slush fund that is self defined by the brocker sees on their behalf. Second instructor can be fired only by the president and then only under limited circumstances because doddfrank prohibits protection, doddfrank protection from being removed by congress. For all practical purposes this means the bureaucracy is free to do whatever it wants in the broadest interpretation of its Authority Without fear of losing its funding or its leadership. This is a very dangerous recipe for petty dictatorship and its completely foreign to the american model. I always remind people lord actons faith famous dictum power tends to corrupt. Absolute power corrupts absolutely and notice he just attends. No better example of the corruption of power than this agency which is totally secret, totally unaccountable spending vast amount of money having huge cost overruns and doing what ever wants to to have to whoever feels like doing it too. We know this is dangerous because we have watched the bureaus behavior over the past four years. We have seen the contempt with which it treats congress and the American People. The cfpb is prohibited from regulating car dealers. Its done so anyway. Its an absurdly inaccurate technique which by the way in the private sector would lead to lawsuits over fraud. Accuse them of Racial Discrimination and extract find from companies and auto finance companies. He your government is a bully and your government is a blackmailer. This hearing is another good example of cfpb soper reached one i also discussed to my own article in the wall street journal last summer. The cfpb is prohibited in section 1022 of doddfrank from collecting personally identifiable information on americans but the bureau is doing so anyway and its doing so on a massive scale. The most controversial collection programs are much less compelling reasons. The cfpb says it aims to monitor at least 95 of all credit Card Transactions in the u. S. By 2016. Toward that end the bureau is collecting data from at least 600 million credit card accounts each month. Thats 7 billion records in the last year alone. Its not just credit card data. The cfpb is gathering data on private markers every month, 5. 5 million student loans, and hundreds of thousands of auto sales credit these intrusive data operating art taking place without consumers knowledge and without the ability of consumers to opt out. Unless there are occasional oversight hearings with his consumers are unaware that government bureaucrats are pouring over their credit Card Transactions looking for products to regulate. The cfpb is scooping up or information about lawabiding americans than any Government Agency should be permitted to collect for reasons unrelated to National Security or Law Enforcement. In fact in a recent poll conducted by zogby the dealers Consumer Coalition which i happen to let me repeat that census director but i want to share particularly with mr. Green staff were to happen to advise. Im not secret about the relationship. One in five americans said the cfpb should be allowed to gather credit card statements without consumers knowledge. Those were concerned about the intelligence Data Collection effort i dont see how you can be worried about the potential for abuse and the justified lack of transparency and National Security agencies and not be concerned about the same dangers in this large amount of bureaucracy armed with similar kinds of information. This is the absurdity of being told Homeland Security will not look at facebook pages of foreigners out of concern for the privacy while cfpb is gathering up all this data. Let me just say certainly for the purpose of preventing terrorism to cfpb should need a warrant to. What we have at the cpfb is an agency not accountable to congress or the American People. An agency that is stretching the boundaries of its authority as far as a canopy or proceed which for all practical purposes is out of control. As the mac and peoples represents a congress that should bother you no matter what side of the aisle youre on and whatever you think are the preferred regulations. Its imperative that we move moved toward abolishing the Consumer Financial Protection Bureau and at the very least subject it to annual appropriations process in addition to restructuring its leadership to make sure its accountable to congress. Thank you i look forward to your questions. Mr. Abernathy you are recognized for five minutes. Thank you chairman duffy and Ranking Member green for this opportunity to testify. My name is wayne abernathy. The customers of thousands of member banks were affected by the actions, policies and decisions of the Consumer Bureau. The bureau has enormous authority for retail financial property, those who provide them and therefore over the people who use them. This power comes with little more than phenomenal oversight and accountability. It would be hard to find a federal agency where the gap between Regulatory Power and public accountability is greater officials repeatedly assert that the bureau as a transparent and datadriven agency. Public exposure and data are to be the checks on the natural tendency for any such agency to stray into arbitrary actions. I emphasize the bureau is governed by one person. No one in the agency can address him without ultimately bending to that one persons policy judgment. Knowing that at some point in the discussion at will and with yes sir. We welcome the subcommittees inquiry into the question of how strong a check on arbitrary behavior are the bureaus data policy. And practices. How much is the bureau in fact datadriven and by which data, from which sources and how would we know . Director cordray stated the following quote at the Consumer Bureau we are dated driven agency. The best decisions will be those that are best informed and quote. The Bureau Strategic plan for fy2013 through 2017 includes the following quote, we take in data manage its storage sure to properly protected from unauthorized access unquote and this from the bureaus web site on a page titled. Transparency is at the core of our agenda and it is a key part of how we operate and quote. We support those statements. The Bureau Practices however have not lived up to the standards and there is little to require that they do so. The doddfrank at the expense of the bureau impressive authorities while requiring information. The oversight structure is much less impressive. Problematic for a data practices have undermined the effective use of data to serve as a check on arbitrary action and weaken