▶ 0:18:38Well, good morning. The subcommittee on oversight and investigations will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. This hearing is entitled from watchdog to attack dog examining the CFPB's choper era assault on disfavored industries. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record.
▶ 0:19:06I now recognize myself for five minutes to give an opening statement. Today's hearing is titled from watchdog to attack dog examining the CFPB's chop error one may describe as assault on disa disfavored industries. I would like to take a moment to thank the witnesses for being here to discuss uh the actions of the CFPB under the leadership of former director Rohit Chobra.
▶ 0:19:34The CFPB was created to be a nonpartisan watchdog, an agency tasked with protecting American consumers from deceptive, unfair, and abusive financial practices. But under Director Chopra, that mission was largely abandoned. The CFPB ceased to be a proconsumer agency and instead became an ideological weapon used not to protect the public but to pressure businesses into aligning with the CFPB's goals through aggressive rules, enforcement, and supervision.
▶ 0:20:02Chopa targeted entire sectors he disfavored, wielding the AY's enforcement powers to intimidate and financially exhaust companies that didn't share his ideological progressive vision for the marketplace. One of the most troubling examples of this overreach was the aggressive use of civil investigative demands or CIDs. CIDs are powerful legal tools that allow the CFPB to demand vast amounts of documents, data, and testimony, often with little to no justification or judicial oversight.
▶ 0:20:33Under Choper, the CFPB issued CIS to effectively weaponize the AY's authority to bury small firms in compliance costs and reputational damage before any wrongdoing was even proven. While a business can petition a C, the decision on any petition was ultimately at the discretion of the director, sending it back to the organization that issued it in the first place.
▶ 0:20:59Unsurprisingly, Director Choper denied 100% of the petitions that were received. Under the first Trump administration, six petitions were granted to overturn CIDs. For many businesses, especially small ones, the process of responding to a CI is a very challenging task. Uh, often leading to layoffs, loss of customers, and in many cases, closures. One of our witnesses here today will explain just how devastating these CIDs were.
▶ 0:21:28Under Choper, the process became the punishment. The threat of a CFPB investigation was less about compliance and more about survival, especially for smaller businesses. This is not consumer protection. It is a bureaucratic attempt at intimidation, and it has no place in a system governed by the rule of law. So, I applaud President Trump for ending this campaign of coercion at the CFPB.
▶ 0:21:54Businesses operating legally should not have to fear their own government. That's why today I've sent a letter to the CFPB's acting inspector general requesting a formal investigation into whether Director Chopra consistently exceeded his statutory lawful authority. Congress must act to ensure that the CF CFPB cannot be weaponized again. Under the Trump administration, legally operating ethical businesses no longer live in fear of the CFPB and their punishment.
▶ 0:22:25Chopra's tenure has made one thing clear. Congress must ensure the CFPB or any agency for that matter can never again be weaponized for ideological purposes. Of the countless banks and compliance officers, both large and small, that I've spoken to over the last two to three years, I have not heard from one that had anything positive to say about Director Chopra and the CFPB's work.
▶ 0:22:50And I've met with former Director Chopra several times and told him about these concerns, and it made no difference. And his CFPB continued its crusade. I look forward to hearing from the witnesses on how Congress can help the CFPB return to its core mission of protecting the American consumers from unfair and abusive the one investigating the abuses became the abuser.
▶ 0:23:19Now, I want to recognize my uh friend and ranking member of the subcommittee, the gentleman from Texas, Mr. Green, for four minutes for an opening statement. Thank you. Thank you, Mr. Chairman, and I acknowledge you as a friend as well.
▶ 0:23:35However, notwithstanding the fact that the title of this hearing is from watchdog to attack dog, I believe that a better title for the hearing would be watchdog to lap dog and how Trump's CFPB has abandoned consumers in favor of corporations. But it's not just the CFPB that's under attack. And we should not view these things in a silo because if we do, we'll miss the big picture. Federal agencies are under attack.
▶ 0:24:04We are currently defunding the Department of Education, defunding HHS, defunding the FEC, defunding HUD, defunding FEMA. With all of these agencies under attack, we should understand that there's an effort of foot not only to defund the CFPB, which is of course being done, but also to literally remove from these agencies dollars dollars so that these dollars
▶ 0:24:35can go to the pockets of the very wealthy in this country. And it's not just from these agencies. the the very essence of a country is the ability for its citizens to have good health care. We're removing dollars dollars from health care so that persons who are very wealthy can have more money in their pockets.
▶ 0:24:59We seem to believe in this country that the poor can do more with less, but the wealthy need more to do more. This is an abomination. And I believe that Trump's CFPB has not only stopped initiating new investigations into abuses into the financial industry. It also has discontinued examinations that are ongoing from Director Choper's CFPB.
▶ 0:25:25Most alarmingly, Trump's CFPB has taken the unprecedented step, the unprecedented step of rescending settlements with companies that the CFPB had negotiated following investigations into consumer harm. In April, Trump's CFPB announced a widescale reduction in force affecting 90% of the agency staff.
▶ 0:25:53that 90% of agency staff cuts will benefit persons who are very wealthy. We have this that this administration seems to believe that you can take from the needy to support the greedy. I'm not with that. I believe that this country has been built upon the foundation of agencies that are helping people. The CFPB is at the very core of this and we have to do what we can to protect consumers.
▶ 0:26:22We don't want the CFPB to become the agency for the financial institutions. It was for consumers. It has now become an institution that is going to protect financial institutions from consumers that are under attack. Uh this is unimaginable. And finally, I want to mention something else as we move to closure. Something has happened today that I can't believe.
▶ 0:26:46Uh, the Trump administration has indicated that they will sue all 15 federal judges in Maryland over an order that the court issued, those courts issued. Rather than appeal the cases, the Trump administration is now suing the judges who rendered the decisions. We've already heard the administration indicate that it would uh want to have judges impeached for decisions that it disagrees with.
▶ 0:27:15This administration is out of control. This administration is causing the demise of democracy to take place before our very eyes. And we have to stop it. We cannot allow American democracy to become authoritarianism with an authoritarian president. I yield back the balance of my time. The gentleman yields. The chair recognizes the ranking member of the full committee, Miss Waters, for one minute. Thank you.
▶ 0:27:44Today, my colleagues on the other side of the aisle are holding yet another hearing to attack the Consumer Financial Protection Bureau under former Director Choper's leadership for fulfilling his duties to protect consumers. That Consumer Financial Protection Bureau returned $21 billion to harmed consumers.
▶ 0:28:08On the other hand, under Trump's leadership, the agency has abandoned American consumers and the dedicated public servants who protect them. I'm once again calling on Chairman Hill to bring acting director before this committee to explain the Trump administration's unlawful efforts to delete the Consumer Financial Protection Bureau and fire 90% of its workers.
▶ 0:28:37Where is the accountability, Mr. Chairman? Unfortunately, for consumers who broadly support having a strong federal watchdog protecting them from financial ripoffs, this Republican le Congress is not providing it. Uh, Mr. Green, I join you in my outrage and disgust at this administration. They're trying to wear us out and they're almost doing it.
▶ 0:29:02And of course, none of the members on the opposite side of the aisle are willing to stand up to you. Gentle lady's time is expired. This mess. I don't know if I'll stop or not. Gentle lady is out of order. We'll now move to witness testimony today. We welcome the testimony of Mr. James Kim. Mr. Kim is a partner at Kulie LLP where he advises clients on compliance with federal and state consumer financial laws and regulations. Previously, Mr.
▶ 0:29:31Kim was a senior enforcement attorney at the CFPB. Mr. Kim holds a bachelor's degree from Brown University and a JD from Cornell University. We also have with us Miss Jennifer Basset. Miss Basset is the chief executive officer of Pacific Rim Alliance Corporation where she served for 17 years in several leadership roles. She also serves on the board of infant, a national trade group for consumer financial services and CFSP California-based trade association.
▶ 0:29:59Miss Basset earned her bachelor's degree in mathematics from the University of Uh we also have with us Mr. Devin Watkins. Mr. Watkins is an attorney at the Competitive Enterprise Institute where he evaluates regulations and develop strategies to curb overregulation. He holds a computer science degree from Stevens Institute of Technology and a JD from George Mason University's Antinine Scalia Law School. And with us is Miss Morgan Harbor.
▶ 0:30:29Miss Harper is the director policy and advocacy at the American Economic Liberties Project. Miss Harper holds a JD from Stanford University, Stanford Law School, my apologies, a master's degree in public affairs from Princeton, and an undergraduate degree from TUS. So, thank you all very much uh for being with you with us. My apologies. Um each of you will be recognized for five minutes to give an oral presentation of your testimony.
▶ 0:30:56Uh without objection, your written statements will be made part of the record. Mr. Kim, uh you are now recognized for five minutes for your oral remarks. Thank you, sir. Chairman Muer, Ranking Member Green, and members of the subcommittee, thank you for inviting me to testify today. My name is James Kim. I'm a partner at the law firm Kulie.
▶ 0:31:23I am presenting my own views today and not those of my firm or any of its clients. The CFPB has a critical mission to protect American consumers and I believe in that mission. That's why I joined the bureau in 2012 as one of the first enforcement attorneys in New York regional office.
▶ 0:31:45Between working at the CFPB for two years and spending the last 11 years in private practice working on matters involving the bureau, I've been immersed in agency matters over three different There's no question the CFPB over the years has strengthened consumer protections since its inception, but some of the bureau's actions during the past administration exceeded the boundaries of the laws and rules that it
▶ 0:32:17Notably, the CFPB issued interpretive rules, guidance documents, and advisory opinions that supposedly interpreted or clarified federal consumer financial laws, but in reality sought to change the substance of those statutes and rules. These actions created confusion rather than clarity.
▶ 0:32:39It started enforcement investigations and filed lawsuits to create new compliance requirements rather than go through the public notice and comment rulemaking process mandated by the uh by the administrative procedure act.
▶ 0:32:55This unilateral approach deprivives stakeholders, including other federal agencies, state lawmakers, and state regulators, from participating in policy discussions directly impacting their The CFPB pressured companies to submit to the bureau's supervisory authority, its most powerful and least transparent regulatory tool, under the threat of the bureau exercising its so-called dormant authority to examine
▶ 0:33:25companies that posed risk to consumers. Compared to other federal agencies, the CFPB is still a startup. And like other startups who've gotten off the ground, it needs reminders to stay faithful to its mission and its core principles. And it needs adjustments to better execute its mission.
▶ 0:33:47Most importantly, the bureau should focus on engaging with and gathering information from stakeholders at the ground level. All CFPB functions from supervision to rulemaking to enforcement should be driven by data collected from a wide range of sources rather than siloed top-down decisions from agency leadership. Thank you again for the opportunity to testify today.
▶ 0:34:16I look forward to any questions that you may have. Back. Miss Basset, you are now recognized for five minutes for your oral remarks. Thank you. Uh, Chairman Muer, Ranking Member Green, and members of the subcommittee. Thank you for the opportunity to testify before you today. My name is Jennifer Basset. I'm CEO of Pacific Rim Alliance Corporation, a small women-owned financial services company based in Phoenix.
▶ 0:34:46For 36 years, we provided small dollar loans in essential financial services to underserved con consumers. We are statelicicensed financially federally compliant business with no outside investors. Our customers are everyday working people who rely on our services for short-term credit when traditional options fall short. Our products help them afford urgent car repairs, appliance repairs, and avoid utility shut offs, overdraft fees, or even eviction.
▶ 0:35:13I'm here today because our business along with others in the small dollar lending sector were designated for enforcement by the CFPB under Director Chopra's leadership. The CFPB pressured our small compliant business to the brink not because of any proven wrongdoing but due to a bias against our industry. We are a small company that is getting smaller. Since the start of this targeted enforcement campaign, we have closed 35% of our locations and laid off a third of our staff.
▶ 0:35:41We currently operate 30 branches across five states and employ 80 people. At some of our lower performing locations as as they approached uh lease renewals, we were forced to make difficult decisions, including closing branches we had successfully operated for over 25 years. Rather than reinvesting to improve underperforming branches, we had to divert resources, both financial and human, to comply with burdensome demands by the CFPB.
▶ 0:36:09We've been the subject of an ongoing investigation by the CFPB for three years. Since July of 2022, the bureau has issued three CIS, each more burdensome than the last. None has been tied to any specific allegation, consumer complaint, or exam finding. Despite our full compliance with the first C, which include included producing over 11,000 pages of documents and my participation in an entire day, eight hours of testimony, we never received any follow-up or feedback from the bureau.
▶ 0:36:39Rather than focusing their investigation, we received a second sweeping C demanding detailed data on every loan made for a period of six years, as well as all internal communications, all personnel files, and more. We were also expected to review and produce 3.8 8 million emails. Still no violations were cited. The third C requested additional written responses in multiple investigational hearings with employees. Each time we complied in good faith. We had to hire outside counsel. We don't have in-house attorneys.
▶ 0:37:09The legal fees and costs have now reached nearly a half a million dollars. Half a million dollars is an extraordinary burden for a company of my size. We petitioned the bureau twice for relief. Both petitions were denied um by the very agency that issued the demands. There is no neutral arbiter, no check on the bureau's authority. Director Chopra served as the judge, jury, and executioner.
▶ 0:37:31Even worse, after submitting confidential financial data to support the tremendous strain we were under in our first petition, the CFPB published our sensitive business and financial information while redacting their own most aggressive CI demands. This kind of selective transparency has a chilling effect on participation and intimidates businesses. We have a history of working cooperatively with the CFPB.
▶ 0:37:55We underwent full lengthy examinations in 2015 and 2018 with no violations of law, zero fines, and no penalties. We suspect we were targeted in part because I participated in the 2015 Sabria panel for the CFPB's small dollar lending rule. When that rule was deemed unworkable and largely rescended, Chopraers Bureau shifted tactics regulating not through rulemaking, but through enforcement. Multiple small lenders like us were hit with nearly identical CIDs. This wasn't a company specific investigation.
▶ 0:38:26It was an intimidation campaign against our industry. Director Chobra has claimed that the bureau was focused on large participants and repeat offenders. But our experience tells a different story. We are neither large nor a repeat offender. Yet, we've been hammered, our reputation damaged, and our ability to serve customers weakened. This is not how regulatory oversight should function in America. Enforcement should be targeted, fair, and transparent, not arbitrary or punishing.
▶ 0:38:55The current C process lacks procedural safeguards. That is why I urge the subcommittee to support real meaningful reforms to this process, including supporting the bipartisan C reform act. The CIB C the CFPB should be a watchdog, not an attack dog. Thank you, and I look forward to your questions. Thank you, Mr. Basset, for your testimony. Um, we now recognize Mr. Watkins for five minutes for his Chairman Muer, Ranking Member Green, and members of the subcommittee.
▶ 0:39:24I appreciate the opportunity to speak to you today. My name is Devin Watkins. I'm an attorney at the Competitive Enterprise Institute. CI has advocated for nearly 40 years for a more accountable government rather than bureaucratic control so people can live freer, healthier, and more prosperous lives. Two years ago, I testified before this committee to express serious concern about the structure and conduct of the Consumer Financial Protection Bureau.
▶ 0:39:46I proposed reforms to the CFPB and shortly after my testimony, the Supreme Court grant a review in Jaresy and last year agreed with me that jury-free administrative trials for the imposition of fines like those used by the CFPB are unconstitutional. The absence of a reform I proposed that rules clearly define unlawful actions before enforcement led to the abuses I will discuss today. Regulatory enforcement abuse like that occurred at the CFPB is just another form of prosecutorial abuse.
▶ 0:40:16A normal prosecutor waits for a potential victim, examines the evidence to see if a well-known violation of law occurred, and then brings enforcement to protect that specific victim. The problem occurs when prosecutors follow the old Soviet saying, "Show me the man and I'll show you the crime." That chilling phrase reflects a regime where law is not a constraint on power, but a tool of it. Where the decision of who to investigate comes first and the legal justifications follow later.
▶ 0:40:42Where the government doesn't apply well-known rules, it invents them for the occasion. Sadly, this has become the reality of too many businesses facing CFPB enforcement actions. Let me illustrate with three concrete examples. Consider the case of Comica Bank, which CFPB sought to penalize over consumer call wait times. I know the CFPB regulates banks, but there's no law or CFB rule stating how long is too long for a wait time.
▶ 0:41:09The agency simply declared that the wait time was too long and sought to retroactively punish America for violating the new rules. John Lockach described freedom as having the standing rule to live by, not to be subject to the inconstant, uncertain, unknown, arbitrary will of another man. If a company cannot know in advance what conduct it will be punished for, that is not regulation. It is an ambush. A second example involves a snap finance and the broader rent industry.
▶ 0:41:38Such rent-to- own leases were not previously treated as credit, but one day the bureau simply announced they were now subject to its authority as credit products. And then in violation of the exposacto prohibitions, or at least the spirit thereof, the CFB fined companies for transactions that occurred before the new interpretation was announced. Lastly, Townstone Financial, a small Chicago mortgage company. The CFPB didn't go after Townstone for denying anyone a loan. There were no consumer complaints. So, what was CFB's issue?
▶ 0:42:08Townstone's owner Barry Sterner had a weekend radio talk show. On the radio talk show, Mr. Sterner expressed concern about crime in the urban neighborhoods. CFB targeted Townstone Financial for his protected speech. The CFB then destroyed his business by claiming complaints about neighborhood crime on the radio were really disguised attempts to dissuade minority applicants for mortgages.
▶ 0:42:30facing a mountain of fines and after seven years and spending a million dollars to defend itself, Townstone was offered a settlement for That might sound big, but is less than it would cost to hire a private attorney to fight those charges in court. Townstone was defended by many great lawyers, including Pacific Legal Foundation, an excellent nonprofit law firm that defends many worthy causes. Townstone's cost could easily have doubled but for the legal assistance provided pro bono. But still the burdens of litigation were too much for Townstone to continue.
▶ 0:43:00Quor plea agreements are far too common in today's legal system. When people are facing millions in fines and offered a settlement for less than what it costs to defend yourself, many innocent people give in. A coerced agreement of an innocent person is not a badge of honor for the prosecutors, but a mark of shame. These cases represent a broader pattern where the CFPB has brought cases for the purpose of stretching its authority. Congress never gave CFPB authority to regulate consumer call wait times, comments on radio talk shows, the agent or rent alone and leases.
▶ 0:43:30The agency just seized that power. Fortunately, there is cause for hope. Under new leadership, the CPB has dismissed many of these abusive actions. It has also tried to unwind the Townstone settlement, recognizing that the enforcement violated the First Amendment. But shockingly, a federal judge has refused to let the agency correct its own mistake. According to the judge, the people cannot be allowed to select new leaders to reverse constitutional violations by their government. A president has the pardon power to pardon even the most atrocious terrorists and traitors.
▶ 0:44:00But for some reason, an unconstitutional settlement in a civil proceeding cannot be vacated. This is wrong. The rule of law is not a partisan issue. It is the foundation of our republic. Thank you. Thank you, Mr. Watkins. Uh, Miss Harper, you are now recognized for five minutes. Thank you, Chair Muer, Ranking Member Green, members of the subcommittee. Thank you again for the opportunity to testify about the CFPB today.
▶ 0:44:30Since its inception, the CFPB has enforced laws to protect consumers and honest businesses. Today's hearing is about attacks. But let's be clear, who is attacking American consumers and competition. It is this administration's unleashing of corporate lawlessness and the rejection of CFPB's true law enforcement mission. This mission is personal.
▶ 0:44:53Though I currently serve as the director of policy and advocacy at the American Economic Liberties Project a few years after the financial crisis, I left a corporate law firm to join the agency. Appalled how private equityf funded corporate giants profited from the crash while so many communities in my home state of Ohio were still reeling economically. I had heard this new agency was trying to do something about it and I wanted to help. We wrote rules for prepaid cards and sued Wells Fargo for opening millions of fake accounts in customers names.
▶ 0:45:23And though it garnered fewer headlines, I am also extremely proud of how we looked out for special populations like older Americans. My own 82-year-old mother lost an entire month's pension in a scam involving prepaid cards, a painful violation too many American families have experienced, and then reported to the CFPB. In fact, the CFPB has processed over 10 million consumer complaints, returning on average over $1,400 each.
▶ 0:45:52The agency has used every tool Congress bestowed to deliver real results, returning $21 billion to over $200 million Americans and forcing lawb breakakers to pay more than $6 billion in fines. Former director Chopra continued this legacy of cracking down on illegal conduct, whether perpetrated by Wall Street, big tech, or newer companies.
▶ 0:46:16Under his leadership, the agency confirmed that buy now pay later lenders are credit providers and subject to the same legal protections as credit cards. The agency held data brokers accountable for how they mismanage consumers personal financial information. And through the open banking rule, the CFPB expanded consumer access to financial data, to their own financial data, allowing companies of all sizes to compete.
▶ 0:46:40The agency took action to ensure fintech companies follow federal laws, cracking down on debanking and holding repeat non-bank offenders like TransUnion accountable. Chopra CFB also did not shy away from suing big guys like Bank of America, Apple, and Goldman Sachs for numerous violations. Acting Director Russell Vote, however, has veered dangerously off this course since assuming his role in February. He has taken a sledgehammer to the AY's enforcement function.
▶ 0:47:10The CFPB has dismissed or withdrawn more than half of its pending cases with no explanation. Talk about arbitrary. And many of these were permanently dismissed. Vote is letting JP Morgan, Wells Fargo, and Bank of America off the hook for $870 million in fraud on the Zel platform and dropping a case against Capital One for cheating consumers out of $2 billion in interest payments.
▶ 0:47:35It comes as no surprise that both JP Morgan and Capital One donated to the president's inauguration fund. The current administration CFPB has not just handed out corporate pardons to their friends on Wall Street, but also reversed course on already negotiated settlements, robbing consumers blind. Chopra CFPB ordered Toyota to pay $60 million for illegally raising borrowers monthly car payments. Last month, Trump's CFPB inexplicably terminated the agreement.
▶ 0:48:03It's again of note that Toyota donated $1 million to the president's inauguration. And as Americans continue to manage increased costs, the current CFPB along with the congressional majority has rolled back rules that would limit junk fees, including overdraft and credit card late fees. Estimates suggest vote and Trump's roll backs have already cost Americans $18 billion, almost as much as CFPB has returned to the public since opening its doors.
▶ 0:48:29In the background of this destructive policymaking, our CFPB employees in limbo, punished for working to prevent any American family from experiencing the pain of being cheated, scammed, or made homeless by a faceless corporation that doesn't give a damn. After the worst financial crisis since the Great Depression, Congress created the CFPB to ensure quote all consumers have access to financial products and services and that markets are fair, transparent, and competitive.
▶ 0:48:58Chopra CFPB fulfilled this congressional mandate to protect American consumers, mitigate risk to our financial system, and enforce the rule of law without fear or favor. It's a mission 82% of Americans, including 77% of Republicans support. Congress should push this administration to resume the work of stopping lawlessness instead of enabling it. As household debt teeters on 20 trillion and loan delinquencies rise, the administration's record time is expired. of the CFPB law enforcement agenda. Something that threatens financial stability.
▶ 0:49:29Thank you. Gentle ladies, time is expired. Please follow the rules. We'll now turn to member questions. Uh the chair now recognizes himself for 5 minutes. So, thank you uh for your testimony, all of you. uh interesting perspectives, real life examples of unbelievably abusive overreach uh that have caused you to fly in from all over the country where you could spend your time doing many other things.
▶ 0:49:57But you want to come here and talk about the the tyrannical uh crusade taken within a a government agency. Uh and we're not going to stand for it. that this is America uh and it's going to remain a free society, not one where an agency feels it can do whatever the hell it wants. So that's where we start. So Mr. Kim, in your view, was the bureau's primary mission to protect consumers through even-handed enforcement of clear rules?
▶ 0:50:26Was was that pretty much uh Yes, sir. Yes, sir. So, you think they're well, did they carry out the mission even-handedly to protect consumers during the last administration? I think the record is clear that, you know, certain actions exceeded its legal mandate and its legal boundaries. Okay.
▶ 0:50:56Well, that I guess that means that they did things that were unlawful according to their uh their scope and their mission and their legal um authorities. So, uh Miss Basset, flying in from Phoenix, where you of course would have better things to do like helping keeping your company alive and functioning.
▶ 0:51:17Um you um have been under CP investigation which you expressed uh and before that you had been in regular contact with your state regulators. You're very regulated industry and business. Would you describe those relationships with your state regulators as fair and Thank you for the question. Uh yes that our relationship with our state regulators has always been great and it's very collaborative and okay effective.
▶ 0:51:45So, so a big a big difference between your state regulators that have been in doing their their business for a long time and then enter the chopra era uh and they you had different experiences uh to say the least. You want to elaborate on that? Thank you. Um Congressman, uh yes, we um it was extremely different that we we received our first civil in investigative demand just out of the blue.
▶ 0:52:12We had been through two prior examinations in 2015, 2018, no fines, no violations, and then all of a sudden we just get this civil in investigative demand with no clear purpose. And the amount of data that they expected from us was just overwhelming. It it consu it's consumed over half of my time for the last almost three years. Last three years. And what sort of um what sort of rationale do you do you give to these CIDs?
▶ 0:52:41what were their purpose and then what were the results of these CIDs to your company's reputation? Uh did it help you improve your relationship with your your consumers? Did it protect any consumers? Uh did it provide uh reputational harm, personal burden, business disruption, or was it was there any was there any glimmer of uh helpfulness in their in their oversight and intrusive uh behavior? Thank you for the question.
▶ 0:53:10they there was absolutely no benefit to consumers based on this investigation. Uh we we it's still open actually today, but we we have never um had a clear understanding of what they're looking for. They asked for just everything we had and we kept trying to narrow the scope and say could we, you know, can we work this out? And we we we tried to comply the whole time and um it is just I I don't know what the end was going to result in. We never got there. Thank you, Mr.
▶ 0:53:40Watkins. You've got vast experience, many years in this industry, dealing with um oversight bureaus, uh dealing with government regulations, and yet you use the phrase, "Show me the man and I'll show you the crime in order to describe uh the the Chopra CFPB." Um, so you obviously believe that these tactics that were being used with the CI and everything else were were were overly aggressive. Could you elaborate?
▶ 0:54:11Uh, yes. Uh, there are many times I think where the CF CFB has chosen what its targets are first before it has any evidence that a crime has occurred or even there's any reason to believe a crime has occurred. I really think the government needs to have some kind of at least probable cause to believe there is a crime before it creates enormous burdens and harms these companies. All right. Thank you uh very much. Um I yield back.
▶ 0:54:41I now um uh now the gentleoman from California, Ranking Member Waters, is recognized for her questions for five minutes. Thank you very much. First, I'd like to ask uh those who have come here uh to uh undermine the uh consumer financial protection bureau. Do you believe uh that it should be deleted? It should be deleted from government alto together each of the three who have testified.
▶ 0:55:09You want to eliminate it all together? No, ma'am. Yes or no? No. Uh yes. Yes or no? Yes. Yes or no? I would have Congress write the rules and transfer its enforcement authority from the CFPB to the Department of Justice. You made an interesting statement.
▶ 0:55:27You said that the President Trump has the power uh to pardon even the most atrocious terrorists and traitors, but for some reason an unconstitutional settlement in a civil proceeding cannot be vacated. And I'm so happy uh that it cannot be vacated because you're right. You're absolutely right. He supports the terrorists. He supports those who came to the Congress of the United States to kill us all. Thank you for that in the record.
▶ 0:55:58Now, let me go to um our witness, Miss Harper. Um the Consumer Financial Protection Bureau uh has returned $21 billion to consumers. uh do you believe that that alone uh should justify the work that they're doing?
▶ 0:56:19And do you believe that in early May, Trump's Consumer Financial Protection Bureau asked a federal judge to scrap the previously finalized medical debt that would take medical debt off credit records and help 15 million people in the US with unjustly lowered credit scores due to medical debt.
▶ 0:56:42The Consumer Financial Protection Bureau previously researched this matter and found medical debt has little value in predicting a consumer's creditworthiness. So, should someone who experienced an unexpected medical event through no fault of their own deserve to end up with a damaged credit score that prevents them from getting mainstream credit or forces them to pay much more for a loan? Thank you for the question, Congresswoman.
▶ 0:57:07I I think the the $21 billion figure that the CFPB the money that CFPB has been able to return to consumers is evidence of just how effective it is as a regulator of the consumer financial markets. I think the reason why it should continue to exist is because Congress said so and and I and we should respect the rule of law. It hasn't been a priority of this administration or the leadership under uh for of acting director vote but that is something that is a principle of this country regarding medical debt.
▶ 0:57:35Uh I'm I'm glad you mentioned it because this has been a very troubling development in in this administration seeing the lack of support for doing something about this industry. Uh we we have millions and millions of dollars and millions of consumers that are now being caught up in the system of their debt now informing their debt from a health care system that has been monopolized by corporate giants and has not been checked yet through government action now informing credit decisions.
▶ 0:58:03And really what the result of this could be and and a question that this committee needs to be asking itself is do we want a system where a health care giant like United Health Group is now determining who gets mortgages in this country whether you get a credit card. That's the end result of this kind of reckless decision-making from this administration and not supporting the medical debt rule which would address some of the abuses that have been happening in that Uh thank you very very much.
▶ 0:58:30Um, you know that uh the chairman here today talked about rules. Follow the rules. He even made you made that point when he talked to you. Do you know and understand that the consumer financial protection bureau director should be brought according to the rules before this committee every six months and it has not been done. Why do you think they didn't follow the rules?
▶ 0:58:55Well, it it's a great point because yes, that is an obligation that has not been fulfilled. I think it's very interesting for all of us as panelists to share our views on different consumer financial protection policies, but the elephant in the room is there's a guy that's in charge of that right now. His name is Russell Vote and he should be here at this hearing explaining some of his decision-making. I mean, I'd also like and to come back to this Townstone case because following the rules.
▶ 0:59:24Well, we had in that situ in that case a Republican judge who agreed with the settlement that had been negotiated by the by the CFPB, a panel of judges that also were Republicanapp appointed that agreed to it. And then this administration that's saying, "Oh, no, don't worry. We no longer care whether fair law fair lending laws have been violated. Follow the rules." What are we talking about? Wow. It couldn't be better stated. What are we talking about?
▶ 0:59:52I guess I'll yield back to time so he can continue with this hearing. All right. Thank you, Mr. Chairman. If I may have a minute. time has expired. Uh we will now um the chair now recognize the gentleman from Georgia, Mr. Louderdermilk, for five minutes. Thank you, Mr. Chairman. Um before uh I start with my questions, u m Mr. Watkins, I'll yield a little time for you to to respond. I just wanted to correct the record.
▶ 1:00:20I did not say the current president supported terrorists and traitors. I was talking about any president's power, whether that is Biden, Obama, or any president, to pardon terrorists and traders. Such abuse of people being given a second chance, civil penalties should also fall under the same provisions. Thank you, Mr. Watkins. This is uh we're claiming my time. This is my time. Um Mr.
▶ 1:00:44Kim, uh, in your opinion, did the Chopra Air CFPB target companies outside the FIN financial services industry through enforcement actions? Uh, yes sir. And um, I believe Mr. Watkins touched upon a few examples. Uh, you know, one public one is the rent to own industry. Uh, it it's not new. It's been around for decades.
▶ 1:01:14Uh about 46 states have rent to own specific laws and regulations. It's also policed by the Federal Trade Commission. Uh it it's clear in the law that it's not an extension of credit under the bureau's jurisdiction, but you know, the CFPB under the past administration brought multiple enforcement actions and lawsuits against that industry.
▶ 1:01:40And it took that industry four years or the companies involved four years to be vindicated with a dismissal in federal court with a decision by a district court judge, not a dismissal by bureau. So it was dismissed by the judicial branch that there was nothing to the How many millions of dollars were spent defending that?
▶ 1:02:06I don't know and I can't say but like I said it took it took several years to get that vindication and uh the the industry offer obviously suffered but it wouldn't it not be the consumer who ended up really bearing the costs of those actions? I I I presume so companies tend to pass on costs to end users um if there are costs imposed on them.
▶ 1:02:33So that wasn't a whole lot of protection of consumer finances, was it? Uh not not that I'm aware of, especially when states can police that industry, right? Uh Mr. Watkins, um did any chopra era CFPB regulations undermine other federal or state regulators existing regulatory authority? Yes.
▶ 1:02:56uh commercial uh commercial bank that I was talking about they were directly regulated under of the oversight of the financial services of the department of treasury uh the CFBB went after them in some in a sense because they thought that the treasury department wasn't being aggressive enough okay Miss Basset how would you describe your engagement with the CFB CFPB's uh team in terms of your request to modify the various CIDs the civil investigative Um uh
▶ 1:03:27I'm I'm forgetting the term. Uh yeah, thank you. Um the the various CDs they served on you and making those requests, you weren't trying to hide anything, were you? Uh thank you for the question, uh Congressman. Uh absolutely not.
▶ 1:03:45We we did we did try to work with them in their meet and confer process where we you know we asked that they just narrow the scope because they were asking for everything that we had and the the the experience is is um just detrimental to a company my size. And and when I said I want to delete the CFPB earlier, the reason that I would even go that far is because my experience with my company has been horrible. It has really hurt our company and our reputation.
▶ 1:04:14I've been through examinations with them with no issues, but that was also so timeconuming and crazy when we already are state regulated and examined by our states all the time. So, so the the CIS we're talking about are civil investigative demands. These are demands on your company that you have to respond whether you're guilty of anything or not. Are they even they're not even accusing you of anything? No, they were not.
▶ 1:04:40They they they issued these CIDs to at least four or five companies in our industry with the exact same notification purpose and the exact same document request. So it wasn't company specific to me. So they had no probable cause. Correct. They're just fishing. It's a fishing expedition which is a violation of the fourth and fifth amendment of the constitution. And so um the bureau's investigation of your company has taken three years. In that time and to this day, were you ever told of a single violation of your company guilty of?
▶ 1:05:10You said no. Correct. Um, the gentleman's time is expired. Thank you, Mr. Chair. I yield. Gentleman yields. The chair now recognizes Mr. Licardo of California for 5 minutes. Thank you, Mr. Chair. Thank you to our witnesses for coming to testify. Mr. Harper is very interested in your testimony.
▶ 1:05:29uh specifically about specific actions that were taken by CFPB, the Consumer um Finance Protection Bureau, uh against companies that subsequently were Uh my understanding was in November of uh Toyota settled a $60 million illegal scheme uh that increase monthly car loan payments on consumers.
▶ 1:05:59Um you indicated Toyota was a contributor to uh President Trump. Is that right? Yes. And how much? A million dollars, I believe. And in May of 2025, uh, the consent order that Toyota agreed to was actually terminated by the administration. Is that right? Yes. Is there much precedent for an administration terminating a consent order that the opposing corporation actually agreed to?
▶ 1:06:29No. I think it's fairly safe to say that what we're seeing from the current CFPB led by acting director vote is beyond any normal parameters of what we would expect from a financial regulator. And do we know anything about the $48 million that was supposed to be returned by Toyota to consumers in terms of that consent order? Was it actually was any of that money actually returned? No, I don't think a a dollar has been returned yet.
▶ 1:06:58So when I said in my opening testimony that um this is really robbing consumers blind, this is money that should have been going back to consumers who were harmed and especially in this period where we know that the American public is facing so many challenges around the cost of living. It's really inexplicable to be adding to that burden and preventing consumers from getting more money. And and here and the last thing I would add is and these are legal violations. This is a law enforcement agency.
▶ 1:07:27We should be all encouraging that. That should be a bipartisan issue. And the fact that it's not says a lot about who Russell Vote wants to benefit in this administration. Let's go to that in a moment. U Bank of America and JP Morgan were both under investigation uh regarding the zel network uh regarding a failure to reimburse customers that were defrauded by scam artists. Uh and that action was taken to the CFPB. Uh, and what was the result of that action?
▶ 1:07:58Those are also among the cases that have been dismissed. And Bank of America contributed to Donald Trump and his inauguration, didn't they? Yes. Was that half a million dollars? I believe so. And JP Morgan another million dollars. Yes. And Capital One, uh, the evidence from the CFPB indicated they may have cheated customers at as much as $2 billion. How how was uh how was it that Capital One engaged in that fraud?
▶ 1:08:28Yeah. So, what what was happening in that case was that Capital One was signing consumers up for accounts that they said were going to be high yield interest accounts. Um that consumers by putting their money in those accounts through interest payments would be able to earn some additional money. And instead of actually doing that, they were keeping them in lower yield accounts um and not telling them.
▶ 1:08:52And so, uh, again, just another example of straight up taking money away from people in this country that need it more than ever. And especially when we're looking at an entity, institution like Capital One, talk about repeat offender, long litany of legal violations. And that's why it was also very disconcerting to see from this administration that they were that they green lit the Capital One Discover merger.
▶ 1:09:17That's only going to increase Capital One's market power and make it really difficult for small businesses and consumers to get ahead. And Miss Harper, Capital One contributed a million dollars to Trump's inauguration. Also true. And what happened as a result to the CFPB case? They got their case dismissed. I I am puzzled as to why we're having this hearing.
▶ 1:09:40uh as we were watching the defunding of the financial police happening over the last several months and weeks uh all I have heard is criticism of whatever happened in the last administration and I'm sure there's plenty of criticism that's legitimate against the last administration. I don't understand why we're still spending time on whatever happened in the last administration when we know what's happening under this administration is so corrupt and so clearly undermining the interests of every American consumer.
▶ 1:10:10I hope that our next hearing is going to actually focus on protecting American consumers and what we can do now and perspectively with a CFPB that has been utterly gutted as Republicans continue to defund the financial police. I yield. Chairman yields. The chair now recognizes uh Mr. Herodopoulos from Florida for five minutes for his questions. Well, thank you, Mr. Chairman.
▶ 1:10:33I appreciate this conversation and it's one that's been having way too often in the idea of that this previous administration seemed to pick winners and losers over and over again. And let's just be clear, if the CFPB did not exist, it does. If it did not exist, there are still 12 different federal and state regulators that can oversee these financial markets. And as as many people have been said after they created the CFPB, you could have just consolidated all this into the FTC.
▶ 1:11:02After all, it's been around as a history teacher. I know this since 1914 in the progressive era. And so, let's make sure that this is not some wild west we're talking about here. There are 12 12 different agencies that oversee these type of things. But what we have heard consistently in this very committee and as both Mr. Moore and I are new members is that this was clearly this agency was playing politics.
▶ 1:11:27And that's the frustration I think we're going through is that they would pick on folks who did they necessarily didn't like and they would run them into the ground, run up expenses and make it very hard for them to compete in an increasingly competitive world. And so I'm glad to see we're having conversations like this. And let's also be clear that the US Supreme Court aggressively told the CFPB that they violated the seventh amendment.
▶ 1:11:51That was a recent Supreme Court decision and and now all we're asking is saying, "Hey, CFPB, would you mind following the APA standards?" That's a good idea so we can actually know what the rule book is because in this committee we've heard over and over again, it's the reason why our chairman uh Mr. Hill has been so effective. He was saying with things like bit uh with things like cryptocurrency and the blockchain, let's make sure we know who is actually going to regulate it so out of control regulators don't get to pick winners and losers.
▶ 1:12:20I think that's a common sense thing to do. And so, Mr. Kim, let me ask you this. With that premise, uh, we saw the violations of the seventh amendment. The Supreme Court ruled very clearly on that measure. What are we doing now? As I think the our previous questioner asks, what are we talking about in the future? I can't go in the past either, folks. Let's talk about the future. What can we do so we don't have these fishing expeditions and these people don't pick winners and losers before they even get into the game? What have they done to make sure this doesn't happen again?
▶ 1:12:53If we're looking forward, you know, I think the guidelines and rules are clear and you've referred to them. There's the Administrative Procedure Act. There are a host of requirements for public rule making through a transparent process. So, um I think that's that's your answer, sir. Is that you know, let me ask Mr. Watkins. Mr. seconds. I'd love to get your opinion. Uh we need to do more. The APA is not sufficient here.
▶ 1:13:21Uh we should require that any kind of civil investigative demand go before a judge to show that it is reasonable in its scope and is supported by probable cause and allow the indiv individual or business uh to dispute that before the judge to ensure that these businesses are protected from these enormous burdens before they are forced to undertake them. And I'll just close this. Mr. Chair, I want to thank Miss Bass for coming in.
▶ 1:13:45These are not easy and I I know that you know these challenges you've had and I appreciate your willingness to testify because some people like to play games and retribution and and it's the it's very much the wrong way to do things and and also I'll mention you know I the last thing we want to do in this business is start getting into the discussion about who gave money to who. I mean uh it's I think it diminishes the the quality of the of the conversation we can have here.
▶ 1:14:09What I I'm excited about is that we're taking a fresh look at whether it be the CFPB, whether it be how the FEC regulates or the CFTC regulates. That's the I think the mission of our committee. And I'm glad to see that our chairman here uh has done a great job of of bringing testimony forward because I don't want to litigate fights in the past either. I want to move this country forward.
▶ 1:14:30And I'm glad to see that we're taking a fresh look about how we administer the APA and how we're going to when a company comes into play that they feel like they're going to have a fair umpire in instead of someone coming in and picking winners and losers with clearly some of the folks before we're done. And I'm not here to litigate that.
▶ 1:14:49But I am here to litigate the idea that we are going to use this committee effectively find out what the consumer is is dealing with and and when they go before one of these huge federal uh administr um agencies that they feel like they're going to get a fair shake and that the dye has not already been cast. So, Mr. Chairman, I applaud this uh uh oversight meeting and I think it's be very helpful as we move forward once we complete the work with Bitcoin, cryptocurrency and and other uh cryptotype measures. Thank you, Mr.
▶ 1:15:19Chairman, I yield back. I thank the gentleman for his remarks. Gentleman yields back. Uh I now recognize Mr. Williams from Georgia for 5 minutes. Thank you, Mr. Chairman. Y'all, as I prepared for this hearing, I was initially very excited because I thought maybe the hearing would focus on oversight of the CFPB. And I finally get an answer about all of the jobs lost and the consumer protection investigations that have been halted after my Republican colleagues stood by as the Trump administration has gutted the CFPB.
▶ 1:15:50But then I read the title, from watchdog to attack dog. And I guess my Republican colleagues are right about something. They've consistently attacked the CFPB and consumer protection since I've arrived on this committee. No matter what the facts are, my colleagues on the other side of the aisle, they just want to continue to attack the CFPB under the guise of accountability. Well, here are the facts. Congress has already placed conditions on the CFPB to ensure that it's accountable.
▶ 1:16:18Now, we just need the Trump administration to follow the law, which seems to be a pretty high bar in this administration. The CFPB director is required to testify before this committee twice a year. We haven't had that first hearing yet, y'all. And it's almost July, but it might have something to do with we still don't have a permanent director at the CFPB.
▶ 1:16:40It's a shame that we're here today to help my Republican colleagues feel like they care about accountability with the sham of a hearing when we could and should be focused on consumer protections. But let's be real, this hearing isn't about making the CFPB work better. House Republicans are just hurt that former director Chopra prioritized the most important piece of our financial system, the consumer, and not their billionaire buddies.
▶ 1:17:07Despite how some of my colleagues feel the work of the CFPB, well, the work that the CFPB did do before it was gutted, and we're still dealing with that, but it was imperative for my constituents in Atlanta, across the fifth district in Georgia, and across the country in Democratic and Republican districts because the CFPB is Reducing excessive junk fees, that's nonpartisan.
▶ 1:17:35Relieving the burden of medical debt on consumer credit reports, that's nonpartisan. Combating housing discrimination and holding banks accountable for deceptive practices, that's nonpartisan. These are consumer protections. Are we really describing those actions as those of an attack dog? To me, those are actions that are all critical to the financial well-being of the American people. People that I fight for every single day in Congress. people who are seeing prices skyrocket under the Trump administration.
▶ 1:18:05People who already couldn't afford to buy a home, send their kids to college, or just get ahead because of years of my Republican colleagues blocking investments in people and communities who need them most. And with the Trump administration's lack of a consumer protection agenda, he's already turned the consumer's watchdog into a muzzled little puppy.
▶ 1:18:27In my district alone, according to the Student Borrower Protection C Center's own data, the CFPB helped over 196,000 consumers find financial relief in Georgia's fifth district. That's not an attack dog. That's a watchdog. A watchdog for the people. So, I want to take this time to help American consumers understand exactly what is happening now, now that we don't have a consumer watchdog. And I'll start with you, Miss Harper.
▶ 1:18:52Miss Harper, I understand that you used to work at the CFPB and we thank you and your colleagues for your work and service on behalf of the American people. Georgia's fifth district is home to 13 higher ed institutions and the largest consortium of H.B.CU in the nation. For many young consumers in my district, especially first generation college students, they're taking out a loan for the first time to finance their education. Students may also be opening a bank account or getting a credit card for the first time on campus.
▶ 1:19:21And this makes students a very captive market for financial firms. Miss Harper, how are students currently at risk of being targeted without protections from the Thank you for the question. And and yes, your point about being marketed when you're a young person. I mean, my brother fell into one of those traps. I fell into those traps. Yeah. And it and it used to be very bad before there was a cop on the beat. And in order to continue to make sure laws are enforced, you have to have people working at the CFPB to supervise some of that conduct.
▶ 1:19:52Right now, based on the decisions out of this administration, we've seen the supervisory staff drop to from a few dozen in some cases for certain departments to just a handful of people. That is not enough to keep track of what's going on uh out there in the market to protect students. And if I if I may just clarify a couple of other um points that have come up because I think you know a lot of today's focus is that suggesting that there's some targeting and and Miss Basset though you know I I heard some of her testimony.
▶ 1:20:20I think it's important to keep in mind again that the CFB's mission is to follow legal violations. Sometimes people who conduct and and participate in legal violations it's not time has expired because this conversation is so important in protecting the consumers. Mr. Mr. Chairman, I yield back and I look forward to having this conversation as we continue to work on this committee to protect consumers in this country. Gentlewoman yields. The chair now recognizes Mr. Moore of North Carolina for five minutes. Thank you, Mr.
▶ 1:20:49This has always been an intriguing subject for me because before being a member of Congress, I was an attorney for 30 years. And during those 30 years, I had cases over the time where I actually represented victims who were the who were c defrauded, civily defrauded. I'm actually criminally defrauded and I'm a big advocate for consumer protection.
▶ 1:21:09But I'll tell you under the former director under director Chopra, the consu the CFPB was essentially I would say fundamentally reshaped to reflect a progressive agenda prioritizing aggressive enforcement over clear guidance and balanced oversight. And the the big injustice that always stuck out to me and we've talked about this before the committee hearings was how like rules are made up on the fly.
▶ 1:21:33they would there would be like you know press releases that came out and then the fundamentally flawed way that the agency was funded was it got more money based on the amount of fines and penalties and so forth that were leveraged. I mean that's just that's just fundamentally unfair. And so it's and and Mr. Herodopoulos made the good point that consumer protection has been the law before this monstrosity of CFPB was ever dreamed up.
▶ 1:22:00uh where you've had multiple agencies, states have, you know, laws dealing with consumer financial protections with unfair and deceptive trade practice. There's other federal agencies that cover this and and this you simply had an agency that I would submit was a was a rogue agency particularly in the last administration. Um and I'll just ask a couple of questions. I'll start with Mr. Kim. You've got ext extensive experience uh with enforcement at CFPB as well as the administrative procedures act. And I've asked this before. I just want to confirm.
▶ 1:22:30Does the APA apply to the CFPB? It does. And is agency guidance guidance is that a rule? It is not. Is a press release a rule? No. Is a simple statement by the director, is that a rule? No. Should a And should a press release or a statement by the director be the basis of any enforcement action? I don't think so. I can't think of a situation in which you should. Well, I agree with you.
▶ 1:23:00My understanding is that kind of thing was happening on a routine basis in the prior administration. Miss Basset, thank you for being here with us today. Uh you've experienced this abuse firsthand as a small business owner. Um you're my understanding is your business was specifically targeted by the previous director and you received a civil investigative demands. Can you explain what a CD is and what it's cost your business dealing with this mess? Congressman, thank you for the question. Uh, yes.
▶ 1:23:28So, the civil investigative demand I I was it was unknown to me until I received one in July of 2022, but it's a it's basically a subpoena um and and where they're asking you for an unbelievable amount of doc for us an unbelievable amount of documents um from our company and and the statement of purpose was very vague in general and it was the same they they were issuing them to everyone in our ind or lots of people in our industry and so so the Um the the
▶ 1:23:58process was is still ongoing for us and it's been three years and and we spent close to $500,000 and and for my small business that is just crippling. My understanding is that you uh about in effect it you you lost about a third of the value of your business. Is that correct? That's correct.
▶ 1:24:16So, you know, it just it ju it just it just shocks me and I and and frankly I I wish more Americans knew about this rogue agency and how it is just wrong in terms of what it's done.
▶ 1:24:31You know, I think that our constituents back home expect us, they expect to know if they're dealing with any level of government, particularly the heavy hand of the federal government, that there are that there are rules in place that protect them, that there is due process in place, that there's not an incentive, if you will, for an agency to go after them. And you had the entire the entire funding stream, Mr. Chairman, the way CFPB was arranged, they were incentivized.
▶ 1:24:59they were incentivized to go out and actually levy these fines, these felonies. That was the basis of their of their funding. And it would be the same as if, you know, you asked if if a police officer got paid more if he wrote you up for a bigger ticket or something. And that's just that just is just a fundamentally flawed system. And I think it goes to show uh why this agency frankly should be abolished.
▶ 1:25:25we have other agencies that can do this and have done a better job when it comes to actually protecting consumers instead of just trampling over people's individual rights. So, I hope as we move through this session and and as we tackle some of the other uh serious matters this committee has charged with dealing with that this is something we will deal with. And with that, Mr. Chairman, I yield back. Gentlemen yields back. The chair now recognizes Mr. Fields of Louisiana for five minutes. Thank you, Mr.
▶ 1:25:53chairman and ranking member and let me thank all of the uh witnesses for being here today. Uh Miss Harper, uh I do have a question for you. Uh given your uh research on financial industry practices, what do you anticipate will happen to consumer protection if the is effectively eliminated through work for workforce reduction or enforcement Uh what alternative mechanisms could
▶ 1:26:23protect consumers from predicate predatory practices that necessitate strong oversight and what would you recommend to this committee uh to preserve meaningful meaningful consumer protection?
▶ 1:26:37Uh and then you know lastly I mean if you look at the number the states uh with the members on this committee the the the complaints that have been lodged uh to the CFPB you got over a half a million in Georgia and you got uh over a million in Florida. Uh so with that u you know uh looking at that as your basis what would be your response?
▶ 1:27:04Well, thank you for the question, Congressman, and and I I think it's an important question, especially as we have folks that are uh reflecting on the past of what got us here. Um, so not having the CFB not having resources, not being appropriately staffed, not really having any enforcement agenda to protect the rule of law to speak of, which is what we've seen under this administration, is laying the groundwork for another financial crisis.
▶ 1:27:29So, it's interesting that so many of your colleagues on the other side of the aisle are saying we'd love to have um all the these resources focused on the CFP on the FTC, I should say, that there's other agencies that can handle this, that we can have these authorities scattered. That was the situation before the financial crisis. We've we've played that tune before and it devastated the lives of millions of Americans.
▶ 1:27:53I think it's also very interesting that they're saying that because if there's so much respect for the FTC, it's interesting that this administration has actually dismissed Democratic commissioners from the FTC that we're doing the important work of some of that market monitoring and being able to uh look into investigations of different practices that might hurt consumers across the country. Well, thank you. Uh let me ask a question to uh Miss Miss Basset.
▶ 1:28:20uh is small businesses historically uh creates twothirds of the uh new jobs. Uh in my district, I have uh 2,478 uh old older uh Americans who have filed complaints with the CFPB.
▶ 1:28:40uh how does eliminating transparency uh help these folk have access uh to the broader economic developments in our Congressman, thank you for the question.
▶ 1:28:55Um I think I I think I understand what you're asking but um through the I want to say that through the um complaint bureau through the CFPB has a a huge database of complaints and um and with that um my industry which is small dollar lending accounts for 0.08% not my company but my industry of those complaints. So, so we don't it's our customers are very satisfied with our services. But maybe you can re restate your question.
▶ 1:29:25Well, this make it very simple. I mean, how does you understand the complaints that we have at the C um at the CF uh C the CFB uh FCB, the Congressional A Media Consumer Protection Bureau. You understand the number of complaints we have nationwide. you know, how would eliminating that department help consumers? Thank you.
▶ 1:29:54U well, as I said before, you know, when I when I stated that I wanted to, you know, I didn't believe in in keeping the CFPB, a part of that is just my personal experience, which has just been um and for our industry, it's just been um such an overreach and and it just seems like an outofc control agency at times. Yeah. Do you feel it it serves any meaningful purpose? Um, for me, no. I there was no I was never um accused of any violation of law or um consumer harm. Not for you, but for the consumer.
▶ 1:30:27I I I'm sorry. I don't I don't really have a complete answer for that. I I think you know again like the other gentleman said, I think there are other agencies that um are are available to protect consumers. All right. Name one in the financial industry. Well, we have our state agencies that regularly audit us and also take complaints in um uh as well. So, I I believe that our states have done a great job. We've been in business for 36 years. Um and and so I I believe that the states do a great job.
▶ 1:30:57I yield back, Mr. Chairman. Chairman yields back. Uh the chair now recognizes ranking member Green of Texas for five Thank you, Mr. Chairman. Thank the witnesses for testifying as And Miss Harper, I especially want to thank you for your bold, brave, and brilliant testimony. You are a superior talent.
▶ 1:31:28BA from TUS, JD from Stanford, MPA from Princeton, clerk for a federal judge, senior advisor to the director of the CFPB for some three years. You're a superior talent. And I must tell you something. I'm afraid for you.
▶ 1:31:51I'm afraid for you because of the vindictive nature that is permeating the society emanating from the very top from the president of the United States of America. There are some other people who would agree with me. I have in my hand statements from 25 current and former employees of the CFPB.
▶ 1:32:20I'd like to place them in the record if I may, Mr. Chairman. Without objection, these 25 people have not allowed their names to be associated with these statements. They live in fear.
▶ 1:32:35These are former employees, not just the current people who are no longer with the CFPB, afraid to be associated with the actions that they believe to be unfair and some degree to some degree We'll place this in the record.
▶ 1:32:57I'm afraid for you because I have in my hand an article style Trump administration sues all 15 Maryland federal judges over order blocking removal of immigrants. Sued all 15 judges because he didn't like the decision. Where are we headed in this country?
▶ 1:33:27When we refuse to honor court orders, it's one thing for this to happen at some lower level by some lawyer. This is the president of the United States of America. He sets the tone and tenor for everything that happens in this country. I'm afraid for you and I want you to know this. I'm going to stand with you.
▶ 1:33:49If you anything that causes you a good deal of causes some fear, I want you to contact my office. I am not among the pussolonous politicians who are afraid to take a stand. I'm going to stand and I appreciate the boldness and the brilliance of your testimony.
▶ 1:34:14Now I have said earlier that what we are doing in this country does not only impact the CFPB. The Department of Education is being defunded. We cannot view these things in a silo. One hearing, one bit of information and then we go to another. We have to connect the dots. Let's connect the dots.
▶ 1:34:39defunding the Department of Education, crippling the ability to help our nation's most vulnerable children. Defunding HHS, which provides essential services, especially those regarding Centers for Disease Control, Food and Drug Administration. defunding department known as HUD, the Department of Housing and Urban Development.
▶ 1:35:06At a time when Congresswoman Waters is trying to help more people get into homes, affordability is a real problem in this country. She has legislation that would help with affordability, especially for first-time home buyers. But here's one that's personal. Defunding FEMA. I live along the Gulf Coast. I know what the severity of hurricanes is. I know how they impact the lives of people.
▶ 1:35:34If we defund FEMA, who's going to be there after a natural disaster to protect people who are sometimes living literally in the streets of life? We have gone too far now. We have put the people who live in the sweets of life above all of the people, especially those who live in the streets. This country has to stop and take notice of what's happening.
▶ 1:36:04This president is destroying democracy in this country. Sir, you said you you wanted to make sure that uh it's rule of law is a foundation. I respect you, Mr. Chairman. I'm going to yield back, but I'm going to tell this gentleman, you're right. It is, and it's being deinished by the president of the United States of America. Chairman's time is expired.
▶ 1:36:33The chair now recogns helping us analyze uh the CFPB 15 years later. It's hard to believe that uh 15 years has passed by since DoddFrank and all of you bring your expertise to our members. And so that's very very helpful. You know, before I was in Congress, both in the brokerage uh industry and in the commercial banking industry, I was subject on and off to federal regulation for years both in public companies and private companies.
▶ 1:37:03And I have to tell you, and I always tell my colleagues, I never once saw the federal government ever sherk its consumer protection enforcement responsibilities at any of the businesses I work for. In fact, quite the contrary. I mean, just intensively uh disciplining the businesses I was associated with, enforcing the law, enforcing the regulations. So, you can count me as I know there are exceptions and I know they're bad actors. And that's why we have federal law.
▶ 1:37:30That's why we have fair housing laws and consumer protection laws and credit protection laws and they're all enforced and they were enforced before the CFPB existed. So I want to be uh very clear about that. The question here is not whether this committee is interested in consumer protection. It's dedicated to consumer protection. The facts here are how to do it.
▶ 1:37:54do it in the right way, the appropriate way based on business strategy, business size, business entity, and in conjunction with what the federal the title of DoddFrank that set up the CFPB, being true to that statute and not inventing law out of whole cloth or operating by regulation by enforcement.
▶ 1:38:18That is not the way our state and federal regulatory system, you know, has operated over the decades. So, Mr. Kim, thank you for your enforcement responsibility. I I looked at your resume. It looks like you were an early enforcement uh attorney working for Director Cordray, who I had the the pleasure to know when I was first uh in Congress.
▶ 1:38:40And um you've seen u as an now as an attorney outside attorney enfor good enforcement and bad enforcement or enforcement over past the fringe of statutory authority. So I want to talk about that a little bit. Can you explain how the CFPB skirted the administrative procedures act process by stating that it would consider discrimination as an unfair, deceptive or abusive practice.
▶ 1:39:08UDAP where we don't have the right defined terms here. We've been talking about this for years. Give me your assessment on that. Uh thank you, Chairman Hill. Uh on that specific issue, um trying to impose anti-discrimination requirements through UDAP authority. Um you don't have to take my word for it. There is a a district court in Texas that that made that very ruling, right?
▶ 1:39:36that it was improper to basically legislate through an enforcement action. And that district court struck down that section of the UDAP manual that would impose these new kind of anti-discrimination requirements outside of existing federal law, outside of a COA, outside of the Fair Housing Act, uh, and by imposing it kind of through the back door as as UDAP requirements through a manual, which uh, you know, is
▶ 1:40:06just a manual like I could write a manual at different not through the APA process, right? This is such a good point. Look, we have a system in place. Let's use it. If you want to come advocate through the Federal Register and promagate a rule or promagate the interpretation of rule, do it. What is this? But this backdoor enforcement work, you know, I just I just can't condone it. Um, Miss Basset, do you believe that the CFPB under former director Chopra engaged with you on a good faith basis?
▶ 1:40:33As I understand it, uh, under director Cordray, you you're work had been reviewed carefully and you'd been given a clean bill of health more than once and then suddenly it's overturned by director Chopra and I don't think anybody thinks Richard Cordre is a, you know, a pathy for the right. Uh, so where's the consistency in the application of CFPB procedures? Could you reflect on that? Thank you, Chairman Hill. Uh, you know, you're right.
▶ 1:41:03We we were thoroughly examined by the Cordray, uh, CFPB. We they sent 10 examiners to our small corporate office for 10 weeks in 2015. They visited 17 of our locations. Um, at the end of that, again, we, you know, we there were no findings of law, no fines, no penalties. They came back in 2018, looked again, 10 examiners. They weren't there quite 10 weeks this time, but by the end of 2019, they had closed out that exam and and there were no findings.
▶ 1:41:32And so then we're just going along dealing with our state regulators, just business as normal. And 2022 in July, we get this C out of nowhere. And it's very vague as to its purpose and and we were um again they they were multiple of those. Thank you. My time's expired. I hope you'll expand to that in your answer in writing and chairman, thank you for the hearing. Yield back. Jimmy is back. I ask unanimous consent. The gentle lady submit to the record to for 5 minutes. Unanimous consent.
▶ 1:42:02I request unanimous consent uh to submit to the record. Um Mr. Chairman, I ask unanimous consent to the record a copy of section 1016 of the DoddFrank Wall Street Reform and Consumer Protection Act, which requires this committee to hold a semiannual hearing with the CFPB director. We've not done so since June 2024.
▶ 1:42:24I wrote Chairman Hill reminding him of this requirement and his high past time that committee Republicans follow the rules and hold the current administration accountable. I have both documents to submit to the record. I ask unanimous consent. Without objection. Chair now recognizes uh Miss Talib of Michigan for five minutes. Yeah, Mr. Kim, you're forprofit, right? Forprofit.
▶ 1:42:55I work for a for-profit. Yep. Uh, Miss Basset for for-profit, right? Yes. How about you, Mr. Watkins? I work at a nonprofit. You're nonprofit. Great. How about you? Nonprofit. Okay. Um, I only say this because, you know, some of the for-profit people are like, you know, the agency sent us a notice and we like, y'all didn't do anything wrong. like it just came out of thin air. And I I want to apologize to you, Miss Miss Harper. I wasn't here.
▶ 1:43:23Uh you know, this institution sometimes others people that look like you and I and try to dismiss us or silence us. And I apologize. I seriously apologize for that. I you you have you know there's no um sense of I think really understanding sometimes our lived experiences or the passion that we have in advocating for for what is important.
▶ 1:43:44this month, you know, CFPB's acting head of enforcement, Carara Peterson, as you might have read or heard, and maybe you guys celebrated and had like pizza or something, and she quit in protest of this administration's attempt to undermine the bureau. And I want to quote her email. She said, quote, "Never before have I seen the ability to perform our core mission so under attack.
▶ 1:44:09It is clear, she said, that the bureau's current leadership has no intention to enforce the law in a meaningful way. Sadly, Miss Peterson departure should have came at no surprise to many of my colleagues. I mean, the administration's acting director vote have sought to fire what 90% of CFPB staff. They've dropped 22 pending enforcement actions against corporate lawmakers. And I want people that are listening because I I hear my colleagues really, you know, 400,000 complaints by veterans, service members.
▶ 1:44:39I know for a fact that the fraud and the schemes targeting our the American people right now is rampant. I know for a fact the bigger banks, their business plans are what 50% junk fees and overdraft fees. Corporate greed is like a disease in our country and is hurting the American people. And so y'all acting like CFPB sitting there just like picking on your donor friends. That's not right. They're doing wrong actions against people.
▶ 1:45:09They have to have actual evidence and complaints, y'all, to One of the things that I really is I'm they've overturned almost 70 pieces of non-binding guidance which can help inform consumers of their rights. Consumers are our residents.
▶ 1:45:27residents, people, service members, The administration has allowed the backlog of 16,000 consumer complaints to pile up and has actually returned millions of dollars that were meant to compensate consumers back to the companies that broke the law. Like the loan ser student loan servicesers, I know they got the calls from their member their residents. You see how they were they were wrong, you know, just really violating the process and so forth and they got caught the student loan servicesers.
▶ 1:45:57They were supposed to give money back to Well, here he comes and he's like, "We're not going to do that anymore." Miss Harper, you know, one of the things that I know CFPB for me, I always explain to my residents, it's like the 911 for consumer protection. You know, I know romance fraud. Uh I I'm mean serious like these outside entities, but in there is the corporations that set up plans and business plans because they know no one's going to watch over them. I mean, CFPB didn't just come from thin air.
▶ 1:46:24It didn't just go, "Oh, we're just going to do this." It's because they were doing illegal, unlawful actions that were hurting the American people. Like, they needed a babysitter. That's exactly what you all need is a babysitter because you will never put our people in the best interest of the American people before the interests of your for-profit clients and schemes. So, Miss Harper, talk about the importance of CFPB and the reaction. I mean, right now, the reaction out there in regards to what is happening uh without any consumer protection.
▶ 1:46:52Well, and thank you for the question, Congressman. I'm glad you used the term 911 because when you look at some of the complaints and we've been talking about the consumer complaint database, you can actually feel the emergency and urgent emotions that the American people are having with things like they have nowhere to go medical debt being at their jobs to pay medical debt that isn't the right amount that they had no control over that now is influencing their employment.
▶ 1:47:18The other thing I would note that's come up in terms of the risks that are in the market now and it's more important than ever to have a CFPB that is staffed and focused on a strong enforcement agenda is around big tech. Uh we we were talking earlier about uh entities that are outside the financial industry. Looking at big tech and how they are trying to move into payments.
▶ 1:47:36This is something the Chopra CFPB was was trying to regulate and be able to have supervisory authority to see risk there and this administration has completely rejected in the current I want you know I only have three seconds because he'll cut me off. $3.5 billion in overdraft fees. I want residents out there in Republican Democratic district don't matter. $3.5 billion of overdraft fees that were illegal. They've just let it go. We're not going to go ahead and enforce that. I just want the American people to know exactly what's happening.
▶ 1:48:15Mr. Chairman, uh uh request recognition to correct the Ladies recognized. Um I indicated that President Trump uh based on these um testimony of uh the Madam Chairwoman, my apologies. Time is expired. Can I be recognized? I want to um correct the record. I ask permission to correct the record.
▶ 1:48:45Is there a unanimous consent request? request the the request that I'm making was I quoted um the gentleman who had the lady's not recognized President Trump has the power to pardon even the most atrocious terrorists and traders but for some reason settlement in a civil proceeding cannot be gentle lady's not recognized this is wrong and the gentleman tried to say that
▶ 1:49:15he did not say not recognized that he said any president the record needs to be corrected. Mr. Chairman point of order gentleman has written orders the gentle lady is not recognized. You understand that nobody would do this during your hearing. It is inappropriate and out of order that the gentle I'd like to thank our witnesses for their testimony today. I request unanimous consent to enter two documents.
▶ 1:49:39President Trump, he did say Miss Waters, this is highly inappropriate and completely out of Yeah. Nice. So, I want to thank our very much. I request unanimous consent to enter two documents into the record. One is a statement from the Consumer Credit Insurance Association. The other document is titled the abuse and vilification of James and Melissa Kins. Without objection, so ordered. Without objection, all members will have legislative business. Mr.
▶ 1:50:07Chairman, I would submit additional soon as soon as I'm finished, I'll yield to you. Thank you. Written questions for the witnesses to the chair. The questions will be forwarded to the witnesses for their response and I ask our witness to please respond no later than July 31st, 2025. This hearing is ajourned. Mr. Chairman, you going to provide unanimous consent? You were going to entertain it by unanimous consent.
▶ 1:50:31I ask unanimous consent that Miss Waters comments be entered into the record as a There is an objection. The hearing is adjourned. We're not going to do it