Patrick McHenry

Mr. McHENRY

Mr. McHENRY. Madam Speaker, I yield 4 minutes to the gentleman from Janesville, Wisconsin (Mr. Steil).

Mr. McHENRY. Madam Speaker, I yield myself such time as I may consume, and I rise in opposition to the resolution. Madam Speaker, as I said, I rise in opposition to this resolution. First, before I get into the contents of my discussion here, I want to thank Chairwoman Waters for her steadfast and long-time leadership in supporting minority, rural, low- and middle-income communities, LMI communities. Her service in the California Assembly and Senate and Congress has been commensurate with that work and that focus. Committee Republicans share the chairwoman's goal of strengthening these communities. For example, we know that community development financial institutions and minority depository institutions play critical roles in getting necessary funds to the smallest of small businesses in these communities. Committee Republicans support the efforts of the Paycheck Protection Program to target small lenders as well as small businesses in communities across America. Committee Republicans believe the reforms made in the underlying final rule promulgated by the Office of the Comptroller of the Currency will continue to support minority, rural, and LMI communities into the 21st century. Madam Speaker, the Community Reinvestment Act was enacted in 1977, nearly 43 years ago. Its purpose was to ensure depository institutions like banks and savings associations help meet the needs of their local communities. The law tasks the OCC, as well as the other bank regulators, with issuing rules to carry out that purpose. However, the last time the CRA regulations were meaningfully updated was in 1995. I think we can all agree that a lot has changed in the past 25 years, including how banks can best serve their communities. Much of this change has been driven by technology and innovation. In 1995, it was cutting edge when you could call your bank and get your balance and the last couple of checks that cleared your account. Calling up and not having to talk with somebody and a computer tell you the answer, that was cutting edge. And at that time, only 24 percent of Americans had accessed the internet. Since that time, we have witnessed a massive shift to online and mobile delivery of banking services, and that is for good in many, many ways. This virus has really enhanced that trend just in the last few months. This means that where banks get their deposits doesn't necessarily match up with where their branches are physically located. Second, the number of bank branches has steadily declined since the financial crisis, but the CRA regulations continue to place a very heavy emphasis on banks' physical footprints rather than where they truly serve. At the same time, CRA exams have gotten more complex and less transparent. Banks can only guess which of their community investments will receive credit, because the exams are quite highly subjective. The written evaluations can be thousands of pages long, and yet the regulators and the public have no clear data to help understand where all the CRA money has gone. But there are, sadly, a few things that have not changed in the last 25 years--sadly--including socioeconomic conditions in the poorest communities, economic opportunity, and the persistent lack of capital in those communities. The CRA is intended to help address those issues, and that is why it is a vital and important law and, properly structured, can deliver in a better way. But, clearly, we know the status quo is not working. It is not working for the communities that we care desperately about giving opportunity to, economic opportunity to, and that is really what this is driven towards with this law. Modernizing this regulatory framework is long overdue. Here are a few aspects of the rule that I believe represent major improvements over the old regulations. First, the rule provides for a public list of activities that will count for CRA credit so the community can understand, the banks can understand, and we, as elected officials who have oversight of this program, we can understand, too. And they will have that public list on what counts for CRA credit. This list will eliminate regulatory ambiguity and provide certainty over the types of investments that will lead to a good evaluation. With more certainly, banks will naturally make more investments. That is how capitalism works. This change alone is likely to increase community reinvestment across the board. Second, the rule provides a better model for where the activity can count. Banks will be incentivized to invest where they take deposits instead of only around their branches. Let me explain. Previously, a bank was only evaluated on its lending and investment in an area around its physical footprint, but banking today is very different than it was a generation ago when this regulation was written. Banking today, with the help of new technology and innovation has changed substantially. So, if an online bank chooses a headquarters in one State--let me give you an example: Utah. Utah has a lot of online banks and they domicile in Salt Lake City, so that is where the community giving is around Salt Lake City, even if they take most of their deposits from Chairwoman Waters' district or my district. So, if you have that headquarters for an online bank, it should not prevent them from making investments in other States or localities that desperately need capital. Under the final rule, banks will get credit for investing in so- called banking deserts. This has been a priority of mine for the last decade, to help those who are in communities where they can't get ready access. We know food deserts in urban areas, and if you can't get access to fresh food, you can't have a healthy diet. That is a huge issue. It is a huge issue in rural areas, it is a huge issue in urban areas. So we have banking deserts now, and this rule prioritizes those banking deserts that don't have a branch or don't have many branches. And those underserved places under this rule are distressed areas, economically distressed areas, Tribal lands, folks that have been hit by natural disasters, regardless of where they get deposits or if they get deposits from those areas. I think there are some laudable changes. Now communities without bank branches that were essentially invisible under the current framework will be able to receive CRA investment. This is a huge improvement. Finally, the rule introduces objective metrics and transparent evaluations. I think that is a really good thing for regulation. Instead of a highly subjective exam and a 1,000-page evaluation, examiners will be able to deliver more consistent, useful, and timely CRA evaluations; ``timely'' meaning more frequent and more readily available. Clearer metrics and better reporting will enable banks, regulators, and the public to have a better understanding of the CRA activities of individual banks and of cross-sections of the industry. Consumers will be able to see that and understand the type of institution they are banking with as well. I would also note that this final rule is a culmination of a multiyear process. It reflects more than a decade of dialogue about how to make the CRA work better, it builds on recommendations that Federal banking agencies submitted to Congress in 2017 and recommendations released by the Treasury Department in April of 2018 and more than 75 hard comments submitted during the rulemaking process that updated and changed and made better the regulations that the administration put forward. Republicans and Democrats agree the Community Reinvestment Act is extremely important, it is an important law. And because it is important, the regulations need to keep pace with how Americans bank today. I believe this rule is a huge improvement over the status quo. Madam Speaker, I urge my colleagues to vote against this resolution and support the underlying rule. Madam Speaker, I reserve the balance of my time.

Mr. McHENRY. Madam Speaker, I reserve the balance of my time.

Mr. McHENRY. Will the gentlewoman yield?

Mr. McHENRY. I misspoke. I said they supported the CRA.

Mr. McHENRY. Madam Speaker, I yield 3 minutes to the gentleman from Colorado (Mr. Tipton), a great member from the Financial Services Committee who also is the vice chair of the Western Caucus.

Mr. McHENRY. Madam Speaker, I am prepared to close. May I inquire if there are further speakers on the majority side.

Mr. McHENRY. Madam Speaker, I reserve the balance of my time.

Mr. McHENRY. Madam Speaker, I yield myself such time as I may consume. So, in closing, the Community Reinvestment Act, we agree, is an important law that is intended to support underserved communities across America. Maintaining the status quo also ignores the innovation and the needs of our community. The innovations taking place to financial services and to banking over the last 25 years need to be addressed, but also the fact that we are not actually meeting the needs desperately needed in communities around our district, both the urban and rural. The new regulations will increase investment and capital in communities and provide more clarity and transparency to all parties involved in the process. That is why it is a good update. As we work to ensure a strong economic recovery for all Americans, it is critical we encourage financial institutions to continue to provide services for those most in need. The OCC's final rule will play an important role in this recovery effort by encouraging more capital, investment, and lending services in the communities hardest hid by COVID-19. That is good. The OCC took a very thoughtful approach, embracing input from other agencies and stakeholders over the course of several years. The final rule builds in nearly all of the constructive criticism the agency has received through the open comment process. In fact, this shows the agency is willing to compromise but not willing to settle for the status quo. The OCC's modernization of the CRA regulation is a long overdue update that will help our communities come into the 21st century stronger and healthier. The last time these regulations were revised was in 1995, when banking received most of their deposits through branches, and as such, the old regulations that are on the books still rely heavily on branch locations. Quite frankly, what we have seen over the last 100 days in America is that branches are less vital than they were in previous generations, because most of these branches have been shut down in our States because our States are trying to do the right thing to address this health crisis. That is why we are wearing masks, that is why we are social distancing, and that is why we are trying to be responsible to one another and be thoughtful in our approach to one another. But, unfortunately, this bill before us is a very straightforward up- and-down. I will say let's not support the status quo. Let's support innovation and an update to our regulation to meet the needs of our communities and to meet the needs that are so desperately needed both in the rural communities and the urban communities in America. Vote against this resolution and support the underlying rule. Madam Speaker, I yield back the balance of my time.

Mr. McHENRY. Madam Speaker, I reserve the balance of my time.

Mr. McHENRY. Madam Speaker, I yield the gentleman from Michigan an additional 1 minute.

Mr. McHENRY. Madam Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. Huizenga), my friend and the ranking member of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets.

Mr. McHENRY. Madam Speaker, I would just note for the Record that the FDIC approved just this week this rule, the CRA, so that is, in fact, they actually support this underlying rule. Madam Speaker, I yield 4 minutes to the gentleman from Little Rock, Arkansas (Mr. Hill), my colleague and friend, the ranking member of the National Security, International Development and Monetary Policy Subcommittee.

Mr. McHENRY

Mr. McHENRY. What I am highlighting is the fact that, in one section of the bill, you have the study to say whether or not using Social Security numbers is good or bad. I think that is good. That was laudable. The problem is, in another part of the bill, you mandate immediately that they need the fullness of the Social Security numbers in order for the data to be included. That is what I am highlighting, and that is one of the rubs that I have with the bill.

Mr. McHENRY. Will the gentleman yield?

Mr. McHENRY. Madam Speaker, I yield myself such time as I may consume to close. Madam Speaker, as I said in my opening, this is yet another attempt by House Democrats to socialize the credit reporting and scoring industry. We had an opportunity for a bipartisan bill, and this is not the work of that product. This bill will decrease competition in the industry, increase fraud risk related to consumers' personal data, prop up the trial bar, and expand the authority of the Consumer Financial Protection Bureau. If Congress really wants to protect consumers, we should be working together promote more competition in the credit reporting and scoring industry. We should be promoting new ways to eliminate the barriers to entry, not promoting what really comes down to less consumer choice. We marked up this bill in the Financial Services Committee back in December. The committee Democrats noted in their report on the bill: ``It has been more than 15 years since Congress enacted comprehensive reform of the consumer credit reporting system, and there have been numerous shortcomings with the current system identified during that time that need to be addressed.'' Yet, since the Democrats took over in 2019, the House Financial Services Committee has held one hearing on credit reporting. We had a bipartisan consensus on the things that needed to be done and the challenges therein. This hearing featured a public grilling of the CEOs of the three nationwide bureaus. The hearing discussed structural problems within the industry, yet this bill just solidifies that structure. The number one complaint in the CFPB consumer complaint database is about consumer issues with credit reporting. Why are we reinforcing the current structure of this industry by legislating that? We should promote more competition in the system, not perpetuate an obviously broken one. The Democrats took issue with the market failure in credit reporting, an issue we agree on. However, their legislative response does not do the things necessary to increase competition and consumer choice and protect our data. The fact that Democrat leadership decided this bill was perfect and needed no amendments demonstrates my point. My colleagues on the other side of the aisle have no interest in working with Republicans to craft a bill that will really protect consumers' personal information. This bill is about catering to their stakeholders. Madam Speaker, I will reiterate, like I have with so many bills that have passed the House: This bill has no chance of being passed by the Senate or signed into law. Preserving access to and making available low-cost credit options to consumers should be Congress' priority. We should be working toward bipartisan solutions, and we should prioritize those things. We should be working toward those solutions, and that is why I urge a ``no'' vote on this bill. Madam Speaker, I include in the Record letters in opposition to this bill by the Consumer Data Industry Association, the Credit Union National Association, the U.S. Chamber of Commerce, the American Bankers Association, the National Taxpayers Union, and the Consumer Bankers Association. Consumer Data Industry Association, Washington, DC, June 17, 2020. Hon. Nancy Pelosi, Speaker, Hon. Kevin McCarthy, Republican Leader, House of Representatives, Washington, DC. Dear Speaker Pelosi and Leader McCarthy: As the House prepares to consider HR 5332, the Protecting Your Credit Score Act of 2019, CDIA and its members wanted to take this opportunity to express our opposition to the bill. We believe that this bill will have negative impacts on the American consumer. Over the last decade Congress has prioritized the ``ability to repay'' as the most important part of underwriting a financial product, to fight predatory lending and ensure that consumers are not able to borrow more than they can afford. This bill will make it harder for lenders to determine whether a consumer has an ability to repay, increase loan losses and ultimately result in higher prices, especially for those who previously received the best prices on loan products after a lifetime of on-time payments. The bill: could make the cost of borrowing more expensive and limit access to credit; could introduce new threats to consumers' information and physical security; and introduces unnecessary and expensive burdens into the credit reporting system, making it harder for consumers disputes to be processed in a timely fashion. The bill could make the cost of borrowing more expensive and limit access to credit. Section 4 of the bill could lead to higher costs of credit for the overall market, and specifically for consumers who pay their bills on time every month. This section of the bill would allow consumers who have not paid their bills on time to continue disputing information, even if the account is verified as accurate. This would increase the likelihood that that accurate, though negative information, will be excluded from credit scores, thereby impeding lenders from making adequate risk decisions. This bill could introduce new threats to consumers' information and physical security. Section 6 would require CRAs to effectively mail a credit report to a consumer every time an adverse action occurs in a credit transaction. If, for example, a consumer applies for a mortgage and receives a rate higher than the lowest possible rate due to the consumer's higher credit utilization rate, then each credit bureau would have to physically mail a report to the consumer, whether the consumer requested it or not. And if the consumer applied to several mortgage companies, the CRAs would have to mail the report to the consumer's last known address each time. This would create data security issues, as thousands of credit reports would be sent, by mail, to people who didn't ask for them, don't want them, or don't need them. Also, tens of millions of consumers move each year, increasing the likelihood that credit reports would fall into the hands of persons other than the intended consumer. Consumers today can receive free credit reports as often as every week and have additional opportunities to get their credit report under certain circumstances. CRAs should not be mailing millions of credit reports with very sensitive information to people who did not ask for them. Section 2 of the bill could also harm consumers' personal physical security. This section includes language giving consumers new rights to opt out of sales of non-credit report information. The identity information that also appears in a credit report is critical for companies that need to confirm identity, alternate names, and previous addresses, such as criminal-background screeners. The effect of this provision would be to allow someone to hide their relevant criminal history from employers, volunteer agencies or other users of criminal history reports. For example, someone convicted of elder or child abuse could simply move to a new jurisdiction, opt out of non-credit report sales and apply for jobs with nursing homes or child-care centers. Today, when someone like this applies for a job and discloses neither their old address nor the criminal conviction, the background screener would purchase an address history from a credit bureau to identify jurisdictions in which to search for records. While this method is not fool proof, it is the industry standard and results in detection rates comparable to fingerprinting by the FBI. Without it, employers, volunteer agencies, youth sports leagues and other legitimate users of background screening would be at the mercy of any convicted criminal who is willing to lie on an application. The bill introduces unnecessary and expensive burdens into the credit reporting system, making it harder for consumers disputes to be processed in a timely fashion. The addition of a new ``consumer portal,'' also in Section 2, would create an unnecessary new government-mandated website for consumers when existing options for consumers already exist. Consumers currently can visit any of the websites of the nationwide CRAs and file a dispute, set a security freeze and exercise other rights that are guaranteed by the Fair Credit Reporting Act. This provision is unnecessary and could create additional data security issues. Consumers who pay their bills on time would also be the ones most impacted by the bill's requirement for full nine- digit Social Security Number (SSN) matching. The FTC studied this matching topic in an exhaustive report directed by the 2003 FACT A Act, and found that matching nine digits of the SSN is not a viable solution, as it would not result in greater accuracy of credit reports, but it would lead to fewer consumers being approved for credit. By denying CRAs the ability to anticipate and fix transcription errors, consumers could end up having multiple fragmentary credit reports, each one tied to a given SSN. Then, when applying for new credit, a lender will not be able to see the full picture of the individual, meaning that the consumer who has paid their bills on time every month won't receive the benefit accrued during their many years of hard work. And some consumers will find strangers' files associated with their SSN, complicating the lending process. The Consumer Financial Protection Bureau supervises and examines the nationwide CRAs and has not raised this issue as a concern; this section of the bill will harm, not help, consumers. We would also note that Section 5 of the bill includes injunctive relief that exposes users of credit reports to private enforcement for consumer notices and red flags. This would be a significant change in practice that would expose lenders to new liabilities from the trial bar. This bill was the subject of a great deal of negotiation and discussion with Representative Gottheimer, the bill sponsor, before the Financial Services Committee passed the bill. We appreciate his spirit of cooperation, but unfortunately the bill before the House falls short of its goals to strengthen the consumer credit market and protect consumer credit scores. Sincerely, Francis Creighton, President & CEO.

Mr. McHENRY. Madam Speaker, I yield 4 minutes to the gentleman from Michigan (Mr. Huizenga), the ranking member of the Investor Protection, Entrepreneurship, and Capital Markets Subcommittee.

Mr. McHENRY. Madam Speaker, I yield 2 minutes to the gentleman from Virginia (Mr. Riggleman).

Mr. McHENRY. Madam Speaker, I urge a ``no'' vote on this bill, and I yield back the balance of my time.

Mr. McHENRY. Madam Speaker, I yield myself 30 seconds. What I would say, very simply, Madam Speaker, is that we could have had a bipartisan solution here. That is what I was offering. Give up the private right of action, so you don't have more lawsuits, and give up your view of a government-centric portal that basically enshrines these big three. Those are two additions. The final kicker is this: End the reliance on Social Security numbers and put the date in the future, and the technology solution will be there. That is an industry mandate that I offered as a matter of compromise. Madam Speaker, I yield 2 minutes to the gentleman from North Carolina (Mr. Budd), my colleague from Davie County, North Carolina, a great leader on the Financial Services Committee.

Mr. McHENRY. The point is, we could have had a massive vote on something that reformed them rather than bring them in and wag our finger again.

Mr. McHENRY. I commend Chairwoman Waters for bringing the three CEOs in.

Mr. McHENRY. We, on a bipartisan basis, beat them up, which is a rare thing in Congress. We beat them up because they had a massive data breach that exposed our data. That is why I sincerely wanted to get to the bottom of this and have a bipartisan bill. This is not a result of this product.

Mr. McHENRY. For sure, for sure. That is why I want to get to a solution. This bill, sadly, incorporates none of the conditionalities that I wanted.

Mr. McHENRY. Madam Speaker, I yield myself such time as I may consume. Madam Speaker, I rise in opposition to H.R. 5332. I want to first thank the gentleman from New Jersey for his work on this bill. I am disappointed we were not able to come to a bipartisan compromise. We worked for the better part of a year to try to achieve a good product that could broadly be supported. This product does not represent that work, sadly. Unfortunately, we didn't get there. I believe that we are considering, today, a bill that is just another attempt for House Democrats to socialize the credit reporting and scoring industry. We are voting on a bill that will decrease competition, increase fraud, prop up the trial bar, and expand authority of an already unaccountable CFPB, Consumer Financial Protection Bureau. First, this bill directs the three nationwide credit reporting agencies to create a shared online portal. This portal will allow unlimited and free consumer access to credit information--this is good--and credit freezes. This is good and allows consumers to initiate disputes. That all sounds very good. In fact, Republicans support a one-stop shop for consumers to access important credit information. But we are talking about the three largest players in the industry, and this bill codifies their place--their oligopoly structure and their favored view of the current marketplace--and enshrines them further into law with this outsized authority. This bill condones their market structure by mandating that many of their services be merged into a single web portal. This doesn't make things better; it makes it worse. If Congress really wants to protect consumers, we should be working to promote more competition in the credit reporting and scoring industry. We should be promoting new ways to eliminate barriers to entry, not promoting what really comes down to less consumer choice. Second, this bill requires the complete Social Security numbers be used to confirm the consumer's identity. So here is the problem: The bill fails to set appropriate standards to protect that information. Specifically, the bill directs the credit reporting agencies to match all nine digits of a consumer's Social Security number before including any information in consumer credit reports. That sounds well, fine, and good, but we know hacks happen. As Federal employees, we have had our information hacked and sold. Just look at the credit reporting agencies. They have had their information hacked and sold. This is why we wanted to come to a bipartisan compromise. There is something legitimate we should be doing, but today, not all data furnishers collect full Social Security numbers for submission for consumer credit information to the credit bureaus. That means this bill has a requirement now that they collect all the Social Security information to confirm the consumer's identity. This will potentially have two negative consequences for consumers. First, data that is not already linked to that Social Security number will be excluded from credit bureaus. That means, under this bill, accurate information will be removed for no other reason than it is missing the Social Security number. This will actually decrease the predictive power of credit files. That is a negative for consumers. That, in turn, will jeopardize the ability to get low-cost credit for consumers, especially for those who are on the margin where much of their information is derived by being a consumer and paying back regular consumer debt. Second, data furnishers will start aggressively capturing and storing Social Security numbers for consumers just so the data can be used in the credit models. That means that our Social Security number will be in more places and identity theft can then increase with more opportunities to steal our information. It means that consumers will be further at peril for fraudulent activities by bad and malicious actors. So committee Republicans have consistently expressed concern with the private sector and government use of Social Security numbers for identity verification. I think we should all agree on that. This bill will only exacerbate the problem by statutorily directing an increase in reliance on this very highly personal information. Next, this bill creates an additional opportunity for trial lawyers to exploit the litigation system, ultimately raising the cost of credit for all consumers. The bill expands the private right of action under the Fair Credit Reporting Act to allow for injunctive relief. It further provides plaintiffs with compensation for attorney fees, and more litigation means increased costs associated with credit reporting. Additionally, this bill allows consumers to continuously dispute information even if the account is verified as accurate, promoting an endless cycle of frivolous reinvestigations and decreasing the effectiveness of credit reporting. Lastly, this bill continues the Democrats' goal of expanding the statutory authority of the Consumer Financial Protection Bureau, or the CFPB. The bill creates duplicative ombudsmen in the CFPB for credit reporting, something that they currently have, but the person has more than just consumer credit reporting responsibilities. Since its creation, congressional Republicans have fought to place this unaccountable government agency under the annual appropriations process and have argued that the single-Director structure is unconstitutional. That is being litigated and will be decided by the Supreme Court this summer. While the current CFPB Director is working to increase the accountability and transparency at the agency, we don't know what the next Director will do, if he or she will abuse his or her power. We should fix the CFPB before we expand their authorities. Madam Speaker, I also want to take issue with a larger set of issues here. The Democrats' decision to report out a closed rule means that you can't even have the ultimate goal of a bipartisan bill that can then get action in the Senate and then, potentially, get a signature by the President. This, too, is a sad sign of the state of affairs in what seems to be a highly broken legislative process that we are in the midst of. It further demonstrates my point that my colleagues, in particular, on the other side of the aisle have no interest in working with Republicans to craft a bill that protects consumers' personal information. I submitted amendments to the Committee on Rules that provide for targeted solutions: Eliminating this reliance on Social Security numbers; Removing paid non-elective debt from credit reports--which this bill fails to do; Allowing parents to electronically freeze their minor's credit report--which this bill fails to do; Requiring sources for public record data in credit reports, which would then expand credit files so that those who are on the margins for creditworthiness would have enhanced credit potentially; Prohibit the inclusion of adverse information relating to predatory mortgage lending; Financial abuse or fraud associated with private student loans in credit reports. This bill does not act; And directing the GAO to study and report to Congress on the use of nontraditional data and credit scoring, this is something that has bipartisan support in our committee and has been reported out in other measures, but not in this one. And so those are sensible measures that could have been included if we had an open amendment process. But then, again, we are wearing masks, we are conducting business in this odd way, where Members can vote for other Members that are not here on the House floor and we have to go through this whole long process. So I understand they have a need to rush, right, but this is an ill-conceived bill that will have a negative impact on every American--every American--if this is signed into law. Madam Speaker, I think we need better consideration and a better product that could actually achieve a bipartisan outcome. Let's vote ``no'' on this, and let's get on with the real work of the American people. Madam Speaker, I reserve the balance of my time.