Patrick McHenry

Mr. McHENRY

Mr. McHENRY. Mr. Chair, I yield 3 minutes to the gentleman from Tennessee (Mr. John W. Rose), a new member of the Financial Services Committee.

Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from the great State of North Carolina (Mr. Budd).

Mr. McHENRY. Madam Chair, I rise in opposition to the amendment.

Mr. McHENRY. Madam Chair, I yield myself such time as I may consume. What I would say, Madam Chair, is that this bill does nothing to protect consumers. This is all about the reporting structure, the organization chart within the CFPB. In fact, in 21 pages of findings in this bill, the next 21 pages of legislative text does nothing to answer the fundamental questions raised in the first 21 pages. Moreover, the reforms that are necessary weren't even considered by the Democrat majority. So we want to protect consumers. I think we all want to protect consumers. Where there is malfeasance and where there is wrongdoing, we will seek it out and we will have bipartisan cooperation for that proper oversight by this branch of government. One area where we can have bipartisan work is the Military Lending Act. We want to make sure that those who are serving in the Armed Forces are protected by those who seek to do financial wrongdoing and perpetrate financial wrongdoing. This is an area where Congressman Andy Barr of Kentucky has authored a bill. He offered it as an amendment-- and it was rejected by the Rules Committee--that would have made this otherwise subpar bill much better in effect, and it would have actually had a positive impact on the people whom we all seek to protect. I think it is important that our colleagues understand part of the reason why we should oppose this bill. I am prepared to close, but I will wait for the majority to finish with their speakers before I will do so, and I reserve the balance of my time.

Mr. McHENRY. Madam Chair, I claim the time in opposition, although I am not opposed.

Mr. McHENRY. Madam Chair, I yield myself the remainder of my time. I commend my colleague for offering this amendment. I urge my colleagues to support it. It is a reasonable step for Congress to say, clearly, that data breaches, cybersecurity, and personal privacy matter. As a matter of public policy, we need to be interested in it. I would also urge my colleagues and reach out to the other side of the aisle for us to have a deeper conversation about cyber data and privacy. We need to legislate in these areas. Without our taking action, we are allowing the Europeans to set the global standard, and we are allowing the European Union to set the standard for our data and privacy here in the United States. That is not appropriate. As American policymakers, we should be interested in legislating in a bipartisan way to achieve that type of data privacy and cybersecurity that is necessary for the American economy, not just in the short run, not just for the next election, but for the next generation to make sure that they are safe and secure. Madam Chair, I urge my colleagues to vote ``yes.'' I commend my colleague for raising this important issue, and I yield back the balance of my time.

Mr. McHENRY. Madam Chair, this amendment will direct the CFPB to appoint representatives of the military- and veteran-serving financial institutions to advisory committees. It is another step in ensuring servicemembers, veterans, and their families have a voice in consumer protection. Military- and veteran-serving financial institutions are unique and can provide the CFPB advisory boards with insights into the biggest risks facing veterans, servicemembers, and their families. I do concur that there should be more military representation across all fronts at the CFPB and across the government. Madam Chair, I ask my colleagues to support this amendment, and I reserve the balance of my time.

Mr. McHENRY. Madam Chair, I am prepared to close.

Mr. McHENRY. Madam Chair, this is a reasonable amendment that highlights the issues facing young borrowers. As I said in previous amendment debate, in 2009 and 2010, the student loan industry was nationalized. Ninety percent of student loans are government loans. It is the government that is putting and saddling a generation of students in unsustainable debt. That is deeply problematic. As a result of the pay-for of the ACA and as a result of the pay-for under ObamaCare, that industry is now 90 percent government. That is problematic. This amendment doesn't deal with the substance of that, though it does deal with the risk factors associated with young consumers and student borrowers. I think it is important that we highlight the needs of young borrowers, the needs of students, and this amendment will provide that type of data on an annual basis. I think it is a good amendment. I appreciate the author for her willingness to engage in this debate, but also highlighting the need for us to think more thoughtfully here in Congress, think more deeply around financial literacy. We passed a bipartisan resolution a month ago that highlighted the National Endowment for Financial Education and the needs of financial literacy, the basic understanding of interest rates, the time value of money, and basic fundamentals of financial literacy that young people need to be aware of and the population needs to be aware of more generally. This amendment gets to that subject matter that is a bipartisan concern and is a bipartisan approach to that bipartisan concern. So I urge my colleagues to support this amendment. I thank the Congresswoman for offering it, and I reserve the balance of my time.

Mr. McHENRY. Mr. Chair, I yield such time as he may consume to the gentleman from Kentucky (Mr. Barr), ranking member of the Subcommittee on Oversight and Investigations of the Financial Services Committee.

Mr. McHENRY. Madam Chair, I yield myself the balance of my time. Again, I want to close by reminding Congress and reminding my colleagues that in 2009 and 2010 the Democrat House, Democrat Senate, and Democrat President nationalized the student lending industry. Ninety percent of student loans last year were done by the government. Only 10 percent were done by the private sector. That is deeply problematic. It is government that is saddling a generation of students with debt that is unsustainable for them. The lost economic potential as a result of that is deeply problematic for our Nation and for the individuals who are affected here. To highlight the risk factors facing young consumers and student borrowers is the right thing. For our Congress to have that proper data is important, but do remember the nature of what is happening in the student loan industry is being driven by a proactive decision of Congress to nationalize that area of student lending. That is problematic. We need to resolve that issue. It is an issue I want to continue to highlight in any debate that we have around student lending. Madam Chair, I urge my colleagues to vote for this amendment, and I yield back the balance of my time

Mr. McHENRY. Madam Chair, I demand a recorded vote.

Mr. McHENRY. Madam Chair, the gentleman's amendment would reinstate a bad rule by the CFPB that was repealed. The CFPB's own data demonstrates that consumers fare better under arbitration than under litigation. On average, plaintiffs' attorneys account for approximately 31 percent of payments plaintiffs receive from class action settlements. Plaintiffs' attorneys collect, on average, $1 million per case; actual plaintiffs receive just $32 each. If Members want to be consumer friendly, if Members are about consumer protection, let's let the consumers get the benefit if they are wronged rather than trial lawyers and the trial bar. This is a trial lawyer's dream amendment. Madam Chair, I oppose this amendment and ask my colleagues to vote ``no,'' and I reserve the balance of my time.

Mr. McHENRY. Madam Chair, I yield myself the balance of my time. Madam Chair, let me just reiterate: This amendment is for trial lawyers. That is what they are trying to reinstate, forcing consumers into the hands of trial lawyers. Every million dollars plaintiffs receive in attorney's fees, the actual plaintiff, the one who is harmed, the one who is wronged, receives, on average, $32. That is not fair. That is not equitable. That is not right. It is not defending an abstract concept. It is actually defending those consumers' right to receive compensation for the harm that they have experienced. Also, it allows that consumer to enter into contractual agreements with people they seek to. This amendment would reinstate a rule that would take that consumer's right away from them and put it into the hands of the trial lawyer once again. It is a profit center. It certainly is. In November last year, the President signed a joint resolution passed by Congress disapproving of the arbitration rule under the Congressional Review Act. Congress spoke, in the House and in the Senate, and we changed the law. Pursuant to the joint resolution, the arbitration agreement rule has no force or effect. That means, moreover, that a rule similar to that can no longer be written going forward. That is under the Congressional Review Act. This amendment serves as little more than a payday for plaintiffs' attorneys. Madam Chair, I urge my colleagues to vote ``no,'' and I yield back the balance of my time.

Mr. McHENRY. Madam Chair, I claim the time in opposition, although I am not opposed.

Mr. McHENRY. Am I to read it correctly that that quarterly report is supposed to give 12 months of data?

Mr. McHENRY. Okay. Madam Chair, I thank the gentlewoman for clarifying. Madam Chair, looking at this, that means that on a quarterly basis, it is an annual report. It is a bit clunky. What we already see with the issues of payday and car title lenders, we know that those are State-regulated products, but we also know, according to the Bureau's 2018 Consumer Response Annual Report, payday loans account for 0.7 percent of consumer complaints, title loans account for 0.2 percent of consumer complaints. This is less than 1 percent of the consumer complaints the CFPB already deals with. The issues of reporting here, if this were merely an annual report to reposition the data that they put out on an annual basis, I would not see that as a burden or a major cost to the CFPB, but doing an annual report on a quarterly basis would be more costly. While I am not opposed to this data being made public--I do think that would be additive to the public--the fact that this is a quarterly filing for an annual report, I don't think that that is going to be quite as sensible as it otherwise could be. Moreover, if you look at the Consumer Response Annual Report on the consumer complaints to the CFPB, 80 percent of those consumer complaints revolve around the credit reporting agencies and credit repair firms. I think we should be focused on that, as a policy matter. I think there is bipartisan consensus that the credit reporting agencies need to undergo a change in the law by which they must abide to make sure that consumers are protected and their data is protected. This is bipartisan work that I hope Chairwoman Waters and I can engage in this Congress. We have raised similar concerns about credit reporting agencies in the past, and I do think there is an opportunity for us to have bipartisan legislating that protects the consumer. Madam Chair, I commend my colleague from Michigan for offering this. I know this is a major issue in Michigan and a major issue for the question of car insurance, the cost of car insurance as well, and a number of other issues that I know that she seeks to remedy for her constituents. Madam Chair, I appreciate the gentlewoman raising this concern to us as a body, but I respectfully oppose the amendment. Madam Chair, I reserve the balance of my time.

Mr. McHENRY. Madam Chair, I am prepared to close, and I reserve the balance of my time.

Mr. McHENRY. I yield to the gentlewoman from Michigan.

Mr. McHENRY. Madam Chair, in closing, this amendment is not practical. It should be offered when we reauthorize the Department of Education. I would support it if it is mandated on the part of the Department of Education to collect this data, which is the right regulator of this nationalized industry of making student loans. Rather than collecting more data, what we need to do is get into the action of fixing the problem of student debt. We need to make sure we have more choices for students, better communication with students, and a better understanding of the consequences of this massive debt load. We can collect all the data we want, but the Federal Government will eventually have to take responsibility for these bad actions we have taken to saddle a generation with student debt that they cannot afford. I urge my colleagues to oppose this amendment. Madam Chair, I yield back the balance of my time.

Mr. McHENRY. Madam Chair, I rise in opposition to the amendment.

Mr. McHENRY. Madam Chair, in my reading of the bill, I would suggest that when it says, ``the Director shall issue a quarterly report to Congress containing,'' and then in subsections 4 and 5 it says 12 months of data, that 12 months is--I don't want to be snarky about it, but 12 months is a year. So on a quarterly basis, CFPB has to provide 12 months of data. That is what I mean by on a quarterly basis CFPB has to provide an annual report. Twelve months being a year, a year being annual, filing yearly is annual. I don't mean to be completely snarky about it, but I think if we simply had an annual report, this would be a much better structured amendment. Madam Chair, while I oppose the amendment, I do so reluctantly. Madam Chair, I yield back the balance of my time.

Mr. McHENRY. Madam Chair, I would ask the author for a point of clarification. As I read it, the amendment requires quarterly reporting to Congress. Is that correct?

Mr. McHENRY. Madam Chair, the gentlewoman from Michigan has offered an amendment that will help ensure the Consumer Advisory Board has a balanced perspective by including individuals who represent community banks, credit unions, and small business owners, or economic growth experts. Community banks, credit unions, and small businesses are disproportionately affected by heightened regulatory burdens. Dodd-Frank imposed 4,000 new Federal regulations on financial institutions, including smaller institutions that lack the resources of larger ones. As a result of that, we have seen the decline of nearly 2,000 banks, from about 6,400 banks at the end of 2010, to the end of last year, that number was 4,600. This is a significant issue for community financial institutions, the weight of regulation. The number of credit unions has also declined by nearly 3,000 over a similar period of time, down to 5,600. While community banking organizations, such as credit unions and small community banks, represent 17 percent of all U.S. bank assets, they make up nearly half of all small business loans. Small businesses account for over half of all U.S. employment, and nearly two-thirds of all employment growth over the last decade. These institutions fuel our economy and spur job growth. They deserve a seat at the table. I commend my colleague from Michigan for offering this amendment. Madam Chair, I reserve the balance of my time.

Mr. McHENRY. Madam Chair, I yield myself the balance of my time. As I said, small community financial institutions have been disproportionately affected by the regulatory burden of Dodd-Frank, which has driven small community banks to either merge, or go out of business. Likewise, the same for credit unions. So for them to have a seat at the table at the CFPB, I think, is right, fair, and appropriate. I appreciate my colleague from Michigan offering this. I support the amendment, and I urge my colleagues to vote ``yes.'' Madam Chair, I yield back the balance of my time.