At a Senate Banking Committee held earlier this month, Sen. Katie Britt questioned CFPB Director Chopra on banking regulations.
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NewsTranscript
00:00Senator Brett from Alabama is recognized.
00:01Thank you so much, Mr. Chairman.
00:03And thank you so much for being here, Mr. Director.
00:05I wanted to touch on several issues
00:07that you and I have discussed and wanted to see if you
00:10could provide some updates.
00:12So first, I have noted with you both publicly and privately
00:15my serious concerns about 1071.
00:19Concerns on both the privacy front
00:21and then the actual cost burden on the smallest community
00:24banks.
00:25So I wanted to kind of sort of let's just start on privacy
00:28first.
00:29You mentioned that the CFPB plans
00:32to publish the information it collects on this rule.
00:34Last time I kind of sort of asked what your plans were
00:37for that, you said you had not gotten there yet.
00:39Do you have any update on that?
00:41So the data collection that would be reported
00:47has been significantly delayed.
00:49Some of it will be as late as I think maybe late 2026.
00:53We're not going to make any determinations
00:56until after we really are able to conduct a first world class
01:02privacy assessment.
01:03OK, good.
01:04So the key is we don't want anyone
01:07have we don't re-identification risk.
01:09We don't want there to be any concerns about that
01:11because that will really undermine enormously.
01:15Yeah, and so you are essentially,
01:17will you commit to me that the CFPB will not publish
01:20any identifying information?
01:22Correct, yes.
01:22Wonderful.
01:23Thank you so much.
01:24OK, now with regards to the cost,
01:27CFPB estimated that banks will face an upfront cost
01:30of around $45,000 to $78,000.
01:34Do you believe that's still an accurate depiction
01:36of the upfront compliance costs that banks should expect?
01:40So we are working with, many of those banks
01:44are going to be using third party vendors in order
01:47to be able to implement this, those core service providers.
01:50So we are working with them.
01:52There is going to be a bit more time.
01:54But do you think that cost is correct?
01:56To the best of my knowledge, we use the best data as possible.
02:00Yeah, so that data, so if you look to it,
02:02it says that these things have to cover things
02:04like nukes, computer software, to collect and store data,
02:07to hire and train new compliance and legal staff,
02:11the expenses of possibly third party audits and legal teams.
02:15And so that just seems like there's
02:18no way that you could do all of that
02:20with just that amount of money.
02:21And then I looked back at to when that estimate was done.
02:24And the estimate was done in 2020.
02:27And obviously, since 2020, we've had a change
02:30in economic conditions, change in a number of things,
02:34whether it's inflation or hiring costs or any of those things.
02:38And so when you kind of take a step back,
02:40and then additionally, and you and I have talked about this,
02:42Dodd-Frank required 13 data points.
02:45It is my opinion that you have now expanded that to 81.
02:48I know that you and I can quibble
02:50about some of those things.
02:51But no doubt, it is certainly more than 13.
02:54And so there's also an additional compliance
02:56mechanism that people, and that in 2020,
02:59we weren't accounting for.
03:01So economy, additional data, et cetera.
03:03So when you look at that, I think when you take a step
03:06back, there's no way that they're
03:07going to be able to do all of that for just $45,000 to $78,000.
03:12And so my question to you is, will you
03:14commit to taking a look and making sure
03:17that that is an accurate cost analysis of what it's
03:20going to cost these banks?
03:23Well, I think we are trying to follow
03:25all appropriate provisions of the law when it comes to this.
03:28This was not a discretionary rule.
03:30We were under a court order to complete it.
03:33We followed all the necessary steps to do it.
03:36But you did expand it, though.
03:38I mean, there is-
03:38Well, actually, I wouldn't characterize it
03:40as expanding it.
03:41The statute is pretty clear about what sort of data points
03:45had to be in there and where might it better contextualize
03:48the information.
03:49In fact, we got input from some industry members
03:52to include some data points to make sure that it's
03:54appropriately contextualized.
03:56But if you even think about things
03:57that people are going to have to put in there,
03:59denial reasons, obviously, a more extensive explanation
04:03there, pricing information, including
04:05interest rates applied, prepayment, penalties,
04:08financial cost, et cetera, there's
04:10no doubt that in 2020, prior to you even being, obviously,
04:13at the CFPB, that that analysis of how much that was going
04:16to cost doesn't take all of these things
04:17into consideration.
04:19And I would just ask you, you have
04:20said that, obviously, it is not your goal
04:22to put small community banks out of business.
04:24And you have said that you understand
04:26that they provide an essential service in our main street,
04:29that they allow people to achieve the American dream.
04:32What I am asking you is, don't put them out of business.
04:35Make sure that you are taking a step back,
04:37really looking at how much this is going to cost them in 2024,
04:41in 2025, in 2026, that you're giving them
04:44that assessment on the front end so that they can plan,
04:47so that it actually doesn't hinder them in the long run.
04:50So I would greatly appreciate it if you would do that.
04:53Make sure that that's accurate, because I
04:56think that that's what's ultimately best
04:58for everyday Americans, everyday Alabamians,
05:01as people work to comply with this.
05:03So thank you very much.
05:04I appreciate that.
05:04Thank you.
05:06Thanks.