Garbarino Hammers Janet Yellen: ‘It’d Be A Serious Mistake To Limit Our Fraud Prevention Tools’

3 months ago

On Tuesday, Rep. Andrew Garbarino (R-NY) questioned the Secretary of the Treasury Jent Yellen on financial fraud during a House Financial Services Committee hearing.

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Transcript

00:00Bayard, the gentleman from New York, Mr. Gabarino, is recognized for five minutes.

00:04Thank you, Mr. Chairman. Thank you, Madam Secretary, for being here today.

00:08Back in September, the CFPB announced that it is considering a Fair Credit Reporting Act

00:13brief that includes a broad and novel definition of data broker.

00:16Of what?

00:17As I mentioned to Director Tropra, I'm very concerned that this proposal may not recognize

00:22how consumer data is used for identity verification and fraud prevention. Use of data for these

00:27purposes is not the same as using it for credit eligibility purposes and, therefore, shouldn't be

00:31subject to the FCRA. Further, the companies that provide identity and fraud prevention technology

00:37to finance institutions should not be regulated under the FCRA, as they already fall under the

00:43Bank Secrecy Act, USA Patriot Act, and the Graham-Leach-Bliley Act. It would be a serious

00:49mistake to limit our fraud prevention tools in the system. Given that the Bureau's proposal

00:56may severely impact the ability to prevent fraud and conduct identity verification, has the CFPB

01:02spoken to anyone at FinCEN or Treasury regarding its brief proposal?

01:08I'd have to ask. I don't know what contact there's been. I have not talked to Director

01:15Tropra about this, but my staff may well have done so.

01:19If they haven't, will you commit to engaging with the Bureau on this?

01:23Certainly, I'm happy to look into it.

01:26All right. Wouldn't it make sense, though, for the Bureau to minimize its impact on the

01:30Bank Secrecy Act, compliance, and other law enforcement and privacy statutes?

01:36If it has that impact, it would make sense.

01:38All right. I appreciate that. Thank you very much.

01:42Over the last two decades, China has unleashed a global lending spree, mainly through its Belt

01:47and Road Initiative, showering mostly developing countries with hundreds of billions of dollars

01:51in an effort to expand its influence and become a political and economic superpower.

01:56China's opaque loans differ from most other loans to developing countries by advanced nations or

02:00institutions like the World Bank. They usually carry higher interest rates and shorter maturities,

02:05requiring refinancing every couple of years, and frequently using national assets as collateral.

02:10As more countries are on the cusp of default, raising interest rates are only going to make

02:14it more expensive to pay off debt denominated in dollars and other key currencies.

02:19Mr. Secretary, what should the role of international financial institutions be in

02:22addressing the needs of those that have outstanding Chinese debt and are currently

02:26in desperate need of relief from Beijing? We're working extremely hard to relieve the

02:33debt burdens of low-income countries that clearly need to restructure their debt and are trying to

02:42do so in the context of an IMF program. And as you say, China is often the holdout and the most

02:50difficult lender to deal with. We have been addressing that in all that we do. It's a topic

03:00I've raised in all of my bilateral meetings with my Chinese counterparts. We've raised this

03:09with the IMF and World Bank. A sovereign debt roundtable has been created to deal with some of

03:18the issues that China continues to raise in multiple debt restructurings. And while I still

03:26have serious concerns, some progress has been made in the context of common framework debt

03:35restructurings. So Zambia, Ghana, for example, are countries where progress has been made. China's

03:43come to the table, but there is more to do clearly. You've said that you've spoken to World Bank and

03:50IMF about this. Estimates peg China's lending to developing world at a trillion dollars, which

03:54makes them a bigger lender than the World Bank and IMF. But China is still considering emerging

04:01and developing economy under the eyes of the IMF. Do you believe that the U.S. should now use its

04:06influence in international organizations to change China's status as a developing country,

04:11specifically at the IMF? I guess I need to look at that. I'm not prepared to give you an answer on

04:19that. All right. Well, again, it's my understanding that the IMF considers China an emerging and

04:25developing economy, which allows them better terms under certain loans. And if they're giving

04:31out a trillion dollars a year to other countries, I think we should look into it. We oppose in the

04:36World Bank and all of the MDBs any lending to China whatsoever, given China's income level and

04:43extensive lending around the world. And we've pushed and they have reduced very substantially

04:52the lending that they do. We vote against all of it. Thank you. I just want to say this statement.

04:57International banks play an important role in our nation's economy, particularly in New York.

05:01I recognize that Basel III endgame is not in your current jurisdiction, but financial impact of these

05:05rules cannot be understated. I would encourage you as Treasury Secretary to talk with banking

05:10regulators and other FSOC members about the impact of this rules. Gentleman's time has expired.

Garbarino Hammers Janet Yellen: ‘It’d Be A Serious Mistake To Limit Our Fraud Prevention Tools’

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