00:00Thank you, Mr. Frotman, and let's examine who the real predator is, the Orwellian predator,
00:09the Consumer Financial Protection Bureau.
00:12Since President Trump took office, we have heard multiple complaints from my Democrat
00:16colleagues about executive power and DOJ and Elon Musk controlling funding.
00:21For example, Ranking Member Waters referred to Elon Musk as, quote, an unelected billionaire
00:27co-president, end quote, multiple times in front of this committee, and that, quote,
00:31they attempted to illegally kill the CFPB, end quote, and, quote, unelected billionaire
00:36Elon Musk seizes control of American people's money, end quote.
00:40My friend, Representative Kasten, brought up how Elon Musk is violating Congress's power
00:44of the purse.
00:45So my question really should be geared toward my friends across the aisle.
00:50If you are so concerned about unelected officials in the executive branch controlling funding
00:54in the future of the Bureau, why aren't you supporting reforms to the Bureau's structure
00:59to bring oversight back to Congress?
01:02If you are so worried about violations to the power of the purse, why aren't you supporting
01:06my TABS Act and bringing appropriations powers back to Congress?
01:10Ms. Keene, during your tenure at the Federal Trade Commission, did you find a commission
01:14structure or being funded through the normal congressional appropriations process somehow
01:19prevented you from protecting consumers?
01:23No, I did not.
01:24The commission structure at the FTC allowed business to continue even through changes
01:30of administration, as it is now, and it allowed the work to have the insight of both sides
01:37of the aisle.
01:38So issues were fairly considered in front of the commission.
01:41Well, under Director Chopra, the Bureau engaged in phishing expeditions through its CID process,
01:46burdening institutions with requests for documentation, time, resources, other demands without any
01:50foreseeable end in sight.
01:52Ms. Keene, you, I think in your written and oral testimony, really laid out the abuses
01:57from the Bureau, and this is why I introduced the CID Reform Act.
02:03Ms. Keene, you've represented clients who've been victimized by these phishing expeditions.
02:07Can you describe what these small business owners, these American citizens, have to endure
02:15with these CIDs?
02:16Yes, sir.
02:17I think it's really telling because I think the focus of Mr. Frotman's open remarks were
02:22talking about large banks.
02:24The clients I represent are not large banks.
02:26They are small businesses in your local community trying to serve a variety of needs of consumers.
02:35And when they receive a CID, it's exhausting.
02:39It's a lot of documents under short time frames.
02:42The usual return date for a CID is 30 days.
02:46There can be 30 or 40 requests in a particular CID.
02:51That's a lot of time and effort on the part of the company to try to gather that information,
02:56and there are very limited abilities of the company to bring objections in a meaningful
03:00way that doesn't expose the investigation.
03:03I think your testimony brings to light who the real predator is here.
03:07Mr. Schneider, how do these demands discourage financial providers from offering financial
03:12products and services to consumers?
03:15Well, if you don't know what the rules of the road are, it's very difficult to innovate.
03:21It's very difficult to know what you can bring to the market that isn't going to be immediately
03:24attacked.
03:25So you just end up spending a lot of money trying to figure out, hiring lawyers, hiring
03:29to figure out what you need to do just to keep going with your current products, and
03:34your innovation is lost.
03:35And that's never seen, quite frankly.
03:37What doesn't happen is never seen.
03:40Well, you know, we want cops on the beat, but we want due process.
03:44And CIDs from the Bureau lack due process.
03:48Can you speak to that?
03:50Well, I would echo my colleague's statements.
03:53These are extraordinarily broad requests.
03:56They often are seeking information about conduct that could never be the subject of an enforcement
04:02action.
04:03There's extraordinarily tight deadlines.
04:06If you have any objection to the scope of the CID, you have to go back and hope to get
04:11relief from the entity that's delivered it to you.
04:15And I might add when you do that, if you dare to petition to modify or set the CID aside,
04:22that becomes part of the public record.
04:24So you're tainted as being an entity under investigation merely by the action of seeking
04:31to make it more reasonable for you to respond.
04:33Yeah, I think it's also reasonable just to require the CFPB to tell the target why they're
04:39actually doing this investigation.
04:42Mr. Palmer, and last question to you, in fulfilling the America First agenda, the President has
04:47begun removing government waste and overreach and ending the disastrous DEI cancer that
04:52has spread throughout our financial system.
04:54In the finalized Section 1071 Small Business Data Collection rulemaking, this rule requires
05:00small business lenders to collect 81 data fields from small businesses, including whether
05:04the applicant is minority-owned or LGBTQ, the sex, ethnicity, race of the principal
05:09owners, et cetera, increasing compliance costs and reducing loan availability.
05:13Can you discuss some of the costs of this rulemaking and elaborate why it must be rescinded
05:18to protect small business access to credit?
05:20Well, the 1071 rulemaking has lots of different avenues right now.
05:24Of course, it's subject to litigation.
05:26The original statutory language only required 13 data fields.
05:30I believe the end result was 81 data fields, which is why the Bureau was sued in the first
05:35place.
05:36Our concern with the 1071 data fields beyond the 13 is that it will complicate the process.
05:42Banks have spent a lot of time going in and out of compliance and preparing for compliance
05:46of this rule.
05:48My time has expired, so I'm sure there will be more questions about this later.
05:53The Chair now recognizes the Ranking Member of the Subcommittee, Dr. Foster, for five minutes.
