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EXAMINING THE CONSUMER FINANCIAL 

PROTECTION BUREAU’S MASS DATA 

COLLECTION PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

DECEMBER 16, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–66 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

SEAN P. DUFFY, Wisconsin, Chairman 

MICHAEL G. FITZPATRICK, Pennsylvania, 

Vice Chairman 

PETER T. KING, New York 

PATRICK T. MCHENRY, North Carolina 

ROBERT HURT, Virginia 

STEPHEN LEE FINCHER, Tennessee 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

ANN WAGNER, Missouri 

SCOTT TIPTON, Colorado 

BRUCE POLIQUIN, Maine 

FRENCH HILL, Arkansas 

AL GREEN, Texas, Ranking Member 

MICHAEL E. CAPUANO, Massachusetts 

EMANUEL CLEAVER, Missouri 

KEITH ELLISON, Minnesota 

JOHN K. DELANEY, Maryland 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

KYRSTEN SINEMA, Arizona 

JUAN VARGAS, California 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

December 16, 2015 ........................................................................................... 1 

Appendix: 

December 16, 2015 ........................................................................................... 43 

WITNESSES 

WEDNESDAY, DECEMBER 16, 2015 

Abernathy, Wayne A., Executive Vice President for Financial Institutions 

Policy and Regulatory Affairs, American Bankers Association ........................ 7 

Calabria, Mark A., Director, Financial Regulation Studies, Cato Institute ....... 9 

Gingrich, Hon. Newt, former Speaker, U.S. House of Representatives .............. 5 

Gupta, Deepak, Founding Principal, Gupta Wessler PLLC ................................. 11 

APPENDIX 

Prepared statements: 

Abernathy, Wayne A. ....................................................................................... 44 

Calabria, Mark A. ............................................................................................. 55 

Gingrich, Hon. Newt ........................................................................................ 67 

Gupta, Deepak .................................................................................................. 71 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Ellison, Hon. Keith: 

Screen visuals displayed during the hearing ................................................. 77 

(1) 

EXAMINING THE CONSUMER FINANCIAL 

PROTECTION BUREAU’S MASS DATA 

COLLECTION PROGRAM 

Wednesday, December 16, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 11:03 a.m., in room 

2128, Rayburn House Office Building, Hon. Sean P. Duffy [chairman of the subcommittee] presiding. 

Members present: Representatives Duffy, Fitzpatrick, Fincher, 

Hultgren, Tipton, Poliquin, Hill; Green, Cleaver, Ellison, Beatty, 

Sinema, and Vargas. 

Ex officio present: Representative Waters. 

Also present: Representative Love. 

Chairman DUFFY. The Oversight and Investigations Subcommittee will come to order. 

The title of today’s subcommittee hearing is, ‘‘Examining the 

Consumer Financial Protection Bureau’s Mass Data Collection Program.’’ 

Without objection, the Chair is authorized to declare a recess of 

the subcommittee at any time. 

The Chair now recognizes himself for 4 minutes to give an opening statement. 

The Consumer Financial Protection Bureau (CFPB) is fundamentally tasked with protecting Americans from unfair, deceptive, and 

abusive financial practices. Ironically, as a result of its massive 

data collection activities, the CFPB is putting all Americans, all of 

us, at risk. 

From January 2012 to July of 2014, the CFPB carried out 12 

large-scale data collections, including the monthly collection of data 

affecting hundreds of millions of credit card accounts, 173 million 

mortgages, as well as information on 10.7 million consumer credit 

reports. Five of these data collections are ongoing. 

Not a day goes by that Americans are not made aware of yet another breach of their sensitive information. Whether it is in the 

public or private sector, vast collections of personal consumer data 

are prime targets for cyber attackers. 

Aside from the fact that the CFPB does not need to be collecting 

these vast amounts of information to carry out its regulatory mission, it is troubling that it has not taken more appropriate steps 

2 

to secure this data. In fact, before this committee last year, CFPB 

Director Cordray said that he could not rule out the potential for 

a data breach at the Bureau. 

We now know—and the American people don’t know—how much 

personally identifiable information, or PII, the CFPB retains, how 

that data is protected, and what the Bureau plans to do with all 

that data. 

And while the CFPB claims that it collects very little data that 

contains PII, collecting non-PII data may also endanger consumers. 

A recent study published by an MIT-led team of researchers found 

that knowing just four pieces—four pieces—of information about a 

person’s credit card transactions was enough to re-identify the 

anonymous credit card data in 90 percent of the cases that they 

studied. 

The Dodd-Frank Act granted the CFPB expansive and intrusive 

authority with very little accountability or oversight. However, 

CFPB’s data collection programs appear to exceed the mandates included in Dodd-Frank. Under the guise of its supervisory, monitoring, and examination authorities, the CFPB appears to have 

subordinated consumers’ interests with its data collection programs. 

What is more concerning is that while the CFPB claims to be an 

information-driven agency, it seems to cherry-pick data to justify 

pursuing a politicized rulemaking agenda. From publishing 

unverified consumer complaints on its website to using unreliable 

methodologies for estimating race in auto lending ECOA actions, 

the agency has proven time and time again that it will present only 

the most convenient of ‘‘facts’’ for its purposes. 

Manipulating data to validate a regulatory outcome is not sound 

public policy. This is junk science. The CFPB should focus on responding to actual allegations of consumer fraud and discrimination rather than collecting data for the purposes of undertaking 

costly and abusive phishing expeditions. 

I welcome our panel of witnesses here today, and I look forward 

to hearing from them as they present their testimony. 

I now yield 5 minutes to the gentleman from Texas, the ranking 

member of the subcommittee, Mr. Green, for his opening statement. 

Mr. GREEN. Thank you very much, Mr. Chairman. 

I would like to thank the witnesses for appearing. 

And I would like to acknowledge the presence of the Honorable 

former Speaker of the House. And for our purposes today, because 

he was the Speaker, I shall refer to him as ‘‘Mr. Speaker.’’ 

I am, Mr. Chairman, antithetical to most of what you said, and 

I am also concerned about something that has occurred. 

Mr. Speaker, we—or someone owes you an apology. And someone 

owes you an apology because on the memos that I have received 

and on the witness list, you are acknowledged as the former Speaker of the House—as indeed, you should be—but there is no acknowledgement of your affiliation with the U.S. Consumer Coalition. And, generally speaking, this is what we do here. 

I have a document that I shall ask unanimous consent to be 

placed in the record. 

Chairman DUFFY. Without objection, it is so ordered. 

3 

Mr. GREEN. This document is dated July 23, 2015, from the Financial Services majority staff, and it is to the members of the 

committee, styled, ‘‘The Dodd-Frank Act Five Years Later.’’ And it 

indicates that we are having the Honorable Phil Gramm appear, 

and the case that he was a senior partner at U.S. Policy Metrics, 

and that he is a former United States Senator; Honorable R. Bradley Miller, of counsel with Grais & Ellsworth LLP, and former 

Member of Congress. 

So I am going to ask unanimous consent that the record be corrected so that it will be indicated on the memo and the witness list 

that you are, Mr. Speaker, associated with the U.S. Consumer Coalition. 

I ask unanimous consent. 

Chairman DUFFY. If that is the case, without objection, it is so 

ordered. 

Mr. GREEN. I would also indicate why I have done this, Mr. 

Chairman. 

I perused quite a few articles concerning this Coalition, this 

group. It appears to be a corporate-owned and -subsidized synthetic 

grassroots organization. The activists, consumer organizations, 

know very little about it. It is a 501(c)(4). There is no way to ascertain who really funds it. And I think it is very important for us to 

know who is really coming after the CFPB. This organization has 

a mission statement that coincides with much of what has occurred 

here in the Congress of the United States of America. 

I am going to have to yield some time to the ranking member, 

but I think it is important for us to go into this. I have several articles that I will be introducing into the record. 

And having perused the Speaker’s statement for today, I am 

going to assume that it is just an oversight, because nowhere in the 

statement does it indicate his affiliation with the U.S. Consumer 

Coalition. 

This oversight has occurred more than once, because it appears 

that The Wall Street Journal had to issue an amplification as a result. This is something that has been called to our attention by virtue of various sources, one being Media Matters. 

So, with this, I will now yield the rest, remainder, and residue 

of my time to the ranking member of the full Financial Services 

Committee, Ranking Member Waters. 

Ms. WATERS. Thank you very much. I appreciate the time. 

As we sit here today to talk about the CFPB’s data collection 

practices, the CFPB uses the data it collects to ensure that potentially harmful products do not permeate the market, to inform the 

agency’s rulemaking efforts, to conduct critical supervisory oversight, and to return money to consumers who have been harmed. 

Unfortunately, my colleagues across the aisle are not here today 

to discuss data collection practices. Instead, this hearing is simply 

another blatant attempt to mischaracterize the Bureau’s data collection activities as harmful to consumers. 

How do we know this? Because the chairman of this committee, 

Mr. Hensarling, previously sponsored the PATH Act, a bill that, if 

enacted, would have authorized the creation of a national mortgage 

data repository that would collect the same individualized, personVerDate Nov 24 2008 16:09 Dec 07, 2016 Jkt 099797 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\99797.TXT TERI
4 

alized data that Republicans shame the CFPB for collecting, and 

which is the subject of this very hearing. 

Currently, most of the data that the CFPB collects is public and 

nonpersonally identifiable. Both the GAO and the CFPB Inspector 

General have indicated that the CFPB is generally in compliance 

with data privacy and security laws. 

Nevertheless, my Republican colleagues are here today to, again, 

criticize and undermine an agency that has returned more than 

$11 billion to 25 million Americans. 

I yield back. 

Chairman DUFFY. The gentlelady yields back time she does not 

have. 

The Chair now recognizes the vice chairman of the subcommittee, the gentleman from Pennsylvania, Mr. Fitzpatrick, for 

1 minute for an opening statement. 

Mr. FITZPATRICK. Thank you, Mr. Chairman, for the hearing. 

And welcome to the witnesses this morning. 

Increasingly, our cyber infrastructure and private records are becoming targets of both state and non-state actors alike. I don’t have 

to remind everyone here about the theft of personal information 

from the Office of Personnel Management—I suspect we all received that letter—or any of the other significant breaches of consumer data that have occurred. 

For these reasons, it is alarming that any organization, especially an agency of the Federal Government of the United States, 

would collect consumer data and store it in a single location, as the 

Consumer Financial Protection Bureau does, especially when, according to a GAO study, the CFPB lacks procedures and documentation for these collecting practices or security protocols to 

store private consumer information in a manner safe from hackers. 

What’s more, it seems that no type of data is off limits to the 

CFPB. While Congress has not been provided a complete picture of 

these actions, we know that one of these mass collections yielded 

data on 173 million loans. 

So we look forward to the hearing, today’s witness testimony, 

and we hope that it allows all of us to develop a better understanding of this practice and if there is a reason or legitimate need 

for these aggressive Federal practices to continue. 

I yield back. 

Chairman DUFFY. The gentleman yields back. 

I now want to welcome our witnesses. 

And because I do want to at one point get to our testimony, I am 

not going to spend an hour relating all of the things that Speaker 

Gingrich has done. What I have realized recently, though, is that 

he is a fiction author; he wrote a great book, which my wife just 

completed. It is a page-turner. I didn’t realize that. But I am going 

to stick to the basics. He was elected to Congress in 1978 from the 

Sixth District of Georgia and, as we all know, was the Speaker of 

the House from 1995 through 1998. 

Speaker Gingrich, welcome, and thank you for being here. 

I also want to welcome Mr. Wayne Abernathy. He is the executive vice president for financial institutions policy and regulatory 

affairs at the American Bankers Association. Welcome. 

5 

Dr. Calabria, welcome again. Dr. Calabria is the director of financial regulation studies at the Cato Institute. 

And finally last, but not least, Mr. Deepak Gupta is the founding 

principal of Gupta Wessler, an appellate litigation boutique in 

Washington, D.C. 

Welcome, panel. 

Each of you are going to be recognized for 5 minutes to give an 

oral presentation of your testimony. 

And without objection, your written statements will be made a 

part of the record. Once the witnesses have finished presenting 

their testimony, each member of the subcommittee will have 5 minutes within which to ask the panel questions. 

Just as a reminder—many of you know this—on the table you 

have three lights: green means go; yellow means you have a minute 

left; and red means your time is up. I would just note that if you 

get a question while your light is yellow, I will give you the leniency to finish your question as it goes into red, but please don’t go 

on for a minute or two. Otherwise, I will just start tapping my 

gavel, and we will try to wrap it up. 

And with that, Speaker Gingrich, welcome, and you are now recognized for your 5-minute presentation. 

STATEMENT OF THE HONORABLE NEWT GINGRICH, FORMER 

SPEAKER, U.S. HOUSE OF REPRESENTATIVES 

Mr. GINGRICH. Good morning, and thank you for allowing me to 

be here. It is an honor to be with you on this important issue. 

I do want to say about Mr. Green’s concern that if either he or 

his staff had read my testimony, they would find that on page 3, 

I describe my relationship as an adviser to the U.S. Consumer Coalition. 

But the subject of today’s hearing is important in a narrow 

sense, in that we have an agency that is collecting more information about Americans’ private lives than any bureaucracy deserves, 

for reasons unrelated to national security. 

But it is also important in a broader sense. Today, the Consumer 

Financial Protection Bureau is so far outside the historic American 

system of constitutionally limited government and the rule of law 

that it is the perfect case study of the pathologies that infect our 

bureaucracies at the Federal level. It is dictatorial. It is unaccountable. It is practically unrestrained and expanding on its already expansive mandate from Congress. And it is contemptuous of the 

rights, values, and preferences of ordinary Americans. 

The CFPB is all of these things, as are many of our large, destructive bureaucracies in this City—a huge problem in its own 

right. But the CFPB is an especially good symbol of these 

pathologies because of its unique structure among regulatory agencies. 

In the Dodd-Frank Wall Street Reform and Consumer Protection 

Act that created the Bureau, Congress—very unwisely, in my opinion—gave up two of its core constitutional powers for reining in Executive Branch agencies. 

First, the CFPB is not subject to the annual congressional appropriations process and instead is funded out of a fixed portion of the 

6 

Federal Reserve’s budget. So, in effect, you have a bureaucratic 

slush fund that is self-defined by the bureaucracies on their behalf. 

Second, its Director can be fired only by the President and then 

only under limited circumstances because Dodd-Frank protects him 

from being removed by Congress. 

For all practical purposes, this means the bureaucracy is free to 

do whatever it wants within the broadest imaginable interpretation 

of its authority without fear of losing its funding or its leadership. 

This is a very dangerous recipe for petty dictatorship and is completely foreign to the American model. 

I always remind people of Lord Acton’s famous dictum: ‘‘Power 

tends to corrupt. Absolute power corrupts absolutely.’’ Notice he 

drops the ‘‘tends.’’ There is no better example of the corruption of 

power than this agency, which is totally secret, totally unaccountable, spends a vast amount of money, has huge cost overruns, and 

is doing whatever it wants to whomever it feels like doing it to. 

We know this formula is dangerous because we have watched the 

Bureau’s behavior over the past 4 years. We have seen the contempt with which it treats Congress and the American people. 

The CFPB is prohibited from regulating car dealers, but it has 

done so anyway, using absurdly inaccurate techniques—which, by 

the way, in the private sector would lead to lawsuits over fraud— 

to accuse them of racial discrimination and extract fines from car 

companies and auto finance companies. This says your government 

is a bully and your government is a blackmailer. 

The topic of this hearing is another good example of the CFPB’s 

overreach, one I also discussed in my own article in The Wall 

Street Journal last summer. The CFPB is prohibited in Section 

1022 of Dodd-Frank from collecting personally identifiable information on Americans, but the Bureau is doing so anyway. And it is 

doing so on a massive scale that rivals the NSA’s most controversial collection programs but for much less compelling reasons. 

The CFPB has said it aims to monitor at least 95 percent of all 

credit card transactions in the United States by 2016. Toward that 

end, the Bureau is already collecting and analyzing data from at 

least 600 million credit card accounts each month. That is 7 billion 

records in the last year alone. 

And it is not just credit card data. The CFPB is gathering data 

on 22 million private-label mortgages every month, 5.5 million student loans, 2 million bank accounts with overdraft fees, and on 

hundreds of thousands of auto sales, credit scores, and deposit advance loans. 

These secretive and intrusive data-gathering operations are taking place without consumers’ knowledge and without the ability for 

consumers to opt out. Unless they have been tuned in to occasional 

congressional oversight hearings like this one, consumers are entirely unaware that government bureaucrats are poring over their 

credit card transactions every month looking for new products to 

regulate. 

The CFPB is scooping up more information about law-abiding 

Americans than any government agency should be permitted to collect for reasons unrelated to national security or law enforcement. 

In fact, in a recent poll conducted by Zogby for the U.S. Consumer Coalition, which I happen to advise—let me repeat that, 

7 

since it is in the record, but I just want to make sure for particularly Mr. Green’s staff that they get it—which I happen to advise— 

so I am not secret about the relationship—just one in five Americans said they believe the CFPB should be allowed to gather credit 

card statements without consumers’ knowledge. 

For those of you who are concerned about the intelligence community’s direct data collection effort, I don’t see how you can be 

worried about the potential for abuse and about the, in fact, justified lack of transparency in national security agencies and not be 

concerned about the same dangers in this large and unaccountable 

bureaucracy armed with similar kinds of information. 

Think of the absurdity of being told that Homeland Security will 

not look at Facebook pages of foreigners out of concern for their 

privacy while CFPB is gathering up all of this data. Let me just 

say, certainly, if the NSA and the FBI need a warrant to collect 

such data on U.S. citizens for the purpose of preventing terrorism, 

the CFPB should need to get a warrant, too. 

In closing, what we have in the CFPB is an agency that is not 

accountable to Congress or the American people, an agency that is 

stretching the boundaries of its authority as far as it can, and a 

bureaucracy which for all practical purposes is out of control. As 

the American people’s elected Representatives in Congress, this 

should bother you no matter which side of the aisle you are on and 

whatever you think of the Bureau’s preferred regulations. 

It is imperative that we move toward abolishing the Consumer 

Financial Protection Bureau and, at the very least, subject it to an 

annual budgeting and appropriations process, in addition to restructuring its leadership to make sure it is accountable to Congress. 

Thank you, and I look forward to your questions. 

[The prepared statement of Speaker Gingrich can be found on 

page 67 of the appendix.] 

Chairman DUFFY. Mr. Abernathy, you are recognized for 5 minutes. 

STATEMENT OF WAYNE A. ABERNATHY, EXECUTIVE VICE 

PRESIDENT FOR FINANCIAL INSTITUTIONS POLICY AND 

REGULATORY AFFAIRS, AMERICAN BANKERS ASSOCIATION 

Mr. ABERNATHY. Thank you, Chairman Duffy and Ranking Member Green, for this opportunity to testify. My name is Wayne Abernathy. I am executive vice president at the American Bankers Association (ABA). 

The customers of ABA’s thousands of member banks are affected 

by the actions, policies, and decisions of the CFPB. The Bureau has 

enormous authority over retail financial products and those who 

provide them, and, therefore, over the people who use them. 

This power comes with little more than nominal oversight and 

accountability. It would be hard to find a Federal agency where the 

gap between regulatory power and public accountability is greater. 

Bureau officials repeatedly assert that the Bureau is a transparent and data-driven agency. Public exposure and data are to be 

the checks on the natural tendency for any such agency to stray 

into arbitrary action. 

8 

I emphasize the Bureau is governed by one person. No one in the 

agency can address him without ultimately bending to that one 

person’s policy judgment, knowing that at some point in the discussion it will end with, ‘‘Yes, sir.’’ 

We welcome this subcommittee’s inquiry into the question of how 

strong a check on arbitrary behavior are the Bureau’s data policies 

and practices. How much is the Bureau, in fact, data-driven? And 

by which data? From which sources? And how would we know? 

Bureau Director Richard Cordray stated the following: ‘‘At the 

Consumer Bureau, we are a data-driven agency. The best decisions 

will be those that are best informed.’’ 

The Bureau’s strategic plan for Fiscal Years 2013 through 2017 

includes the following: ‘‘We take in data, manage it, store it, share 

it appropriately, and protect it from unauthorized access.’’ 

And then this from the Bureau’s website on a page titled, ‘‘Open 

Government’’: ‘‘Transparency is at the core of our agenda, and it is 

a key part of how we operate.’’ 

We support those statements. Bureau practices, however, have 

not lived up to these standards, and there is little to require that 

they do so. The Dodd-Frank Act extends to the Bureau impressive 

authorities for requiring information. The Act’s oversight structure 

is much less impressive. 

Problematic Bureau data practices have undermined the effective 

use of data to serve as a check on arbitrary action and weakened 

the quality of policymaking, placing at risk the Bureau’s mission to 

protect consumers. In my written statement, I discuss several examples, which I will merely list for you at this point. 

The Bureau evades public disclosure laws, such as the Paperwork Reduction Act, while cherry-picking data. In selective data 

samples, the Bureau skews results, mischaracterizing consumer 

markets. The Bureau has misrepresented its data gathering on 

overdrafts. On its website, the Bureau publishes unverified complaint information. In its arbitration study, the Bureau ignores its 

own data. To promote its policies on indirect auto lending, the Bureau has manufactured data that do no exist. 

I will explain briefly one of these as an example, the unverified 

complaint information. 

The Bureau publishes on its official website, at the top of which 

are the words, ‘‘An official website of the United States Government,’’ they publish consumer complaints that are unverified for 

accuracy or veracity. 

The Bureau asserts that, ‘‘by adding their voice, consumers help 

improve the financial marketplace.’’ But how can this be true if the 

information provided is unreliable and misleading? What does the 

Bureau offer to protect a consumer from acting on erroneous information published on the Bureau’s own website? 

ABA offers four recommendations in our written statement. I 

would emphasize our fourth. The governance of the Bureau should 

be changed from a sole directorship to governance by a bipartisan 

commission. With a bipartisan structure, we gain light from a variety of viewpoints, different people posing different questions from 

different backgrounds, all more likely to poke and prod the data, 

and all of them likely to be intolerant of information legerdemain. 

9 

On behalf of ABA and its member banks of all business models, 

serving hundreds of millions of people, our customers and your constituents impacted by Bureau decisions by the Consumer Bureau, 

I want to thank this subcommittee for this very important inquiry. 

I would be happy to respond to any questions you may have. 

[The prepared statement of Mr. Abernathy can be found on page 

44 of the appendix.] 

Chairman DUFFY. Thank you. 

Dr. Calabria, you are recognized for 5 minutes. 

STATEMENT OF MARK A. CALABRIA, DIRECTOR, FINANCIAL 

REGULATION STUDIES, CATO INSTITUTE 

Mr. CALABRIA. Chairman Duffy, Ranking Member Green, and 

distinguished members of the subcommittee, I thank you for the invitation to appear at today’s important hearing. 

Let me first say that the concerns I will raise are not unique to 

the CFPB. They apply across the Federal Government. 

Let me also note that my colleagues and I at the Cato Institute 

have consistently raised these concerns regardless of politics or the 

mission of the agency. We have been vocal, highlighting abuses in 

law enforcement and national security. I would go so far as to say 

we have spent considerable resources trying to undo the thirdparty doctrine, which is the basis of almost all Federal surveillance. 

So, again, this is not something new to us. In fact, we have spent 

more time on the PATRIOT Act and the Bank Secrecy Act than we 

have on surveillance at the Consumer Financial Protection Bureau. 

So, again, this is not something new for us. 

Let me also say, as I detail in my testimony, the massive data 

collection at the CFPB is one of choice. There is no explicit mandate or requirement for this level of data collection. As someone 

who has previously managed one of the offices that have been 

transferred to the CFPB, I can say that the extent of this data collection is also unnecessary for it to fulfill its responsibilities. 

During my tenure enforcing the Real Estate Settlement Procedures Act at HUD, we nearly doubled enforcement, significantly increased enforcement action, and we did so without having to resort 

to a massive dragnet of consumer data. 

Obviously and unfortunately, some of those actions did not prevent the financial crisis, but I would have told you then, as I will 

tell you today, the problems with RESPA and much of our consumer financial protection are in the underlying statutes—which I 

greatly encourage Congress to revisit—not from a lack of surveillance. 

We have seen this play out in the area of national security, 

where the public is repeatedly told that if only we had more data, 

various attacks would have been avoided. Yet, repeatedly, the intelligence failures we witness are not from a lack of data. They are 

from an inability or unwillingness to connect the dots. 

Similarly, the financial crisis was met with demands for more 

data, as if the overheated housing and mortgage markets were not 

obvious enough from the aggregate data. They were obvious to me 

over a decade ago. Unfortunately, our regulators ignored them. 

10 

And, of course, more data does not necessarily help you if you continue to ignore it. 

The CFPB has not been immune from this false idol of more 

data. As the GAO has reported, the CFPB has engaged in at least 

12 large-scale data collection efforts. At least three of these include 

information that directly identifies individual consumers. Combining this information with other sources, such as the other nine, 

could allow the information also to be identified on consumers. In 

my opinion—granted, as a nonlawyer—I believe these collections do 

not comply fully with the Right to Financial Privacy Act. 

Let me also state, as a former Federal employee and one subject 

to the recent OPM breach, I don’t trust any part of the government 

with my data, the CFPB or otherwise. In consolidating all of this 

financial information in one place, the CFPB has left consumers extremely vulnerable to hackers and identity theft. 

Those are only threats from outside the Bureau. Unfortunately, 

the CFPB’s data collection, in my opinion, also poses significant 

threats to our Fourth Amendment protections, which I believe 

apply to everybody, even financial service providers. As Justice 

Douglas observed in his dissent to the California Bankers case, ‘‘A 

checking account may well record a citizen’s activities, opinions, 

and beliefs as fully as the transcripts of his telephone records.’’ 

Credit cards are today’s checks. 

Such concerns are not simply reflections of the Watergate era. As 

recently as 2012, Justice Sotomayor, in her concurrence to United 

States v. Antoine Jones, correctly observed, ‘‘Awareness that the 

government may be watching chills association and expressive freedoms. The government’s unrestrained power to assemble data that 

reveal private aspects of identity is susceptible to abuse.’’ Those are 

Justice Sotomayor’s words, not mine. 

Justice Sotomayor offers the example of medications purchased 

online by online retailers. Such a purchase could theoretically be 

identified within the CFPB’s data card collections. 

For a variety of reasons, as I think this hearing has demonstrated across the aisle, the CFPB has become a highly partisan 

issue. I think that is unfortunate. Were it to use the financial 

records of its critics as an attempt to silence and intimidate those 

critics, it would not be the first agency to do so. And as an institute, at the Cato Institute, where we receive our donations via 

credit card, this is a very real risk and certainly one that we worry 

about. 

I will only quote Justice Thurgood Marshall, who sadly observed, 

‘‘The technique of examining bank records to investigate political 

organizations is, unfortunately, not a rare one.’’ And as someone at 

the Cato Institute who regularly takes a stand that is occasionally 

unpopular in Washington, I certainly share in this concern. 

My suggestion would be that the CFPB end these data collections. I would submit that there is more than enough work to do 

actually responding to consumer complaints. 

I thank the subcommittee for their time, and I look forward to 

your questions. 

[The prepared statement of Dr. Calabria can be found on page 

55 of the appendix.] 

11 

Chairman DUFFY. Mr. Gupta, you are now recognized for 5 minutes for a summary of your opening statement. 

STATEMENT OF DEEPAK GUPTA, FOUNDING PRINCIPAL, 

GUPTA WESSLER PLLC 

Mr. GUPTA. Thank you, Chairman Duffy, and Ranking Member 

Green. 

I will make three points this morning based on my perspective 

as a former CFPB official and as an advocate for consumers, including in data privacy cases. 

First, privacy and the security of consumer data are important 

issues, and if this subcommittee were really concerned, there are 

real problems it could be addressing. There have been major data 

breaches recently in which credit card information was stolen from 

consumers at Target and Home Depot, for example. 

But this subcommittee hasn’t held a single hearing on those realworld threats. Instead, we are having a hearing about a set of 

imagined problems that exist only in the minds of the CFPB’s political opponents. 

In fact, if you ask the actual consumer privacy groups, they voice 

support for the CFPB’s data collection efforts. And I believe there 

is a statement that has been entered into the record today, or will 

be—As one privacy advocate put it, ‘‘The reason you don’t hear 

from privacy or consumer groups is that the CFPB is not doing 

anything that concerns us, nor, for that matter, is it doing much 

differently than other regulators have always done.’’ 

Second, to the extent that it is doing anything different, the Bureau’s collection of data is creating the kind of oversight and consumer protection that were missing before the financial crisis. 

For example, the compilation of anonymous account-level data— 

I want to stress that; it is anonymous account-level data—from the 

CFPB’s credit card database has allowed the Bureau to study important topics, such as credit card marketing practices and the 

widespread use of forced arbitration clauses in consumer contracts, 

something Congress required the CFPB to study. 

Data collection is crucial to the Bureau’s ability to identify systemic violations of consumer laws, discrepancies in credit score reporting, and harmful effects of checking account overdraft programs, to name just a few examples. 

The CFPB’s data collection ensures that the agency’s regulation 

and enforcement are data-driven—that is, based on the best understanding of market trends and empirical reality. That is the whole 

point of having expert administrative agencies in the first place. So 

unless your profits come from deceiving consumers, you should welcome the CFPB’s data collection. 

Third and finally, the very existence of this hearing illustrates 

one danger that can occur when public officials don’t base their actions on data. We have a made-up controversy, unfortunately, 

based on made-up facts. 

The CFPB is not spying on American citizens. It is not the NSA. 

It is not interested in the details of people’s personal activities, nor 

would the data that the agency is currently collecting enable it to 

investigate those activities even if it were interested in, say, what 

12 

you plan to buy tomorrow with your credit card for a Christmas 

present for your grandmother. 

In fact, the vast majority of the data collected by the CFPB is 

already public, such as data on mortgages already recorded in local 

land records or auto sales on record with the DMV. And most of 

it is aggregate data at the account level, not at the transaction 

level, designed to give the agency a picture of what financial institutions, not individual consumers, are up to. 

The GAO looked into this controversy and, in a detailed review, 

found that none of the major problems that the CFPB’s opponents 

have alleged exist. Of the 12 major projects analyzed by the GAO, 

only 3 even potentially involved any personal consumer data, and 

the GAO found that the CFPB had taken steps to protect and secure the data it collects, and it has a system for anonymizing any 

material involving identifying information. 

And I want to correct one factual inaccuracy that I have heard 

several times already this morning. None of the ongoing data collections by the CFPB contains personally identifiable information. 

That is a fact that has been verified by the GAO. Agencies have 

been collecting this same stuff for years and nobody has complained, GAO also found. 

The story with consumer complaint data is similar. The Inspector 

General did an exhaustive review and uncovered no major problems. Of the 250,000 complaints examined, the IG’s audit found an 

accuracy rate of 99.99 percent, an error rate of 0.01 percent. I wish 

that most of the work product that emanated from this building, 

for example, could meet that accuracy standard. 

Meanwhile, the financial industry is collecting far more personally identifiable data that could open up real questions about consumer privacy. The JPMorgan Chase Institute, for example, recently released a report that pulled from a data set of 12 billion 

individual consumer transactions. 

So if we are really worried about the collection of this kind of 

data, we should be far more concerned about the private market 

that is developing for this data. And with all the real problems in 

consumer finance, I think it is unfortunate that the subcommittee 

feels the need to hold a hearing today on this nonissue. 

Thank you for inviting me to testify, and I am happy to answer 

any questions. 

[The prepared statement of Mr. Gupta can be found on page 71 

of the appendix.] 

Chairman DUFFY. Thank you, panel. 

The Chair now recognizes the vice chairman of the subcommittee, the gentleman from Pennsylvania, Mr. Fitzpatrick, for 

5 minutes for questions. 

Mr. FITZPATRICK. Thank you, Chairman Duffy, for calling this 

hearing. The hearing is critically important, given all the security 

breaches that we have been hearing about and reading about, not 

only in the private sector of the economy, from retailers, but, most 

importantly, in the public sector. 

And, in most of those cases, the average American citizen does 

not know that their information is being collected by the Federal 

Government or that their security has been breached. They just 

don’t know that. 

13 

Speaker Gingrich, you talked about the two Constitutional provisions that the United States Congress essentially walked away 

from in passing Dodd-Frank and creating the CFPB. And then you 

testified about all the personally identifiable information that the 

CFPB is collecting. 

I have two questions. First, are you concerned about the CFPB’s 

ability to protect and secure that information from breaches? 

And second, when you have an agency of the Federal Government that essentially lacks accountability or oversight from the 

Congress, what is the interest or the vigilance that the agency 

would have to actually get down and protect that information? So 

how is the CFPB different than other agencies? 

Mr. GINGRICH. Thank you for the question. 

Let me say, first of all, anybody who believes that anyone has 

the ability to guarantee security of information is totally out of 

touch with the real world. When you look at the size of the 

breaches and you look at the number of hackers around the planet 

and you look at the intensity with which people are trying to figure 

out how to do this, there is no place where you are going to aggregate information, unless you take it totally offline, that you are 

going to have real, true security. 

These systems are growing very rapidly. They are getting much 

more sophisticated, and we are going to be in a very different 

world. It is like the Wild West. This is not like 10 years ago. And 

it is going to get worse. 

Second, I want to point out that in The Wall Street Journal article I cited a Stanford study on how to take metadata from telephones and connect them to get individual identity, and an MIT 

study for how to do that with credit cards. So when people say to 

you, oh, we are only gathering impersonal information, the fact is 

that is a sign they don’t understand how big data has evolved and 

the fact that you can reassess and redefine people if you have 

enough data points. 

So I find it much more frightening to have government bureaucracies that are uncontrolled having that level of information and 

power. In the private sector, if I don’t like a company, I can quit. 

That isn’t how it works if you are a citizen and two bureaucrats 

show up at your front door. 

Mr. FITZPATRICK. Mr. Gupta, if a constituent of mine in Bucks 

County, Pennsylvania, had her personal information or her financial habits stolen in a data breach of the CFPB, how would you explain to her that it was necessary for the Federal Government to 

collect and store this information in the first place? 

Mr. GUPTA. I would first explain to her that the whole premise 

of the question is false, because, as I said, none of the ongoing collection efforts by the CFPB involve any personally identifiable information. 

And that is verified by the GAO report, and it is pursuant to the 

statutory authority. The authority that this Congress gave the 

CFPB to do ongoing market monitoring expressly comes with a limitation which says that data cannot include personally identifiable 

information. And the CFPB, the GAO found, is complying with that 

mandate. 

14 

So, to the extent there is any personally identifiable information, 

it is either going to be because she provided it as part of a consumer complaint and that information is not going to be information that would be damaging; it would be information that allows 

the agency to get in touch with her—or, for example, when there 

is supervision and enforcement and the agency needs the person’s 

contact information to get in touch with them to reimburse them 

if they have been defrauded. But those are really small exceptions. 

Mr. FITZPATRICK. Dr. Calabria, do you concur that my constituent should have no concern with what the CFPB holds? 

Mr. CALABRIA. I do not concur. Maybe I need to reread the GAO 

report a few times, but my read of it is pretty clear that at least 

three of those programs do have personally identifiable information. 

And there is also a question of, can you take the information in 

those programs and link to other programs that aren’t personally 

identifiable, and I think that there is a very real risk there. 

Again, as I noted in my testimony, I was a victim of the OPM 

breach. And I am very touched that OPM has now made sure that 

I get at least a year of credit check free. That is very touching. I 

would personally like the Chinese to give me my information back 

and not to use it. It is kind of hard to close that barn door after 

the horse is out. 

So I think we need to be thinking ahead of time. The time to 

react is not after the breaches; the point to react is to not collect 

this level of data if you don’t need it to begin with. 

Mr. FITZPATRICK. I think most of us who also were victims of 

those same breach would agree with you, Dr. Calabria. 

Thank you. I yield back. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the ranking member of the full Financial Services Committee, Ms. Waters, for 5 minutes. 

Ms. WATERS. Thank you very much. 

Let me welcome all of our panelists here today, and especially 

Speaker Gingrich. Welcome, welcome, welcome. 

Speaker Gingrich, whom are you representing here today? 

Mr. GINGRICH. I represent myself. 

Ms. WATERS. What is the name of the PR firm that you work for? 

Mr. GINGRICH. The U.S. Consumer Coalition is not a PR firm. It 

is an organization which has been raising questions. I work with 

them. I have said that publicly. I said it, in fact, in the testimony 

we submitted here. And I think the questions they raise are very 

good ones. 

But my view— 

Ms. WATERS. The Coalition— 

Mr. GINGRICH. —is not shaped by that. I am a conservative— 

Ms. WATERS. Excuse me. I am not interested in that right now, 

Mr. Speaker. 

Mr. GINGRICH. I apologize. 

Ms. WATERS. The Coalition has hired a PR firm that you work 

for. You work for the PR firm. Is that right? 

Mr. GINGRICH. We work with the Coalition. 

Ms. WATERS. Do you work for the PR firm that is hired by the 

Coalition? 

15 

Mr. GINGRICH. I would have to check to see whether it is— 

Ms. WATERS. Okay. 

Mr. GINGRICH. But there is no question we work with the Coalition. We have said— 

Mr. GREEN. Would the ranking member yield, if you would? 

Ms. WATERS. Yes, the ranking member will yield. 

Mr. GREEN. Mr. Speaker, I have your Wall Street Journal article 

wherein there is an indication at the end that you are a paid adviser to the Wise Public Affairs group. Are you denying this, Mr. 

Speaker? 

Mr. GINGRICH. No, I am not denying— 

Mr. GREEN. That was the question that the ranking member was 

asking. 

I will yield back to the ranking member. 

Ms. WATERS. Thank you very much. 

And the Coalition is funded by what industries? 

Mr. GINGRICH. I don’t know. 

Ms. WATERS. Does the Coalition represent any other consumer 

groups? Do they advocate for any other consumer groups? Or was 

it just organized to deal with their concerns about the Consumer 

Financial Protection Bureau? 

Mr. GINGRICH. My impression is that they think that the threat 

from the CFPB is large enough that that is their primary focus. 

Ms. WATERS. I am not interested— 

Mr. GINGRICH. And it is the only bureaucracy— 

Ms. WATERS. —Mr. Speaker, in your impression. But is that exactly what they do, just— 

Mr. GINGRICH. I don’t know. You would— 

Ms. WATERS. —the Consumer Financial Protection Bureau? 

Mr. GINGRICH. —have to call them and ask them. They asked me 

to advise on one thing. 

Ms. WATERS. I know that you are very smart, Mr. Speaker, and 

you wouldn’t work for somebody that you didn’t know who they are 

and what they do. So that is why I ask you. 

But let me just move on, because I know you understand how 

this place works. You talked about the fact that it is the only agency that operates in the way that it does, that it is the only agency 

that does not have to go before the Appropriations Committee. Do 

you really know and understand that to be true? 

Mr. GINGRICH. That is certainly my impression, but if you find 

other agencies that have perpetual life by drawing money in manners that has nothing to do with the Congress, I think Congress 

ought to, frankly, then hold hearings on bringing them within the 

Constitution. 

Ms. WATERS. Are you aware that, for example, the FHFA has one 

Director, appointed by the President, who can only be removed by 

the President, and does not go before any Appropriations Committee? Are you aware of that? 

Mr. GINGRICH. I wasn’t aware of that. But, as I just said, to the 

degree you would like to give us a list that we could suggest to 

Congress that they bring under annual appropriations, I would be 

happy to— 

16 

Ms. WATERS. Mr. Speaker, I know that you know how this place 

runs. You ran it with a strong hand, so I know you understand how 

it works. 

Does the FDIC go before an Appropriations Committee? 

Mr. GINGRICH. I believe it is subject to congressional supervision. 

Ms. WATERS. That is not what I asked. 

Mr. GINGRICH. I believe it answers to congressional inquiries. 

Ms. WATERS. That was not my question. 

In terms of what the President is able to do in determining 

whether or not a director continues as director—the OCC, for example, their director can only be fired by the President. Isn’t that 

right? And the same thing with the FHFA. Is that correct? 

Mr. GINGRICH. That is correct. 

Ms. WATERS. And the Fed, they don’t go before an Appropriations 

Committee. Is that right? 

Mr. GINGRICH. That is right. In fact, I have favored auditing the 

Fed for that very reason. 

Ms. WATERS. And the President, for example, can only remove 

the head of the SEC. Is that right? 

Mr. GINGRICH. Yes. 

Ms. WATERS. Okay. So I just want us to be clear when we compare the Consumer Financial Protection Bureau with other agencies. 

Some of us are very appreciative that Dodd-Frank created the 

Consumer Financial Protection Bureau, because prior to the meltdown that we had, the recession that we entered into, nobody was 

protecting the consumers. We had all of our oversight agencies who 

basically were supposed to be responsible for soundness, et cetera, 

but they did nothing for consumers. 

And so now we have the Consumer Financial Protection Bureau, 

and we have a whole effort to destroy it. The other side of the aisle 

have made this the top priority in everything that they do. And 

just as Mr. Gupta said, while we had this breach with Target and 

others, never have we had a hearing on any of that. 

So I am glad that you are here today, but I want you to share 

your knowledge with us and tell— 

Chairman DUFFY. The gentlelady’s time has expired. 

Ms. WATERS. —us what you know and what you understand 

rather than— 

Chairman DUFFY. The gentlelady’s time has expired. 

Ms. WATERS. —some of the other stuff that I am hearing. 

I yield back the balance of my time. 

Chairman DUFFY. And there is none left. 

Mr. GINGRICH. Can I make one brief comment? 

Chairman DUFFY. Maybe you can ask— 

Mr. GINGRICH. Okay. 

Chairman DUFFY. I want to stick with the rules. 

The Chair now recognizes the gentleman from Colorado, Mr. Tipton, for 5 minutes. Maybe he will entertain the Speaker’s request. 

Mr. TIPTON. Thank you, Chairman Duffy. 

Mr. Speaker? 

Mr. GINGRICH. I just wanted to comment—the gentlelady just 

pointed out that all of these various bureaucracies that were responsible for oversight prior to 2007 failed, and so the answer is, 

17 

let’s build another bureaucracy to look after the failed bureaucracies, as opposed to looking at why did all these bureaucracies 

fail. I think it is a fascinating difference of opinion. 

And I appreciate your pointing out that we actually should have 

a study, which Cato may already have, of all of the agencies that 

should be under congressional annual appropriation. I thought that 

was a very useful contribution. 

Mr. TIPTON. Thank you, Mr. Speaker. 

Mr. Gupta, I would like to start with you, in regards to personal 

information. You made the comment that no personal information 

is collected. Is gender an identifier? 

Mr. GUPTA. Is gender an identifier? Gender standing alone, with 

nothing else? 

Mr. TIPTON. How about if we included age? Would that be an 

identifier, those two together? How about ethnicity, if we included 

those three elements? Are those things that can be used to identify 

an individual? 

Mr. GUPTA. I take your point, and you are right. A constellation 

of data can certainly be used to identify someone without their 

name. And the CFPB is very concerned about that. And that is 

why— 

Mr. TIPTON. Interestingly— 

Mr. GUPTA. —if you look at the GAO report, you will see that 

they have a data intake team that carefully, carefully scrubs the 

data before it even enters the Bureau and is disseminated to ensure that you don’t have a constellation of data that can be assembled to actually identify anyone. 

Mr. TIPTON. Well, interestingly, Mr. Gupta, under the CFPB, 

with the NMD, they do require the collection of gender, age, and 

ethnicity. 

Mr. Calabria, would you like to maybe comment on that? 

Mr. CALABRIA. Again, I would agree that only a small number of 

information is needed to identify people. 

I do want to emphasize, as I pointed out in my testimony, and 

as the Federal Reserve Inspector General pointed out, a significant 

amount of the CFPB data collection is maintained by contractors 

on cloud computing, which in my opinion—granted, I’m not a tech 

expert—leaves it particularly vulnerable to hacking. 

So I would certainly encourage the CFPB to bring more of that 

data—here, I am going to say it for a second: Cato Institute, Mark 

Calabria, encourages less use of contractors and more government 

employees, in this case. 

Mr. TIPTON. Does the GAO report that the CFPB does not have 

the security protocols in place to be able to secure this data scare 

you? 

Mr. CALABRIA. That is correct. And that is a very big concern of 

mine, the security of this data. 

Mr. TIPTON. If I could follow up again with you, Dr Calabria, for 

a long time, I have held the belief that with a lot of the regulatory 

bodies, the heart may be in the right place, but we need to be able 

to look at outcomes. 

And I get a general sense, going back to Speaker Gingrich’s 

point, that we actually have an institution right now, through the 

18 

CFPB, that is completely off the books. Congress has no real control to be able to actually control it, to be able to direct it. 

Do you have a sense that we have a system in place that is continuing to build, that is designed to be able to find and punish, 

rather than help and improve? 

Mr. CALABRIA. So let me first say, there is a fair amount of work 

in the psychology literature about, when people feel like they are 

wrapped up in a cause and self-righteous. And I think that, certainly, the CFPB’s attitude is, ‘‘We are a crusade. We are here to 

protect the consumer. We are going to fix the financial crisis.’’ And 

we saw the same thing in the intelligence community after 9/11. 

When you get caught up in this mentality, you get blinders, you 

get tunnel vision. There is a lot of psychology research which I 

think clearly demonstrates that. 

And so what you need—and, again, I would reference one of the 

citations in my testimony from something by Cass Sunstein, of all 

people, who really argued that you need to have procedures and 

checks in place so that dissent is heard. 

And this is one of the—the value of a board is that somebody sits 

there and says—just like this committee can have this dialogue 

and this back-and-forth—is there needs to be this back-and-forth. 

And Wayne talked about, at the end of the day, every employee at 

the CFPB needs to say, ‘‘yes, sir’’ to Mr. Cordray, and I think that 

is a real problem. 

None of us have all the answers, and you lack this institution for 

this dialogue and this back-and-forth and this give-and-take. You 

need that. And other places that don’t have this don’t do well. It 

was mentioned that a number of other agencies—look at OFHEO, 

who was the regulator for Fannie Mae and Freddie Mac, and had 

a single director. We saw how that turned out. 

So, again, the attitude that you can’t have this sort of give-andtake, I think is critically important. 

I will also note, the argument you often hear is we need a single 

director so it isn’t captured by the industry. I am not a mathematician, but the last I checked, I think it would be easier to capture 

one person than it would to capture, say, five. 

Mr. TIPTON. One thing that genuinely concerns me about this is, 

if we were to apply the same rules to the CFPB that they are trying to apply to everyone else, if we were getting ready to make a 

mortgage—and, again, go back to the comments in terms of identifiers about gender, age, ethnicity in determining and making a 

loan, they are collecting this data with no consumer knowledge. 

How would the CFPB address a private-sector entity in doing that? 

Mr. CALABRIA. Let me make two quick points since you are out 

of time. 

First of all, the JPMorgan example, I can choose not to use 

JPMorgan, and if I do, I can sue them if they distribute my data 

in a personal way. And, plus, they suffer. Target took a big hit. You 

don’t see any of this with the Federal Government, in terms of 

these corrections. 

But, lastly, I want to say we don’t have to wonder how this 

works. The HMDA is an example of where there is not personally 

identifiable information but you can link it to courthouse records 

to figure out the identity. It is not that hard. 

19 

Chairman DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Cleaver, for 5 minutes. 

Mr. CLEAVER. Thank you very much, Mr. Chairman. 

And thank all of you for being here. I appreciate it very much. 

Mr. Speaker, you may have misspoken. You said that the CFPB 

was totally secret. And so I am assuming that you weren’t—and 

this is not a catch-you-wrong question. I am just—when you made 

the comment, I just wrote it down, because I didn’t think you were 

saying that the CFPB was a totally secret agency. 

Mr. GINGRICH. My impression is, if you look at various hearings 

and various interrogatories, that the leader of the CFPB has remarkably little interest in sharing with Congress a whole range of 

information, including the various cost overruns, including salaries, 

and so forth. So my impression is that they are a remarkably secretive operation for a non-national-security operation. 

Mr. CLEAVER. Okay. I agree with you if you use ‘‘remarkably secretive’’ as opposed to ‘‘totally secretive.’’ Because if it was totally 

secretive, we wouldn’t have this hearing. 

Mr. GINGRICH. I am happy to be amended to ‘‘remarkably.’’ 

Mr. CLEAVER. Thank you. 

Mr. Abernathy, do you think that it is important that we have 

evidence-based policies? 

Mr. ABERNATHY. Absolutely, Congressman. 

In our view, when you have an agency that is led by just one individual, without all of the other checks and balances and oversight 

that other agencies are subject to, you are left with just one check, 

and that is the exposure to the public, letting the public see what 

is the information that you used to make your decisions, and let’s 

have a debate on that to make sure you are not operating in an 

arbitrary manner. 

I can think of no agency where that is more important than it 

would be at the Bureau to make sure that they avoid getting into 

arbitrary action. That is why we are so concerned about their data 

practices. 

Mr. CLEAVER. Yes. Here is something that I am interested in: 

What county do you live in? 

Mr. ABERNATHY. I live in Fairfax County, Virginia. 

Mr. CLEAVER. I am not familiar with the way that county operates, but do you believe that the county has data on your mortgage? 

Mr. ABERNATHY. I don’t have a mortgage anymore. But I think, 

when I had a mortgage, they probably had some information. 

But what is interesting about Fairfax County is that they have 

a series of seven, I believe, elected officials, and these officials all 

are peers of one another, and they check one another’s activities. 

And that prevents the abuse of data because they will call somebody else on it. They will say, Madam Chairman, or whomever, 

there is more information that you need to take into account. 

There is no one like that at the Bureau. There is no peer at the 

Bureau for the Director of the Bureau. Everybody reports to him. 

Mr. CLEAVER. Most counties, maybe not in Fairfax, but most of 

the other counties around the country have a lot of data on your 

20 

mortgage. They have a lot of data on—well, not on your mortgage, 

but on people who hold mortgages, a lot of data. 

The same thing, I think, holds true when you think about some 

of the commercial data that is available. The DMV, does it not 

have a lot of data about individuals who drive and about the machine they drive? 

Mr. ABERNATHY. Yes, they certainly do, Congressman. I think 

what makes the Bureau different is that they can put all these different pieces together. 

If you look at the authority that has been given them under 

Dodd-Frank, there is virtually nothing that a covered firm, a firm 

subject to its jurisdiction, has in terms of information that the Bureau cannot demand. And, in their recent data collections, they 

have been gathering in enormous amounts of those data and putting it all in one place. 

Mr. CLEAVER. We have probably had more hearings on the CFPB 

than we have had on anything. So I think it is erroneous to say 

there is nobody looking at the agency. That is all we do. It has become the political punching bag of this whole Congress. 

And maybe the Speaker was right. Look at the OCC, the FDIC, 

and the Federal Reserve; they are all in the data collection business. 

And so, we can create this attitude that this is going to be a Big 

Brother operation and they are going to give money to the Taliban 

or whatever, and I think we are taking this stuff too far. 

I yield back, Mr. Chairman. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the gentleman from Maine, Mr. 

Poliquin, for 5 minutes. 

Mr. POLIQUIN. Thank you, Mr. Chairman. I appreciate it very 

much. 

And thank you, gentlemen, for coming here today. I appreciate 

it. 

I come from the private sector, and for 35 years I have been running small companies. And when you come from a business background, you have to be accountable all the time. You have to be accountable to your employees, to your customers, and to your suppliers. You have to be accountable to your board. If you have a 

product or a service that is overpriced or performs poorly, you are 

going to go out of business. Now, it seems to me that we should 

do the same thing here in government, but, unfortunately, it 

doesn’t happen very often. 

When I was State treasurer up in Maine, I was on the board of 

an independent public housing authority. And shortly after joining 

the board, I realized that the executive director had a 5-year term, 

appointed by the Governor, and couldn’t be fired. The board had no 

authority. The executive director didn’t report to the board. And it 

had a funding source that was independent of appropriations. 

Now, after a little bit more digging, we found out that we had 

6,000 families waiting in Maine to come in from the cold so they 

could have a safe and warm place to live, and we had a public 

housing authority that was spending money on theater programs 

for prison inmates. 

21 

As well as the fact that any request from the board to get data 

on how the operation was performing was just ignored. And then 

we found out that they were spending twice as much to build onebedroom apartments than it cost to buy a single-family home on a 

quarter-acre with a garage, two bathrooms, and three bedrooms. 

So we changed the law. We made sure that the executive director 

reported to the board, we put in financial controls, and we put 

business people on the board. And, by the time I left, the cost per 

unit had dropped to about 35 percent, it was still going down, and 

we helped hundreds more families. 

Now, I am looking, Mr. Gingrich, at the CFPB. And we have an 

independent organization, as you mentioned, that reports to nobody. The Director has a 5-year contract, and can only be replaced 

by the President. They have a revenue stream that is divorced of 

appropriations from Congress. 

And all I am asking you is, did it make sense when the Director 

showed up here 6 months ago and tried to convince us that it was 

a darn good idea to spend $216 million on an office building for 

their 1,400 employees, to rehab it, they don’t own it, with a twostory waterfall in the building and a reflecting pool and a playground on the roof? Now, how can we trust these people to collect 

the sort of data they are doing here in America for our families? 

In our district, we had a major breach of data security with the 

largest health insurance provider in the State. Thousands of people 

in my district had their personal data violated. 

So I ask you, Mr. Speaker—you have a lot of experience in this 

area—what can we do to fix this? Do you trust this organization 

to collect the sort of data that they are? And if not, how in the dickens do you fix it? 

Mr. GINGRICH. Thank you. And I have to confess, the entire story 

about the Maine housing authority is amazing and would almost 

be a study in its own right. 

Let me say first of all, just to set the record straight, both the 

Department of Justice and the Federal Trade Commission had consumer protection responsibilities prior to 2008. So this notion that 

magically we are going to create a new super-bureaucracy all on 

top of the other bureaucracies because this new bureaucracy will 

be terrific—and you just described the arrogance of power. 

Since they are totally uncontrolled, and since they are virtuous 

and should not be questioned, why shouldn’t they have a waterfall 

in the atrium? Why shouldn’t they be able to walk in and look up 

and think, I am here to protect America on my terms, based on my 

prejudice, and applying my ideology, and aren’t you lucky to have 

me as the savior of consumer behavior? 

That tells you everything about why this agency ought to be 

abolished, whether you want to break it up and put it back at the 

FTC and the DOJ, or whatever, One other thing the CFPB will not 

tell you is all of their various data-gathering techniques, but we are 

told that there are consumer data companies which sell information to them which includes personal data. 

Now, that should be findable, and that is the kind of thing we 

ought to say, explain to me why you think you are going to keep 

this anonymous, given modern technology and modern information 

systems? 

22 

Mr. POLIQUIN. For us here today and those listening, Mr. Speaker, can you give us another couple of tangible examples, to the best 

of your knowledge, of how you connect data protection with accountability in government agencies like this? 

Mr. GINGRICH. As I said earlier, I think anytime you start centralizing information into specific banks of data, you have to assume that you are really at high risk. 

And I would raise the question—again, we always have the government show up and tell us, ‘‘Everything is fine,’’ until the next 

huge data breach, and then they come back to tell us, ‘‘But now, 

everything is really fine.’’ 

We are in a competition in which there is a free market of hackers worldwide, all of whom can operate without red tape, without 

limitations, without all of our various rules and regulations, and 

bureaucratic structures that are stunningly slow and incompetent. 

I find no reason to believe this particular structure is going to be 

dramatically better than OPM at protecting data. 

And I think aggregating the numbers I gave you earlier, billions 

of data points in one place is really defying everything we have 

learned about the emergence of a very aggressive hacking culture. 

Mr. POLIQUIN. Thank you, Mr. Speaker. I appreciate it very 

much. 

Chairman DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Tennessee, Mr. 

Fincher, for 5 minutes. 

Mr. FINCHER. Thank you, Mr. Chairman. 

Mr. Gupta, would you support a five-person governing panel instead of the one director at the agency? 

Mr. GUPTA. I would not. I think that, as Ranking Member 

Waters mentioned, there are lots of agencies that have single directors— 

Mr. FINCHER. Okay. That is it. 

Would you support having CFPB under the appropriations process? 

Mr. GUPTA. No, I would not. 

I think the OCC, and lots of other banking regulators, are not 

subject to the appropriations process, but they have an even worse 

source of funding, historically. They have gotten their funding from 

the entities they are regulating. 

Instead, what you have here is a stream of money that comes 

from the Federal Reserve Board, and it prevents agency capture. 

It prevents the agency from being subject to the thing that makes 

Washington broken in every respect, which is the influence of financial industry money. 

Mr. FINCHER. Okay. And— 

Mr. GUPTA. That is why you are having so many hearings, I assume, on— 

Mr. FINCHER. What makes Washington broken is too much 

Washington and too many bureaucrats. 

I think the narrative here that we are hearing from my colleagues on the other side of the aisle—and no offense to Ranking 

Member Waters, she is very passionate about this; she just happens to be wrong—is that the American people aren’t smart enough 

23 

to make decisions on their own, so bureaucrats and politicians in 

Washington are going to tell them what to do. 

Another one of my colleagues trying to compare data collection 

at the CFPB to my county in my rural district in Tennessee is a 

joke. We look back at a lot of the reasoning behind Dodd-Frank and 

behind the CFPB, because the private sector was out of control, 

when in a lot of respects it was Fannie and Freddie that were influencing the private sector and telling banks who to loan money 

to. 

So, let’s get to the facts. The facts are, for a lot of my friends on 

the left, they see the private sector as a problem, and everything 

should be done in Washington and by bureaucrats and politicians. 

This is a slap in the face to the American people. They are smart 

enough to figure out what works and what doesn’t, and they don’t 

need people in Washington doing it for them. 

Mr. Abernathy, if the CFPB were to use this data irresponsibly, 

are you concerned with a lack of accountability? And how would we 

rein them in? They are almost untouchable. 

Mr. ABERNATHY. That is a serious problem, and that is one of the 

things that we believe this hearing is bringing out, is the fact that 

all you have to act as accountability for the Bureau is the public 

exposure of the data that they claim that they rely upon. And yet, 

when we look at the decisions that they have made, rather than 

relying upon the data to drive what they do, they cherry-pick the 

data through processes that they don’t reveal to the public, in order 

to silence debate rather than to foment debate by basically saying, 

this is what the data tells us we have to do; therefore, there should 

be no discussion. 

In one case, they have actually demonstrated the value, and that 

is with regard to their arbitration study, where they did put the 

data out for people to look at, and the data actually disprove the 

assumptions they make in their study, but it encourages a broad 

discussion by the public. And that is what we need. 

Mr. FINCHER. Dr. Calabria? 

Mr. CALABRIA. I want to make a couple of points, but first, I 

want to go back to the funding issue. 

Let’s remind ourselves that the CFPB is funded in the same way 

that the Federal Reserve itself is funded. And I think it is widely 

accepted that the Federal Reserve fell down on the job before the 

crisis despite being outside of the funding process. 

And of course, as we know, Mr. Greenspan, Mr. Bernanke, and 

Mrs. Yellen are not accepting campaign contributions from Wall 

Street. That is not why they screwed up. They screwed up for a 

number of reasons. Of course, you could try to say, well, they 

screwed up because Mr. Greenspan has some crazy ideology and 

whatever. That is actually an illustration of why you don’t want 

one single powerful person, because how will you know that person 

is not going to get the check and balance? 

And, in fact, the only way we know that there were discussions 

about subprime lending at the Federal Reserve is because Ned 

Gramlich, one of the Board Members, forced that conversation. And 

that was a conversation that was at least had, which would not 

have been had if it was a single director. 

24 

So, again, let me clearly state for the record so that we don’t 

have to go back over this topic, the CFPB is not the only part of 

the Federal Government or our financial regulatory structure that 

is broken. I think we can accept that. I don’t subscribe to the twowrongs-makes-a-right theory of policy. So just because something is 

broken over at agency ‘‘A’’ does not, in my opinion, justify us to 

leave something broken at agency ‘‘B.’’ 

Mr. FINCHER. My time is expiring. Let me just say this in closing. 

Hopefully, a Republican Administration will take over in 2017, 

and my friends across the aisle will be singing a very different tune 

at that time, but let’s remember that, to your point, two wrongs 

don’t make a right. We need to call this out for what it is. And if 

Republicans were doing it, it would be wrong also. But let’s fix this. 

And, please, my friends on that side of the aisle, give the American people some credit. They are smarter than Washington. 

I yield back. 

Chairman DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Arkansas, Mr. 

Hill, for 5 minutes. 

Mr. HILL. Thank you, Mr. Chairman. And thanks for calling this 

hearing. 

It is certainly good for me to see my old friend, Wayne Abernathy. We served so long ago on the Senate Banking Committee 

staff, Mr. Speaker, that there was no TV in the Senate. That is 

how long ago it was. Many moons have passed. 

I feel like Rip Van Winkle when I come back to Washington after 

25 years and see this kind of behavior. And this isn’t the first time 

we have talked about a subject like this at a hearing. FINRA proposed a proposal called CARDS, where they would sweep up every 

brokerage account in the country and every brokerage transaction 

and organize it in a way that it would not be identifiable so that 

they could just look at it. 

And my whole problem with things like this is just because you 

can, doesn’t mean you should, in these massive data collections, 

when a simple sample would do just as well in trying to look for 

a trend analysis. 

And, further, our whole regulatory system has been based on 

looking at institutions and looking at the activities of that institution on a small-scale basis and making determinations about, did 

the executives of that institution do a good or a bad job with regard 

to consumer legislation or prudential regulation. That has not been 

the sweeping 170 million loan records, for example, that are now 

in the hands of the CFPB. 

In my district in Arkansas, this spring has been taken up by 

working 70 cases of IRS identity theft. And it is all we talk about 

in my office: identity theft problems with federally-stored data. So 

I have concerns about that. 

Mr. Gupta being here, it reinforces, I think, why I ran for Congress, and why I was glad the people of Arkansas elected me to 

Congress. Because once again, I feel like you are the chief apologist 

for an intrusive, Big Brother, Big Government solution. 

We have had hearings, sir, in this room on the Target breach. 

We had retailers and bankers testify about those breaches. And we 

25 

have bills moving in the Energy and Commerce Committee in this 

House and in this committee, Financial Services, to deal with that. 

So don’t make the assumption that we have not had data breach 

discussions in— 

Mr. GUPTA. And I commend you for those efforts. Those are good 

efforts. 

Mr. HILL. Thank you. 

And, also, you stated that this committee is making up facts, 

when, in fact, I think The Wall Street Journal was quite clear, and 

I commend the staff of this committee. In the made-up-fact arena, 

it is the CFPB and their auto finance investigation that has gotten 

the world record for made-up facts in their most recent efforts. 

So I would like to get some thoughts, Mr. Speaker, on this issue 

of why the CFPB claims it needs all this information in order to 

understand the markets it regulates. In my opening comments, I 

talked about how individual firms and individual prudential managers deal with markets, and that is how we have traditionally regulated it. And they have collected 87 percent of the credit card 

market. They have collected 95 percent—it is trying to get 95 percent of all the credit card accounts. 

What do you think is any justification for that, when one could 

just do a survey of credit card vendors for a small sample to meet 

any analysis, it seems to me, that would have a public policy benefit? Could you comment on that for me, please? 

Mr. GINGRICH. Thank you. 

Look, Friedrich Hayek, in ‘‘The Road to Serfdom,’’ made the argument that, once you start toward centralized planning, you inevitably coerce, and that the centralized planners think of themselves 

as virtuous and as having a fact-based approach to life, when, in 

fact, they are like the rest of us. They have ideologies, they have 

things they like, they have things they don’t like. 

It is very funny, in a sense. This is a monster which, if Democrats thought about it, they would rush to create a bipartisan 

board. Imagine you have a President Cruz or a President Trump 

and they decided to appoint their version of this kind of collection 

agency, and that person was now in total charge of gathering the 

data they wanted to gather so that, let’s say, instead of being 

antigun, as the current group is, they decided they were pro-gun, 

and so they decided that you really ought to have lots of credit if 

you are a gun dealership and so forth. 

You need to understand, when you put total power in one person’s hands and they can operate in—not total secrecy but surprising— 

Mr. HILL. Remarkable secrecy. Yes. 

Mr. GINGRICH. —remarkable secrecy, you are creating a natural 

pattern that leads to very dangerous behavior, for this reason: The 

government always, in the end, is about power and the ability of 

the state to coerce. And when you have people in darkness who are 

able to exercise the power of the state, they apply their prejudice 

and their ideology. And that can destroy normal people because the 

government is so big and so powerful. 

Mr. HILL. Thank you, Mr. Speaker. 

26 

I have Fourth Amendment concerns about this process, as I did 

on CARDS. It is not the direction we should be going in regulation 

in this country. 

And I yield back. 

Chairman DUFFY. The gentleman’s time has expired. 

The Chair now recognizes the gentlelady from Ohio, Mrs. Beatty, 

for 5 minutes. 

Mrs. BEATTY. Thank you, Mr. Chairman, and Ranking Member 

Green. 

Let me first say thank you to the panelists for being here and 

that I am also proud to associate myself with the comments from 

my ranking member of the Financial Services Committee, Congresswoman Maxine Waters. 

Mr. Chairman and to the witnesses today, certainly this is an 

important topic. When I received my overview with the name of the 

topic today that we were going to look at, consumer protection and 

data security, it kind of puzzles me, as we have witnesses here, 

that we don’t have anyone here who is actually from the agency 

that we are talking about, and that we have certainly discussed— 

which probably are important, for us to hear our different views 

from our witnesses—that go far beyond what I think we should be 

discussing at hand. We are talking about the establishment and 

how it was established 5 years ago. We are talking about the budget. We are talking about everything but the real issue of what this 

hearing was scheduled to do, which I think is unfortunate and a 

disservice to me and to our constituents. 

I would also be curious as to your expertise, starting with you, 

former Mr. Speaker. Can you tell us your expertise as a cybersecurity expert? I know that you are here as yourself, as you commented. I also know that you are a paid public affairs consultant 

with the Wise Group. 

So tell me what your expertise is in this area. 

Mr. GINGRICH. I wouldn’t classify it as expertise, but I have 

worked on data issues and on cyber issues for over 25 years. As 

Speaker of the House, I had a substantial amount of involvement. 

I have this year spent time out at the National Security Agency 

looking at their things. I served for 6 years on the Defense Policy 

Board, and cyber was part of that. 

And I can tell you, as a historian, all you have to do is clip out 

of the newspapers the increasing frequency of cyber activities, the 

increasing frequency of hacking, and the stunning inability of the 

American Government to protect itself, and I think that doesn’t require any massive level of expertise. 

I do think it would be wise for the subcommittee to arrange for 

a number of people who have cyber capabilities to come in and explain why this is a dangerous thing. And it is dangerous at two levels. Remember, it is about a mass data collection program. So it is 

dangerous at two levels. We are talking about breaches and hacking. It is also dangerous because the truth is, in the age of 

metadata, you can identify individuals from supposedly anonymous 

information. And you may want to have a hearing and bring in 

people from places like Carnegie Mellon and MIT and go through 

this. 

27 

But I will assure you I have spent time with the Army Cyber 

Command, I have spent time at NSA. I am not personally a cyber 

expert, but I think— 

Mrs. BEATTY. Okay. Thank you. 

Mr. GINGRICH. —I am reasonably knowledgeable. 

Mrs. BEATTY. I am going to move on because of my time. 

So based on that, and your clipping out articles and reading 

them, and your past experience, let me ask you this: Some have 

commented that the CFPB is particularly vulnerable to hackers because of their heavy reliance on cloud-based computing. Can you 

tell me how you feel about that and why? And what better practices, from your reading and the experience you have said, would 

be better? Give me something specific. 

Mr. GINGRICH. I think if you talk to people at the Pentagon and 

at the— 

Mrs. BEATTY. No, I mean in your opinion, not whom I should talk 

to about it. You are here today. 

Mr. GINGRICH. No, I understand. 

Mrs. BEATTY. I want to hear from you, not— 

Mr. GINGRICH. Okay. 

Mrs. BEATTY. —who I can call or who the Republicans can bring 

in. You have shared that you have this experience, and you have 

probably been the most critical. And so I want to be able to discern 

and be able to separate, is this predisposed from articles I have 

clipped out on you and what you have said that is clearly coming 

with some predetermined ideas against the organization and Mr. 

Cordray. 

So let’s keep this in the context and give me some specifics that 

you have. You are sitting here today, not the folks that may call 

or may come here in the future, so let’s hear from you. 

Mr. GINGRICH. Okay. And I would say, then, three things. 

One, I believe if you aggregate this kind of data, you always have 

the potential to identify individuals. And I would be glad to provide 

you technical experts who will explain that. 

Two— 

Mrs. BEATTY. So, in other words, you don’t have any that you can 

give me. I can call those folks or wait for my colleagues to bring 

in a real expert who is sitting here taking my time up to hear it. 

Thank you very much. 

Let me go to the second gentleman. 

Can you answer that question, please? 

Mr. ABERNATHY. Thank you, Congresswoman. 

Our testimony is focusing on the policymaking process, and the 

problem that you have when you have a single director with nobody who can engage that— 

Mrs. BEATTY. No, that is not my question, about the single Director. 

I’m sorry. My time is— 

Mr. ABERNATHY. That is what our focus is— 

Mrs. BEATTY. —up. I yield back. 

Mr. ABERNATHY. —and our testimony is about. 

Mrs. BEATTY. Okay. But that wasn’t my question to you. So let’s 

be clear on that. 

Mr. ABERNATHY. Right. 

28 

Chairman DUFFY. The gentlelady yields back. 

The Chair now recognizes the gentleman from Illinois, Mr. 

Hultgren, for 5 minutes. 

Mr. HULTGREN. Thank you all for being here. 

Speaker Gingrich, it’s good to see you. One of my favorite memories of serving over the last 5 years was being with you and your 

wife in Tampico and Dixon, Illinois, for Ronald Reagan’s 100th 

birthday. So I appreciate you being here. Certainly, he is a hero of 

mine, and I appreciate the work you have done talking about him 

as well. 

But I want to get to what I see as a very important subject here. 

I am troubled by all the stories that we have heard of what happens to consumer financial information when it gets into the wrong 

hands and how aggressive people are in trying to get this information. Our government should be held to the highest standard when 

it comes to protecting personal information it holds on the American people. 

On October 15th, the CFPB released its final rule to expand data 

collection under Regulation C, the Home Mortgage Disclosure Act, 

or HMDA. The final rule requires covered banks and credit unions 

to collect 48 unique data fields on each mortgage loan they make. 

This is more than double the number of data fields covered lenders 

are currently required to collect. 

Some of the new fields include applicant or borrower age, credit 

score, automated underwriting system information, unique loan 

identifier, property value, application channel, points and fees, borrower-paid origination charges, discount points, lender credits, loan 

term, prepayment penalty, nonamortizing loan features, interest 

rate, and loan originator identifier. 

I think we can all agree that this is a lot of information. And 

while some of this information is not directly related to the borrower or terms of the loan, this data can still be revealing. I understand regulators and the public make use of this data, but I am 

also concerned that it could pose privacy risks for homeowners. 

Speaker Gingrich, if I can direct this first question to you, I 

think we all remember the Office of Personnel Management data 

breach, and I think we have heard some testimony today about 

how the CFPB’s data security controls may be inadequate. 

In light of the incidents like OPM and others within the government, how can we assure the American people that their personal 

information is safe? 

Mr. GINGRICH. First of all, you can’t. 

Second, you reminded me that I got one of those letters, among 

21 million people, which said my data had been breached, and it 

said, gee, if you want to do something, call this number. I couldn’t 

imagine anything useful. What were they going to do? Say, we 

don’t know exactly who breached it, we don’t know exactly where 

it is, and we don’t know exactly how it will be used? It is just nonsense. 

Mr. HULTGREN. Yes. 

Mr. GINGRICH. The fact that you can live through this, you can 

watch this scale of failure, and then have some other bureaucrat 

sublimely tell you, ‘‘Oh, we are safe,’’ they don’t—my first point is 

29 

they don’t know. If you are not offline, you are, by definition, potentially hackable. 

And this is a major crisis for the whole government. This is not 

something that—I have worked with John McCain, the chairman 

of the Armed Services Committee in the Senate, who is very worried that we are not able to innovate rapidly enough inside our bureaucracies to keep up with the private-sector revolution worldwide. And it is always worldwide. It is Estonians, it is Romanians, 

it is Russians, it is Israelis. And so, we need to understand the 

threat. 

I think that is a significant thing, and I would encourage the 

committee to get people from places like Carnegie Mellon and MIT. 

Let’s meet everybody’s concern about the level of technical expertise. And I think you will find that they will tell you, ‘‘You should 

be afraid. You should not be reassured.’’ 

Mr. HULTGREN. I believe you are right. I just had a briefing this 

morning with the Department of Energy on cybersecurity—and 

some real concerns, real threats, real experts who are frightened— 

having nightmares, they talked about what could happen. And we 

see this as just as widespread. 

I am going to ask a question, just a yes-or-no question, Speaker 

Gingrich, Dr. Calabria, and Mr. Abernathy, the CFPB’s final rule 

did not explicitly state which of this new data would be made publicly available. It seems to me a study on the privacy risks and the 

opportunity for public comment would be appropriate, just as 

Speaker Gingrich was talking about. 

Mr. Speaker, I think you have already answered. Would you 

agree that this is a good position? I think you would say ‘‘yes.’’ 

Mr. GINGRICH. Yes. 

Mr. HULTGREN. Mr. Abernathy? 

Mr. ABERNATHY. I agree, Congressman. Thank you. 

Mr. HULTGREN. Dr. Calabria? 

Mr. CALABRIA. Yes. 

Mr. HULTGREN. Let me jump back and focus on Dr. Calabria and 

Mr. Abernathy. Do you have any thoughts on why the CFPB chose 

to go well beyond the new reporting requirements in Section 1094 

of Dodd-Frank? The CFPB loves to say they are data-driven in 

their policy, but doesn’t the increased reporting of this data raise 

more privacy issues? 

Mr. ABERNATHY. That is one of the serious concerns when you 

look at the more than two dozen additional data segments that the 

Bureau asked for. And yet, there really is inadequate discussion as 

to why they need this data, and what they would do with it. We 

need that kind of public debate before they do the rule rather than 

afterwards. 

Mr. HULTGREN. I agree. 

Dr. Calabria? 

Mr. CALABRIA. And I would certainly agree with that. 

Let me say, even before this, from what was publicly available 

for HMDA, you could link to courthouse records and identify individuals with that data even with the preexisting databases. 

Mr. HULTGREN. Yes. 

I only have a couple of seconds left. 

30 

This feels like such an overreach at such a risky time. I think 

it is absolutely the wrong direction to go, for CFPB to be doing this, 

and we need to do more to make sure it doesn’t happen. 

Mr. Chairman, I yield back. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the gentlelady from Utah, Mrs. Love, 

for 5 minutes. 

Mrs. LOVE. Thank you, Mr. Chairman. 

I have to tell you, you have an idea of how dangerously powerful 

some of these regulatory agencies are before you get here, but I 

can’t tell you how shocked I am, getting here and realizing the casualness, where we talk about collecting people’s private information, the casualness in saying, ‘‘It’s okay. Don’t worry about it. 

We’re here to protect you. We know everything. We’re bigger minds 

than you are, and we can handle things for you.’’ It is absolutely 

shocking to me, the amount of power these regulatory agencies 

have over the American people. 

I have a couple of questions. As I have gotten into learning a little bit more about the CFPB, I have several concerns, but I want 

to focus, first of all, on some of the data collecting, which raises privacy concerns, and, second of all, what is being done with that 

data. 

These are the questions—by the way, that is not just coming 

from me. They are coming from my constituency. So I do this work 

on behalf of them. 

We have learned that the way that the CFPB uses data and interprets the data was highly suspect and that the result, the supposed redress that the CFPB imposed on the marketplace, was not 

correlated with actual harm. There was a lot of guesswork involved, and the guesswork resulted in the CFPB imposing more requirements on the auto lending market, which results in higher 

costs and less choices for the consumer. 

So, now, in addition to the auto sales, the CFPB has also been 

collecting data, as we have heard today, regarding credit reports, 

credit cards, mortgages, student loans, payday loans, overdraft 

fees, and other financial data. Over the past year that I have been 

here on this committee, I have been investigating some of that activity, specifically in regards to payday loans and overdraft fees. 

So my question for the panelists is: What other CFPB actions do 

you see on the horizon? What other disappearing options, as you 

would say, for services that consumers, when they are looking at 

it, need to worry about losing? 

Mr. ABERNATHY. If I may, Congresswoman— 

Mrs. LOVE. Yes. 

Mr. ABERNATHY. —one of the areas we are particularly concerned 

about is the ability to serve the market for short-term and smallamount loans. Our estimate is that there are 54 million customers 

each year in the market for small loans, short-term loans—these 

are loans for less than a year—and the Bureau is on the verge of 

decreasing significantly the access to those kinds of resources. 

They have the payday lending rule that they are about to come 

out with that, estimates are, will eliminate 80 percent of that market in one decision. We are concerned that they are looking at overdraft, where a number of people who have bank accounts use the 

31 

opportunity to overdraw their account a little bit to be able to obtain immediate short-term credit for a variety of needs, from a vacation to a major emergency that takes place at their home. 

And yet, we have looked at the way they exposed data on this. 

One data segment that they put forward indicated that, in their 

view, the median average overdraft is $24, for which people paid 

$34. If they actually look at what happens with all of the data for 

an institution, they would discover that the amount of credit that 

customers receive versus what they paid for it for overdraft is 

something like 7 to 8 times the amount of the fee. 

But by manipulating the data in ways that no one can really get 

at and challenge, they end up promoting policies that could choke 

off the opportunity for overdraft to be a source of credit for millions 

of people. 

Mrs. LOVE. So far, what I have seen is the people that they have 

vowed to protect are the ones who are being hurt the most. 

And I just want to say—because I am not here to necessarily 

change the minds of my colleagues, because a lot of the minds have 

been made up, on both sides of the aisle. I am here to make sure 

that we are transparent and we give a fair warning, a warning to 

the American people, that if we continue to allow this to happen, 

the only people who are at risk are them, are the American people. 

Let me just say right now, this is a fair warning that if we are 

not vigilant, if we do not cry out and make our voices heard that 

this is, first of all, unacceptable, and second of all, we are smart 

enough to make decisions in our homes and for ourselves—and if 

we do not do something now, then the only people who are at risk, 

who have the risk of losing everything, are the American people. 

I yield back. 

Chairman DUFFY. The gentlelady yields back. 

The Chair now recognizes the gentleman from Minnesota, Mr. 

Ellison, for 5 minutes. Welcome. 

Mr. ELLISON. Let me thank the Chair and the ranking member 

and thank the panel. I really appreciate having time to discuss this 

issue today. 

Mr. Gupta, I would like to ask you a question, if I may. You 

made the comment, unless your profits come from deceiving consumers, you should welcome the CFPB’s data collection. Could you 

explain what you meant by that? 

Mr. GUPTA. Sure. Thanks for the question. 

The reason we have the CFPB in the first place is because we 

had a massive regulatory failure, right? We had a financial crisis 

that resulted from all sorts of fringe lending that was entirely unchecked. People were asleep at the switch. You didn’t have anyone 

who was looking out for consumer protection. The Federal Reserve 

Board was looking out for other things, and consumer protection 

took a backseat. 

And so we created a single agency that is the voice of the American consumer. It is actually standing up for American consumers 

and trying to prevent the kind of practices—those practices didn’t 

just harm people who had subprime mortgages, right? They threatened to harm all of us. They threatened to tank the American economy and the world economy. 

32 

So, unless your business model is based on unfair and deceptive 

practices, the kind of thing that the CFPB pursues in its enforcement actions and its regulations, you should have no concern about 

transparency and about the CFPB having that data and using it 

as a tool to do better consumer protection. 

Mr. ELLISON. Thank you. 

So, honestly, I have to admit something. When I first saw the 

panel lineup, I thought to myself that my friend, Mr. Gingrich, has 

a Ph.D. in history and he may know a lot about that, but what 

does Newt Gingrich know about big data? I was just a little surprised by that choice. 

But it turns out that you actually do know a lot about big data, 

because—let me put it like this. Republicans, in general, claim that 

they have collected more than 300 terabytes of voter data, including more than 725 billion data points on nearly 200 million American voters. This information is matched to individuals in voter 

data files, which also contains personally identifiable information— 

home address, phone number, email. 

Not only are Republicans collecting massive amounts of voter 

data, some Republicans even rent out the data to other campaigns. 

Well, they rent that data to a list of brokers that lease data to marketing firms and other private entities. For example, the Presidential campaign for Newt Gingrich, Newt 2012, reported getting 

$17,000 in the most recent FEC reporting cycle, even though that 

campaign dropped out of the primary more than 3 months before. 

A separate company, Gingrich Productions, also uses a list 

broker to sell personal information via TMA Direct. For the low 

price of $120 a month, you can get access to nearly 500,000 individuals’ personal information who were never before on the market. 

So I did have my doubts about whether our panel was qualified 

to offer opinions on such a complex topic, but, clearly, clearly, 

Speaker Gingrich, you do know something about making money off 

big data. 

So I guess my question is, if it is okay for you to sell big data 

with personal information, why can’t the CFPB rely on anonymous 

data to protect consumers? 

Mr. GINGRICH. Look, that is a great question. As often with you, 

it was a brilliant setup. 

It is true that we have carefully studied the 2008 and 2012 

Obama campaigns. And it is true that, while we are still behind 

them in gathering metadata and while we don’t have quite the ties 

they have in Silicon Valley and at major intellectual centers, we 

are doing everything we can on the Republican side to be at least 

as good as the Obama team at using metadata. So I appreciate 

your recognizing that, while we are second, we are working hard 

to catch up. 

Second, the big difference—and you put your finger on it: I can’t 

go to somebody and threaten to cut off their bank loans. I can’t go 

to somebody and threaten to put them in jail. People who happen 

to be on my list voluntarily signed up to get information from Newt 

Gingrich and can voluntarily get off the list without having a bureaucrat call and threaten them. 

If you look at the power of the government—which is always, in 

the end, coercion—and you imagine random independent bureauVerDate Nov 24 2008 16:09 Dec 07, 2016 Jkt 099797 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\99797.TXT TERI
33 

crats who aggregate to themselves the right to decide what my consumer choices should be, that is real power. We don’t have real 

power. We are just a private company doing private things in a free 

market. And that is why I am so frightened to see this much power 

in the government. 

Mr. ELLISON. And making a good penny at it in personal data. 

Thank you, Mr. Gingrich. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes the ranking member of the subcommittee, Mr. Green from Texas, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

Let me start with a few questions, and I would like for you to 

raise your hands if these questions apply to you. 

If you are in any way, now or ever, connected to the U.S. Consumer Coalition, would you kindly raise your hand? 

Let the record reflect that Mr. Gingrich has raised his hand. 

If you are now or you have ever been paid by the Wise Group, 

if you would raise your hand—the Wise Public Affairs group. 

Thank you. 

And, Mr. Gingrich, since you have raised your hand both times, 

I would like to know a little bit more about the Wise Public Affairs 

Group. But before I get there, I want to go back to something that 

you and I have broached earlier, and it has to do with your statement. 

Because, in your statement, you do indicate that you are an advisor, in an advisory capacity. But I was hoping that you would do 

what was done when The Wall Street Journal had to issue its additional statement, and that is indicate that you were a paid advisor 

to the Wise Public Affairs Group. Because you well know that the 

Wise Public Affairs Group owns and operates the U.S. Consumer 

Coalition. 

So I was disappointed that this was not called to our attention. 

As has been indicated, this is not the first time this has been done. 

You pride yourself in transparency, but, for some reason, you didn’t 

reveal this money connection. You were willing to reveal that you 

just happen to advise, but you are making a profit based upon this 

advice because you work for the Wise Group. 

If I have misstated this about your working for the Wise Public 

Affairs group and also being connected to the U.S. Consumer Coalition, would you kindly raise your hand again? Because I would like 

to hear from you if you have. 

Let the record reflect that what I have said, per Mr. Gingrich, 

is accurate. 

And this is why we bring this up, Mr. Gingrich: Because this 

U.S. Consumer Coalition is out to emasculate the CFPB. It has 

published its intent in terms of what it would like to do to the 

CFPB. 

There are many of us who are of the opinion that the CFPB 

serves a meaningful purpose. And we are of the opinion that in 

serving this meaningful purpose, the CFPB has done a good thing. 

The CFPB makes it possible for consumers to receive restitution 

after they have been harmed. And it is unfortunate, but I think it 

is fair to say that if the rule that you would have us adhere to were 

34 

implemented, then there are many consumers who would not receive the benefits that they have received already. 

The personally identifiable information of which we speak is not 

by law permitted to be used for market monitoring—not by law. It 

can’t be used. But it can be used for enforcement activities, which 

means if you find out that a consumer has been harmed, you can 

take that personally identifiable information and you can then contact that consumer and say, ‘‘You have been harmed,’’ as was done 

with the $4.5 billion in relief that was given in debt collection, $50 

million of it in civil penalties, I might add; $2 billion to consumers 

related to credit card enforcement, $140 million for civil penalties; 

$125 million to consumers for auto finance enforcement, defrauded, 

taken advantage of, $25 million of it in related civil penalties; $115 

million in relief for mortgage lending enforcement, $55 million of 

that in civil penalties; $20 million in relief to consumers for student lending enforcement, $2 million related to civil monetary penalties; $19 million to consumers for payday enforcement activities, 

over $10 million in related civil monetary penalties. 

So if we decide that we are no longer going to allow the CFPB 

to aggregate information for enforcement purposes, we now take 

away these dollars that are going to consumers, because we won’t 

be able to find out who they are and contact them. I suppose there 

is some nebulous way that someone would conclude that we could 

do this, but the truth of the matter is that enforcement activities 

benefit seniors. 

The CFPB is in the business of helping people, and this would 

eviscerate it to the extent that it would be emasculated, if not eviscerated, such that it could not continue its enforcement activities 

and return moneys to seniors who have been harmed. ‘‘Senior citizens’’ is a more appropriate term—consumers. 

I yield back. 

Chairman DUFFY. The gentleman yields back. 

The Chair now recognizes himself for 5 minutes. 

Now, taking a page from the ranking member, would the panel— 

would you raise your hand if you are surprised that former Speaker Newt Gingrich is fighting for limited government and more 

transparency in government? If you are surprised by that, raise 

your hand. 

Mr. Gupta, you are not surprised by that. It is consistent with 

everything this man has done. 

Mr. GUPTA. No. I am surprised that he is paid by the financial 

industry— 

Chairman DUFFY. No, no, that wasn’t my question. You are not 

surprised that he is fighting for limited government and more 

transparency. 

What I find unique is that my friends across the aisle want to 

do everything to attack the former Speaker, when this is consistent 

with his life’s work. 

We are talking about big data and abuse of power. And I commend the Speaker for coming in and lending his voice to this very 

important issue. 

Now, a question to the panel: Do you all agree that American 

consumers are at risk of having their data taken from the collection 

at the CFPB? 

35 

Mr. ABERNATHY. Yes, sir. 

Chairman DUFFY. Mr. Calabria? 

Mr. CALABRIA. Yes. 

Chairman DUFFY. Mr. Gingrich? 

Mr. GINGRICH. Yes. 

Chairman DUFFY. Mr. Gupta, do you agree with that? 

Mr. GUPTA. I would say of course there is a risk, but no more 

than with any other agency— 

Chairman DUFFY. Of course, there is— 

Mr. GUPTA. —and less so than with the private sector. 

Chairman DUFFY. So, Mr. Gupta, is there another agency out 

there that goes by the ‘‘Consumer Financial Protection Bureau?’’ 

Anyone? Yes or no? 

Mr. GUPTA. No. 

Chairman DUFFY. So the one that is here to protect consumers 

is also an agency that is putting consumers at risk with the data 

that they collect, right? Yes or no? 

Mr. GUPTA. No. It is a— 

Chairman DUFFY. You just told me that they were— 

Mr. GUPTA. It is a false construct, because— 

Chairman DUFFY. No, it is not a false—listen— 

Mr. GUPTA. —the risk in the private sector for this data is far 

greater— 

Chairman DUFFY. That is not— 

Mr. GUPTA. —than it is with the CFPB. 

Chairman DUFFY. No. I— 

Mr. GUPTA. And what the CFPB— 

Chairman DUFFY. I am going to reclaim my time. 

Mr. GUPTA. —is doing is no different than— 

Chairman DUFFY. As the Speaker pointed out, there is a big difference between the private sector and Big Government. If I choose 

to go get a license at the DMV, it is government, they have my information, I know that. If I shop at Target or Home Depot, they 

have my information, and I know it. 

Does the American consumer actually know that the Consumer 

Financial Protection Bureau is collecting their information? Do you 

think they know that? 

Dr. Calabria? 

Mr. CALABRIA. I don’t believe they do. 

Chairman DUFFY. Okay. 

Mr. Abernathy, by chance, does the Consumer Financial Protection Bureau ask the people whom they claim to protect if they can 

collect their personal information? 

Mr. ABERNATHY. No. They go to the institutions with which people have voluntarily entered into a business relationship and then 

gather up all of that data and bring it into the Bureau. 

Chairman DUFFY. So they don’t ask them, do they? 

Mr. ABERNATHY. They don’t. 

Chairman DUFFY. The very people they claim to protect, they 

don’t ask for permission to collect the data. And they put those 

very people they claim to protect at risk by housing the data. 

Dr. Calabria? 

Mr. CALABRIA. If I could—I guess I should be careful, as a nonlawyer, but I would remind the committee that the Fourth AmendVerDate Nov 24 2008 16:09 Dec 07, 2016 Jkt 099797 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\99797.TXT TERI
36 

ment does not apply to the private sector. You can choose. What 

the Fourth Amendment does is constrain the government. And that 

is what we should not lose sight of here. 

Chairman DUFFY. I think that is a very good point. 

Another concern that I have, I think, Mr. Gupta, you made the 

point that this agency is better. It is better because it is not subject 

to, I think you said, lobbying and outside forces. They can do the 

goodwill of the people without being subject to the people. Is that 

basically your point? 

Mr. GUPTA. No. I mean that all agencies should be held accountable, and the CFPB is accountable. We have had countless hearings about that. 

Chairman DUFFY. No, no— 

Mr. GUPTA. We talk about it— 

Chairman DUFFY. I Chair the Oversight Subcommittee. We have 

asked for countless documents specifically on this. And if they don’t 

turn them over to us, do you think that they are accountable? 

Mr. GUPTA. I do. They are— 

Chairman DUFFY. So if they don’t give me all of the documents— 

Mr. GUPTA. If there is another agency that has had to come up 

to the Hill and testify more than the CFPB over the past couple 

of years, I am not aware of it. 

Chairman DUFFY. So, on that point, maybe, Mr. Gingrich, would 

the model be better, then, if the EPA, the DOJ, the Department of 

Health and Human Services, the Department of Education all 

weren’t subject to appropriations, if they would just come and give 

us a few lip-service hearings a couple of times a year? Would democracy be better off if we followed Mr. Gupta’s set of ideas? 

Mr. GINGRICH. Look, I understand why people who want to coerce and control the American people want to ensure that the Congress can’t represent people in an effective way. If you think about 

the logic of that, it is perfect. 

But I want to go back to something that your ranking member 

said that I am confused by. If, in fact, the CFPB doesn’t know 

about individuals, how did all that money get back out to individuals? And how do we know it got to the right individuals? And isn’t 

it the case that, in fact—I am told that in the auto loan problem, 

they actually ended up paying white Americans for racial discrimination because, in fact, their algorithms were wrong. So you can’t 

have it both ways. 

And the idea of trying to stop 2007 and 2008 makes some limited 

sense—although the problems weren’t bureaucratic; they were 

judgment. But the idea that we leap from that, which would be a 

focus on the big banks, to deciding that we are going to look at everything anybody does in America based on the whim of one bureaucrat in a hidden institution which is remarkably secret, to go 

back to that term— 

Chairman DUFFY. And I want to— 

Mr. GINGRICH. —I think is just wrong. 

Chairman DUFFY. My time is up, but pursuant to clause 4(d) of 

the committee’s rule 3, the Chair recognizes himself for an additional 5 minutes. And I will also then recognize the ranking member after I am done for an additional 5 minutes. 

37 

To that point, Speaker Gingrich, I would agree with you. Personally identifiable information is taken by the CFPB, contrary to Mr. 

Gupta’s prior testimony. 

You would now agree, Mr. Gupta, that the CFPB does collect personally identifiable information, correct? 

Mr. GUPTA. I think a lot of things are being— 

Chairman DUFFY. Yes or no? 

Mr. GUPTA. —conflated here. You have to be clear. 

Chairman DUFFY. Mr. Gupta— 

Mr. GUPTA. The ongoing data collection that is being talked 

about— 

Chairman DUFFY. I am going to reclaim my time. These are very 

specific questions. 

Mr. GUPTA. —does not include personally— 

Chairman DUFFY. I am going to reclaim my time. 

Mr. GUPTA. —identifiable information. 

Chairman DUFFY. A very simple question: Does the CFPB collect 

personally identifiable information? 

Mr. GUPTA. Not as part of the— 

Chairman DUFFY. Yes or no? 

Mr. GUPTA. —ongoing market monitoring. The only extent— 

Chairman DUFFY. So I am going to translate that for the American people. The answer is: Yes, they do. 

Mr. GUPTA. Only through the Consumer Complaint Database 

and through the supervision process. Those are the only ways in 

which any— 

Chairman DUFFY. So you are— 

Mr. GUPTA. —personally identifiable information comes in. 

Chairman DUFFY. I don’t care about— 

Mr. GUPTA. And it is scrubbed before it is used by the Bureau. 

Chairman DUFFY. —the parameters, Mr. Gupta, by which you indicate they collect. They do collect. And GAO in their study said, 

under arbitration cases, they collect personally identifiable information; deposit advance products, they collect personally identifiable information; and storefront payday loans, they collected personally identifiable information. 

So they do collect it, and they do put the American consumer at 

risk. That is when they have the information, and that is not even 

talking about how we can reverse-engineer the data points that 

they do have— 

Mr. GUPTA. Mr. Chairman, if I may— 

Chairman DUFFY. —to subject the American people to cyber attacks. 

Mr. GUPTA. Those three examples are the only ones that they 

found. The arbitration study was mandated by Congress. There is 

no other way to do it if you don’t get the arbitration cases— 

Chairman DUFFY. I am going to reclaim my time. That is very 

different than what you tried to first say to this committee, which 

was that it wasn’t collected, and to now your clarified statement, 

it is collected. 

Dr. Calabria? 

Mr. GUPTA. No, what I said was that— 

Chairman DUFFY. I am done with— 

Mr. GUPTA. —none of the ongoing market monitoring— 

38 

Chairman DUFFY. Thank you, Mr. Gupta. 

Mr. GUPTA. —collections include personal information. 

Chairman DUFFY. Dr. Calabria? 

Mr. CALABRIA. I just wanted to make two quick points. 

One was on the notion of oversight. If we said that somehow 

Jamie Dimon is responsible to JPMorgan because he appeared in 

front of his board twice a year, we would think that was ridiculous. 

If we said that he was accountable because he appeared before his 

regulator twice a year, we would say that is ridiculous. So the notion that hearings are somehow what constitutes accountability, 

and that is sufficient for an agency, I think is, with all due respect, 

absurd. 

But, more importantly, I want to get to the notion of—we had a 

financial crisis. It was painful. Everybody agrees with that. Mr. 

Gupta lists in his testimony a number of things on the first page 

that the CFPB has done. Not one was the cause of the financial 

crisis. 

In fact, when the CFPB had an opportunity to deal with the 

cause of the financial crisis in its qualified mortgage rule, it 

punted. It gave up on checking credit, it gave up on downpayments. 

Congressman Frank sat before this dais a year-and-a-half ago and 

said that the most important part of Dodd-Frank, the mortgage 

rules, were essentially gutted. 

So, essentially, if we want this agency to actually do something 

about the financial crisis, we have to recognize the financial crisis 

was not caused by payday lending, it was not caused by arbitration 

clauses; it was caused by shoddy mortgages. And, again, in that instance, the CFPB— 

Chairman DUFFY. By chance— 

Mr. CALABRIA. —completely punted. 

Chairman DUFFY. —from the GSEs? 

Mr. CALABRIA. Yes. Again, GSEs are exempt. FHA is exempt. We 

have basically said, anybody who had anything to do with the crisis, with the exception of mortgage brokers— 

Chairman DUFFY. Is exempt. 

Mr. CALABRIA. —is exempt from the CFPB. So let’s not pretend 

that this agency has almost even a loose connection to the financial 

crisis. 

Chairman DUFFY. I find it hard to wrap my head around the fact 

that, if you are accountable to the American people by way of the 

Congress and through appropriations, if you disclose not just the 

data that you collect but the purpose for that data—for what are 

you using it? 

The NSA has been very clear on the parameters on which they 

use the data points that they collected on phone records. Tell me 

if you disagree that the CFPB has not set out bright guidelines for 

how this data is going to be used. They have told us a few of the 

things it will be used for, but, Mr. Abernathy, would you agree that 

they haven’t been clear on how and the limitations in which this 

data can be used? 

Mr. ABERNATHY. That is one of the most significant concerns we 

have, that they gather in enormous amounts of information, keep 

the data in house, and then they parse out only the pieces of it that 

will establish the positions that they have already taken. 

39 

It is like being in a court case where the prosecutor says, here 

is the information I am going to share, which shows that you are 

guilty, but you don’t have access to the other information I have 

that might tell a different story. 

Chairman DUFFY. Thank you. 

And I want to go to Mr. Gingrich, Speaker Gingrich, for one 

quick second before my time expires. 

The CFPB, whether you like it or not, has been empowered to 

make rules. And I want to make sure that the rules that they 

make are good rules, that they actually help the American consumer and they help the American people. 

But, Mr. Gingrich, do you think that they could obtain good data 

by way of sampling as opposed to bulk data collection? I know that 

you in campaigns have looked at a lot of polling data that is pretty 

representative of the country as a whole. Could we have the same 

impact if we were sampling as opposed to long-term bulk data collection? 

Mr. GINGRICH. I think it depends on what you are trying to accomplish. If what they want to know is if there are patterns that 

should be looked at, you could do all that by polling. 

But what you are seeing—if you just think about the logic of 

what they are now doing, what you are seeing is an effort to assimilate all of the consumer behavior of the United States into one 

analyzable system for the purpose of a group of bureaucrats making a decision about whether or not it is an acceptable behavior. 

Now, that is a very practical thing if you are in their shoes. They 

would like to have the entire economy at their fingertips so they 

have control so they can decide which parts of the economy are inappropriate. I think that is really, really dangerous. 

Chairman DUFFY. And my time has expired. 

I now recognize for an additional 5 minutes the ranking member, 

Mr. Green. 

Mr. GREEN. Thank you very much, Mr. Chairman. 

Let’s go to you, Mr. Gupta. Now, Mr. Gupta, would you make the 

distinction between market monitoring and the supervisory activities with reference to enforcement? 

Mr. GUPTA. Yes. Would you like me to elaborate on that? 

Mr. GREEN. Is the CFPB allowed to collect identifiable information for market monitoring? 

Mr. GUPTA. It is not. The Dodd-Frank Act makes that illegal, and 

the GAO found that the CFPB is obeying the law. 

Mr. GREEN. And if someone has information to the contrary, if 

you have information indicating that the CFPB is collecting identifiable information for the purpose of market monitoring, would you 

kindly raise your hand? 

All right, Mr. Abernathy. 

Mr. ABERNATHY. One of our concerns is that we don’t know what 

the Bureau is collecting— 

Mr. GREEN. But you don’t know— 

Mr. ABERNATHY. —and what they are using it for. 

Mr. GREEN. But my question to you is— 

Mr. ABERNATHY. We don’t know. 

Mr. GREEN. —do you have any evidence of it actually happening? 

Mr. ABERNATHY. No one in America— 

40 

Mr. GREEN. You don’t have any evidence of— 

Mr. ABERNATHY. —knows what the Bureau— 

Mr. GREEN. So you will now use conjecture and speculation to in 

some way skew this issue such that people would be confused. 

That is what this hearing is all about: confusing the American 

people so that they will now want to end the CFPB that happens 

to be a benefit to them. 

And Mr. Gingrich has gone so far as to say in his testimony that 

it is imperative that we move toward abolishing the Consumer Financial Protection Bureau—abolishing it, which, by the way, is the 

same desire of some of these entities that he works for. 

It is important for the American people to know who is working 

on their behalf. And you can confuse the American people with 

enough of this rhetoric that we have heard today, and they will be 

absolutely opposed to an entity that benefits them, has sent back 

all of this money to them, some $11 billion in relief to consumers. 

This would all be evaporated. It would just go away. They wouldn’t 

have an opportunity to get the money back that they overpaid or 

the money that they suffered a loss with reference to some kind of 

fraud or scam. They would just be scammed. They would be defrauded. 

The personally identifiable information is used so that we can 

send the money to people. 

Mr. Gupta, do you agree with this? 

Mr. GUPTA. I agree wholeheartedly. 

Mr. GREEN. And, also, we might add that, as we go through this 

process, it is very interesting that there seems to be a sort of a 

stealth campaign that is taking place under the radar—entities 

that can’t be properly identified; you don’t know who is on the 

board of directors, if there is a board of directors; massive amounts 

of money going to a 501(c)(3); an entity indicates that it is going 

to spend over a million dollars to take out certain Members of Congress. All of these things are happening just to make sure that the 

CFPB is emasculated and eviscerated if possible. 

This is unbelievable. I agree with the ranking member; it is hard 

for me to get my mind around some of the things that are going 

on here. The people of this country are absolutely being fed bad information. Yes, they are intelligent; yes, they are smart; yes, they 

can sift the sand and find pearls of information, but they can’t do 

it if they are getting bad information. 

And that is what this is all about, which is why we have put so 

much emphasis on what has happened with reference to this 

stealth organization, this mystery organization. 

And, to this end, I would like to correct one thing. I said 

501(c)(3), and it is a 501(c)(4) organization. And there is so much 

more to be said, but I do want to add into the record a news article 

styled, ‘‘Gingrich-Connected PR Firm Issues Baffling Response to 

WSJ Disclosure Failure.’’ And this is where the amplification had 

to take place. 

And I would also want to note that, in this Mother Jones article, 

there is an indication that the Wise Public Affairs Group set up 

this Coalition, this Consumer Coalition, so-called Consumer Coalition, and that the members of the staff seem to double as members 

of the Coalition. 

41 

Does anybody know of any board of directors, any member of a 

board of directors associated with this Coalition? If you know of a 

board member, raise your hand. 

No one seems to. It is a mystery. 

I yield back the balance of my time. 

Chairman DUFFY. The gentleman yields back. 

I want to thank our witnesses for their testimony, and for the 

rigorous debate that took place today. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

Without objection, this hearing is now adjourned. 

[Whereupon, at 1:00 p.m., the hearing was adjourned.] 

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A P P E N D I X 

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78 


99797.035
79 


99797.036