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EXAMINING LEGISLATIVE PROPOSALS 

TO ADDRESS CONSUMER ACCESS TO 

MAINSTREAM BANKING SERVICES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 27, 2016 

Printed for the use of the Committee on Financial Services 

Serial No. 114–105 

( 

(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 FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

RANDY NEUGEBAUER, Texas, Chairman 

STEVAN PEARCE, New Mexico, Vice 

Chairman 

FRANK D. LUCAS, Oklahoma 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

ROBERT PITTENGER, North Carolina 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

MIA LOVE, Utah 

TOM EMMER, Minnesota 

WM. LACY CLAY, Missouri, Ranking 

Member 

GREGORY W. MEEKS, New York 

RUBE ́ N HINOJOSA, Texas 

DAVID SCOTT, Georgia 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

STEPHEN F. LYNCH, Massachusetts 

MICHAEL E. CAPUANO, Massachusetts 

JOHN K. DELANEY, Maryland 

DENNY HECK, Washington 

KYRSTEN SINEMA, Arizona 

JUAN VARGAS, California 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

September 27, 2016 .......................................................................................... 1 

Appendix: 

September 27, 2016 .......................................................................................... 35 

WITNESSES 

TUESDAY, SEPTEMBER 27, 2016 

Michel, Norbert J., Research Fellow, Financial Regulations, Heritage Foundation ........................................................................................................................ 9 

Paul, Ronald D., Chairman and CEO, EagleBank, on behalf of the Independent Community Bankers of America (ICBA) ............................................. 7 

Turner, Michael A., President and CEO, Policy and Economic Research Council (PERC) ............................................................................................................. 6 

APPENDIX 

Prepared statements: 

Michel, Norbert J. ............................................................................................. 36 

Paul, Ronald D. ................................................................................................. 43 

Turner, Michael A. ........................................................................................... 48 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Neugebauer, Hon. Randy: 

Written statement of the American Bankers Association ............................. 71 

Written statement of CUNA ............................................................................ 73 

Written statement of Equifax and the National Consumer Telecom and 

Utilities Exchange Inc. ................................................................................. 74 

Written statement of FICO .............................................................................. 76 

Written statement of IBAT .............................................................................. 81 

Written statement of the National Association of REALTORS® ................. 82 

Written statement of PERC ............................................................................. 83 

Written statement of the U.S. Chamber of Commerce .................................. 86 

Ellison, Hon. Keith: 

Written statement of the Credit Builders Alliance ........................................ 88 

Written statement of the National Association of REALTORS® ................. 89 

Written statement of CFED ............................................................................ 90 

Written statement of the National Consumer Reporting Association .......... 92 

American Banker article entitled, ‘‘Five Ways Alternative Data Can Expand Credit Access ........................................................................................ 94 

Rent Reporting for Credit Building Pilot ....................................................... 96 

Emmer, Hon. Tom: 

Written statement of the American Bankers Association ............................. 130 

Written statement of the Alabama Bankers Association .............................. 131 

Written statement of the Arizona Bankers Association ................................ 132 

Written statement of the California Bankers Association ............................ 134 

Written statement of the Community Development Bankers Association .. 135 

Written statement of the Community Bankers Association of Georgia ....... 138 

Written statement of Independent Bankers of Colorado .............................. 140 

Written statement of the Independent Bankers Association of New York 

State, Inc ....................................................................................................... 141 

Written statement of the Independent Bankers Association of Texas ......... 143 

Written statement of the Independent Community Bankers of America .... 145 

Page

VI 

Emmer, Hon. Tom—Continued 

Written statement of the Idaho Bankers Association ................................... 146 

Written statement of the Illinois Bankers Association ................................. 148 

Written statement of the Kansas Bankers Association ................................. 150 

Written statement of the Maryland Bankers Association ............................. 152 

Written statement of the Minnesota Bankers Association ........................... 154 

Written statement of the Montana Bankers Association .............................. 156 

Written statement of the National Urban League ........................................ 158 

Written statement of the National Bankers Association .............................. 160 

Written statement of the North Carolina Bankers Association ................... 162 

Written statement of the North Dakota Bankers Association ...................... 163 

Written statement of the bankers of Nevada ................................................. 165 

Written statement of the New York Bankers Association ............................ 166 

Written statement of the Ohio Bankers League ............................................ 168 

Written statement of the Pennsylvania Association of Community Bankers ................................................................................................................... 170 

Written statement of the South Carolina Bankers Association ................... 172 

Written statement of the South Dakota Bankers Association ...................... 174 

Written statement of the bankers of Tennessee ............................................ 176 

Written statement of the Texas Bankers Association ................................... 178 

Written statement of the Virginia Bankers Association ............................... 180 

Written statement of the Wisconsin Bankers Association ............................ 182 

Written statement of the bankers of West Virginia ...................................... 183 

Luetkemeyer, Hon. Blaine: 

Written responses to questions submitted to Dr. Norbert Michel ................ 185 

Royce, Hon. Ed: 

Written statement of the Housing Policy Council ......................................... 187 

Written statement of the National Association of Home Builders ............... 189 

Written statement of the National Association of REALTORS® ................. 190 

Letter to FHFA Director Watt from Representatives Royce, Bachus, 

Himes, and Maloney, dated January 9, 2014 ............................................. 191 

Letter to FHFA Director Watt from various undersigned organizations, 

dated November 14, 2014 ............................................................................. 193 

Letter to FHFA Director Watt from leaders of communities of color, 

dated April 29, 2015 ..................................................................................... 196 

Letter to Monica Jackson, Office of the Executive Secretary, CFPB, from 

various undersigned Members of Congress, dated August 22, 2016 ........ 199 

Written statement of Congressman Pete Sessions (TX-32) ........................... 201 

Written statement of the U.S. Chamber of Commerce .................................. 203 

American Banker article entitled, ‘‘Credit Access Bill Would Shore Up 

Financial Literacy’’ ....................................................................................... 205 

Written statement of KASASA ........................................................................ 207 

(1) 

EXAMINING LEGISLATIVE PROPOSALS 

TO ADDRESS CONSUMER ACCESS TO 

MAINSTREAM BANKING SERVICES 

Tuesday, September 27, 2016 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER CREDIT, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:03 a.m., in room 

2128, Rayburn House Office Building, Hon. Randy Neugebauer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Neugebauer, Pearce, Posey, 

Fitzpatrick, Luetkemeyer, Mulvaney, Pittenger, Barr, Rothfus, Tipton, Williams, Emmer; Clay, Scott, Maloney, Capuano, Heck, 

Sinema, and Vargas. 

Ex officio present: Representative Hensarling. 

Also present: Representatives Royce, Ellison, and Moore. 

Chairman NEUGEBAUER. The Subcommittee on Financial Institutions and Consumer Credit will come to order. Without objection, 

the Chair is authorized to declare a recess of the subcommittee at 

any time. 

Also, without objection, members of the full Financial Services 

Committee who are not members of the subcommittee may participate in today’s hearing for the purposes of making an opening 

statement and questioning the witnesses. 

Today’s hearing is entitled, ‘‘Examining Legislative Proposals to 

Address Consumer Access to Mainstream Banking Services.’’ 

I now recognize myself for one minute to give an opening statement. 

Today’s hearing is important to consider legislation that can have 

a tremendous impact on consumer credit, product access, and education. I am pleased that our committee members on both sides of 

the aisle have taken thoughtful approaches to tactful issues that 

affect the daily lives of the American consumer. For example, Representative Royce has put forth two bills that would ensure a competitive environment for the selection of credit scoring models at 

GSEs, and to ensure the continued offering of credit education and 

counseling services. The latter bill is one that I want to continue 

to work with his office to refine and see if we can move across the 

finish line. 

Representatives Tipton, Williams, and Emmer all have put forth 

to bills seeking to address problems with the Federal Deposit InVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
2 

surance Act that classifies certain deposits as brokered deposits. 

These bills aim to ensure that new and innovative consumer products can continue to be offered without unnecessary regulatory restraints. Today’s panel will help this committee ensure all policy 

issues are considered and that we are informed in making thoughtful decisions as we move forward. 

The Chair now recognizes the ranking member of our Financial 

Institutions and Consumer Credit Subcommittee, Mr. Clay, for 2 

minutes for an opening statement. 

Mr. CLAY. Thank you, Mr. Chairman, and thanks for calling this 

hearing. I view this morning’s hearing as an important opportunity 

to discuss the challenges faced by 10 million unbanked or underbanked American households who, for various reasons, do not have 

an account at a bank or other financial institution. I am also concerned about how we can help the estimated 26 million consumers 

representing about 11 percent of the adult population in this country who are considered credit invisible. They are called credit 

invisibles because they do not have any credit history with one of 

the nationwide consumer reporting agencies. The CFPB found that 

blacks, Hispanics, and individuals in low-income neighborhoods are 

more likely to have no credit records with nationwide credit bureaus, or to not have sufficient current credit history to generate 

a credit score. 

As credit scores are increasingly used to determine so many aspects of consumers’ lives today, to have 1 in every 10 adults in this 

country to be considered credit invisible is a serious problem. Because of the importance of these issues, I appreciate this chance for 

members to get valuable input from external stakeholders about 

the legislative proposals that they have introduced. This hearing 

will ensure that members have the chance to fully vet these proposals, ensuring that we understand the benefits, but also are 

made aware of any potentially unintended consequences that may 

result if these bills are enacted into law. 

To this end, I hope the members who have introduced the bills 

that we will be discussing today will be open to any suggestion 

from the witnesses and others about possible changes to the bills 

to ensure that the text actually achieves the intended purposes to 

help vulnerable consumers, and I will yield back. 

Chairman NEUGEBAUER. I thank the gentleman. And now the 

gentleman from California, Mr. Royce, is recognized for 1 minute. 

Mr. ROYCE. Mr. Chairman, thank you very much. I thank you, 

and I thank Chairman Hensarling for holding this hearing. I am 

in southern California, and we have one of the highest costs of living in the country, so access to credit is really vital in our communities to the well-being of the family. And the difference between 

good credit and bad credit is the ability to purchase a home out in 

California, or it is the ability to be able to actually own your car, 

or pay for a college education. This legislation that we are looking 

at here, H.R. 347, the Facilitating Access to Credit Act, would ensure that consumers’ access to credit education services aren’t 

choked off by lumping them in with credit repair scam artists. And 

in the digital age, the American people should have more tools at 

their disposal, not less. 

3 

H.R. 4211, the Credit Score Competition Act, my other bill here, 

opens up the GSEs to alternative credit scoring models and in 

doing so expands the pool of home buyers without lowering the bar 

for qualifications, and it eliminates the government-backed monopoly in this regard. So both of these bills are strongly bipartisan 

with support from many members of this committee. 

And with that, Mr. Chairman, I asked for unanimous consent to 

submit to the record support letters from the Financial Services 

Roundtable, the National Association of REALTORS®, the National Association of Homebuilders, and letters in support of alternative credit scoring model considerations by the GSEs from 18 

civil rights and advocacy groups, the Leaders of the Congressional 

Black Caucus, Congressional Hispanic Caucus, Congressional 

Asian-Pacific-American Caucus, the Congressional Progressive 

Caucus, and a bipartisan group of members of this committee, including myself and Representative Maloney and Representative 

Himes. And I would also ask to submit a statement of support for 

the Facilitating Access to Credit Act from Representative Sessions 

of Texas, an opinion editorial in favor of the bill from the CEO of 

the Consumer Data Industry Association, a letter expressing concerns regarding CROA’s jurisdiction from the U.S. Chamber of 

Commerce, and a recent letter I authored to the CFPB about 

CROA. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. ROYCE. Thank you, Mr. Chairman. I yield back. 

Chairman NEUGEBAUER. The time of the gentleman has expired. 

The gentleman from Minnesota, Mr. Ellison, is recognized for 2 

minutes. 

Mr. ELLISON. Thank you, Mr. Chairman. What if there was a 

way with no government money and the backing of Democrats and 

Republicans to give tens of millions of Americans an increase in 

their credit scores, to give people a credit score that accurately reflected their ability and willingness to pay, that made it easier for 

them to buy a car, get a mortgage, start a business, because they 

had access to affordable interest rates, that allow young people to 

get a car note without relying on their parents to co-sign, that allowed widows to quickly establish a credit score, even if their credit 

was in their husband’s name, that allowed residents of public housing to easily build a credit score? 

What if middle and working class and poor people who pay their 

bills on time get rewarded with access to lower cell phone and utility deposits? What if it was easier for people stung by bankruptcy 

or financial trouble to quickly improve their credit scores? 

Well, it is not impossible. It is not even hard. All I do is ask you 

to join me and my Democrat and Republican colleagues, a special 

thank you to Congressman Mike Fitzpatrick and many others, to 

support the Credit Access and Inclusion Act of 2015, which amends 

the Fair Credit Reporting Act to clarify the Federal law with respect to reporting certain positive consumer credit information to 

consumer reporting agencies and for other purposes. And let me 

just say, thank you to the advocates who, without their tireless 

work, we wouldn’t be here today, and I just want to say a special 

thank you to Mr. Turner who’s here to talk about it in an expert 

way. I yield back. 

4 

Chairman NEUGEBAUER. I thank the gentleman. Now the gentleman from Colorado, Mr. Tipton, is recognized for 1 minute. 

Mr. TIPTON. I’d like to thank the chairman and the ranking 

member for holding this hearing. Preserving consumer access to 

mainstream banking services is certainly an important topic and 

should continue to be a consistent bipartisan goal of this committee. I would also like to thank the witnesses for taking the time 

to be able to appear before the subcommittee today. Your expertise 

is invaluable as we discuss these legislative proposals. H.R. 6162, 

the Protect Prepaid Accounts Act, is a legislative relief effort I introduced to clarify that prepaid funds deposited in an insured depository institution satisfy the requirements of the Primary Purpose Exclusion to the definition of a deposit broker. As a result of 

the 2014 revision to a deposit broker regulations, the FDIC has determined the primary purpose exception applies only infrequently 

to prepaid products and typically requires a specific request for a 

determination by the FDIC. Unfortunately, the practical impact of 

this conclusion is an increase in deposit insurance costs to any depository institution that operates a prepaid program. Inevitably, 

this also leads to an increase in costs and less choices for consumers as banks commit additional resources to compliance rather 

than to their customers. 

Prepaid products are an incredibly important tool utilized by numerous organizations, including State and Federal Government 

agencies, as well as universities and corporations, to make a variety of disbursements to consumers. Importantly, prepaid card users 

include 67 million Americans considered unbanked and underbanked. 

Mistakenly classifying prepaid accounts as brokered deposits 

may force depository institutions to drop their programs, impacting 

students, workers and government benefit recipients, that all rely 

on prepaid products to access the financial system. This legislation 

will ensure that financial institutions will be able to devote their 

time to their customers. The most financially vulnerable Americans 

will continue to have safe and reliable access to their money. Mr. 

Chairman, I thank you for this hearing and look forward to our 

comments from our committee, and I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. The gentlewoman from Wisconsin, Ms. Moore, is recognized for 1 minute. 

Ms. MOORE. Thank you so very much, Mr. Chairman, and ranking member, and thank you, panelists, for coming here to speak 

with us today. I am so happy, especially, to have Dr. Michel here, 

to speak in support of H.R. 4116, the Reciprocal Deposits Bill. And 

I want to thank our Ranking Member Waters for working with me 

on this legislation and for her support. H.R. 4116 is a targeted way 

for us to help minority-owned, small, and CDFI institutions within 

our districts. It is good for rural and for urban districts. I appreciate that this bill has bipartisan support, and I look forward to 

this bill passing here today. And with that, I would yield back. 

Chairman NEUGEBAUER. I thank the gentlewoman. 

Mr. SCOTT. Mr. Chairman, I ask unanimous consent to submit a 

letter from a number of consumer, civil rights, and other advocates 

about H.R. 41172. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

5 

Chairman NEUGEBAUER. The gentleman from Texas, Mr. Williams, is recognized for 1 minute. 

Mr. WILLIAMS. Thank you, Mr. Chairman. Community banks are 

independent, locally owned and operated institutions. Community 

bank officers often know their customers and are often deeply involved in their local communities. While large banks can offer 

these same customers a wide range of products and resources, community banks often rely on third-party venders. H.R. 5660, the Retail Checking Account Protection Act of 2016, is a bipartisan bill 

providing regulatory relief to community banks so they can compete with larger financial institutions. This commonsense bill provides a simple clarification that enables community banks to offer 

advanced banking services and innovative financial products via 

third-party service providers without the fear of increased regulation or having those customer deposits be deemed brokered. 

Simply put, I believe the regulatory risk and deposit classification should be based on the strength and characteristics of the relationship established between an individual depositor and their 

bank, rather than by a bank’s use of third-party service provider 

or service. 

Mr. Chairman, I look forward to discussing the bill further with 

the witnesses today, and I yield back the balance of my time. 

Chairman NEUGEBAUER. I thank the gentleman, and now the 

gentleman from Minnesota, Mr. Emmer, is recognized for 1 minute. 

Mr. EMMER. Thank you, Mr. Chairman, for calling this legislative hearing today. As you know, Congresswoman Moore and I introduced H.R. 4116 to modernize a law that currently treats reciprocal deposits like brokered deposits, despite fundamental and very 

meaningful differences. As we all know, reciprocal deposits are 

safe, practical, core-like deposits that enhance the ability of a community bank to serve loyal customers. Ultimately, this leads to 

more capital in our communities to fund economic development. 

From local governments, nonprofits, and small businesses, to folks 

living on the iron range to urbanites in the Twin Cities in Minnesota, reciprocal deposits are both necessary, and in the public interest. They are a way for Americans to ensure deposits without 

having to use multiple banks while actually reducing the likelihood 

of taxpayer bailouts like we saw in the aftermath of the Great Recession. 

I want to thank the witnesses in advance for testifying today, 

and I look forward to discussing the merits of enacting this vital 

policy proposal, and I yield back. 

Chairman NEUGEBAUER. I thank the gentleman and will now introduce today’s witnesses. Today, we welcome the testimony of Dr. 

Michael Turner, the President and CEO of the Policy and Economic 

Research Council, or PERC; Mr. Ron Paul, who is the chairman 

and CEO of EagleBank, testifying on behalf of the Independent 

Community Bankers of America; and Dr. Norbert Michel, Research 

Fellow in Financial Regulations at Heritage Foundation. 

Each of you will be recognized for 5 minutes to give an oral presentation of your testimony, and without objection, each of your 

written statements will be made a part of the record. 

Chairman NEUGEBAUER. I now recognize Dr. Turner for 5 minutes. 

6 

STATEMENT OF MICHAEL A. TURNER, PRESIDENT AND CEO, 

POLICY AND ECONOMIC RESEARCH COUNCIL (PERC) 

Mr. TURNER. Thank you, Mr. Chairman, Ranking Member Clay, 

and members of the subcommittee. I am here to offer testimony in 

support of three bills: the Facilitating Access to Credit Act, the 

Credit Access and Inclusion Act, and the Credit Score Competition 

Act. I will just paraphrase the Jackson Five, that the core message 

of my 1, 2, 3 bills is as easy as A, B, C, action by Congress. 

Let me begin with the Facilitating Access to Credit Act. In all 

my years of dealing with consumer finance issues, the one issue 

that has unified members of both parties with regulators, advocacy 

groups, and industry, is the importance of a need for more financial 

literacy. In fact, consumers both want and need more convenient 

and robust credit education. They need this to enjoy a better life 

through better credit for the reasons that Congressman Ellison 

enumerated earlier. Since 1970, in fact, this institution has encouraged consumers to communicate, to dialogue with national consumer reporting agencies, credit bureaus, about their credit reports. And, in fact, thousands of lenders have instructed consumers 

to reach out to credit bureaus, national credit bureaus, about their 

reports and scores. More recently, in 2004, with the implementation of the FACT Act and free annual disclosures, this dialogue between consumers and credit bureaus was enhanced, and, in fact, 

regulators now have been making a push for free score disclosures. 

Despite this complex architecture of communication that is guided toward financial literacy, credit report and credit score literacy, 

a wedge has been driven between consumers and credit bureaus in 

the form of a circuit court decision that expands the definition of 

credit repair organization and now includes all sorts of things that 

have nothing to do with credit repair, including credit education. 

This topic has been researched by my organization, the University of Arizona, and others, and what we found is that personalized 

credit education makes a difference. It outperforms the best available options currently dramatically. In addition, the CROA barriers 

effectively deter more than 9 in 10 consumers from taking up these 

services. It basically renders them meaningless. And as a consequence, the very existence of these convenient, high-tech, accessible credit education services are currently at risk and require 

Congressional action, such that H.R. 347 puts out. 

Another area requiring Congressional action is the Credit Access 

and Inclusion Act. And I have the privilege of now being before this 

body for my third time dating back to 2005, talking about this very 

issue. There are 54 million credit invisibles today. We use a different definition than the CFPB. We included not only those who 

have no credit file, but who have insufficient information in the report to generate a score. This group is overwhelmingly comprised 

of younger Americans, elderly Americans, lower-income Americans, 

and members of minority communities. They remain trapped by 

the credit Catch-22, that is to say, that in order to qualify for mainstream credit, you have to have already had credit. 

So credit access for credit invisibles means high cost credit access, payday lenders, pawn shops, check-cashing services. One 

study estimates that $3.4 billion of wealth are stripped from credit 

invisibles a year, and that use of payday loans alone increases 

7 

hardship on this group by 25 percent, meaning it makes it more 

difficult to pay essential bills like utilities, dental and health care, 

as well as prescription drugs, and this is just payday loans, not including the other high-cost forms of credit. 

The Credit Access and Inclusion Act would empower consumers 

with a tool that would allow them to stamp out credit invisibility. 

Currently, when utility companies and telcos report to credit bureaus, they report late data. We are permitting late data to be reported, which for many credit invisibles may be the only trade line 

in their file. What this does is rather than credit reports and scores 

being a tool for inclusion, it becomes a tool for exclusion. It becomes 

a blacklist. We have fought this around the world and had this 

changed in countries, most recently including Australia and New 

Zealand, for that very reason. 

The Credit Access and Inclusion Act would clarify this, because 

right now, State regulators think that it is okay for negative data 

to be reported, but not for positive data. We believe that this is already permitted, that this bill would end regulatory uncertainty, 

and enable this tool to be used for consumers’ benefit. 

How good of an idea is this? Well, my colleague who has fighting 

for this for years now, Jose Quinonez, just last week was made the 

most recent MacArthur Foundation genius, in part, because of his 

innovative ways to facilitate access to credit using alternative data. 

I will stop. I see I am over. Thank you very much for the privilege 

of testifying today. 

[The prepared statement of Dr. Turner can be found on page 48 

of the appendix.] 

Chairman NEUGEBAUER. I thank the gentleman. And now Mr. 

Paul, you are recognized for 5 minutes. 

STATEMENT OF RONALD D. PAUL, CHAIRMAN AND CEO, 

EAGLEBANK, ON BEHALF OF THE INDEPENDENT COMMUNITY BANKERS OF AMERICA (ICBA) 

Mr. PAUL. Chairman Neugebauer, Ranking Member Clay, and 

members of the subcommittee, my name is Ron Paul, and I am 

chairman and CEO of EagleBank, a $6.4 billion asset community 

banks headquartered in Bethesda, Maryland. I am pleased to testify today on behalf of the Independent Community Bankers of 

America and the nearly 6,000 community banks we represent. 

EagleBank has 430 employees, and serves 12,000 customers in the 

Washington, D.C. Metropolitan area. EagleBank has been able to 

build strong relationships with our customers because we know we 

are committed to the Washington region, that we are active lender 

to local businesses, and a vital part of the regional economy. 

A bipartisan bill before the subcommittee today, H.R. 4116, will 

help keep deposits in the community by ensuring the FDIC’s classification of deposits that reflect the true characteristics. Introduced 

by Representatives Gwen Moore and Tom Emmer, H.R. 4116 would 

promote the use of reciprocal deposits as a stable source of funding 

to support community lending, which we know is the backbone of 

our local economies. 

Reciprocal deposits allow a customer to effectively receive FDIC 

insurance on deposits that exceed the $250,000 insurance limit 

without the inconvenience of splitting their funds amongst multiple 

8 

banks. A bank distributes the amount of deposits that exceeds the 

insurance limit through a network of banks and receives reciprocal 

deposits back from other banks within the network. The customer 

enjoys the convenience of maintaining a relationship with one local 

bank, and receives the benefit of full deposit insurance. At 

EagleBank, our customers who use reciprocal deposits include local 

governments, nonprofit organizations, foundations, businesses, individuals, and law firm, with significant escrow balances. Many of 

these customers have stipulations that require that their deposits 

be collateralized or insured, but these customers also take great interest in where they place their deposits and continuing to build 

their relationships with their local community bank. 

EagleBank’s reciprocal deposits support our lending to local 

small businesses. This lending activity helps create jobs and stimulate growth in the regional economy. Recognizing this, many local 

governments within the Washington area choose to keep their deposits in local banks. Several of them have formal programs in 

which EagleBank is involved. Our participation in the program 

with Montgomery County, Maryland has resulted in the creation of 

525 jobs over the last 4 years. In addition, EagleBank is the leading community bank SBA lender in the Washington region. Without the insurance available on reciprocal deposits, these types of 

programs would not be feasible. Broken deposits are disfavored and 

discouraged by the FDIC because they are not considered to be a 

reliable source of funding. While this is true, reciprocal deposits are 

an incredibly stable source of funding because they are provided by 

long-term, core customers. At EagleBank we have found that reciprocal deposits behave just like other core deposits. This is because 

these deposits come from our local customers. Our relationships 

with them are long-term and include multiple services and products. Because the FDIC insurance reduces the customer’s risk, 

these deposits are stable and an important ingredient of our relationships with our core customers. 

These deposits are not hot money. Having these deposits allows 

us to continue our active lending to local businesses like hardware 

stores, medical practices, restaurants, which are often not able to 

create credit from large regional or national banks. Our average 

commercial loan is $700,000, confirming our commitment to these 

small businesses. 

Because reciprocal deposits have been classified as brokered deposits, they are stigmatized and subject to certain restrictions that 

keep community banks from using them to their full potential. H.R. 

4116 would rectify this by creating a limited exception from FDIC 

restrictions on reciprocal deposits. The bill includes safeguards that 

limits a bank use of reciprocal deposits, gives the FDIC full discretion to address any safety and soundness concerns, and ensure the 

bill is focused, as it should be, on reciprocal deposits used by community banks. 

Thank you, again, for allowing me to testify. You have been offered an opportunity to enact legislation, H.R. 4116, that will have 

a meaningful impact in our communities before the close of the 

114th Congress, and I strongly encourage you to do so. I am happy 

to take any questions later. Thank you. 

9 

[The prepared statement of Mr. Paul can be found on page 43 of 

the appendix.] 

Chairman NEUGEBAUER. I thank the gentleman. And Dr. Michel, 

you are recognized for 5 minutes. 

STATEMENT OF NORBERT J. MICHEL, RESEARCH FELLOW, 

FINANCIAL REGULATIONS, HERITAGE FOUNDATION 

Mr. MICHEL. Good morning, Chairman Neugebauer, Ranking 

Member Clay, and members of the subcommittee. Thank you for 

the opportunity to testify at today’s hearing. My name is Norbert 

Michel. I am a research fellow in Financial Regulations at the Heritage Foundation, and the views I express in this testimony are my 

own. They should not be construed as representing any official position of the Heritage Foundation. 

The main aim of my testimony this morning is to argue that 

Congress should end the practice of providing FDIC deposit insurance to brokered deposits. There are three main issues that I would 

like to address on this front today: First, providing Federally 

backed insurance deposits was, and is, a bad idea. Doing so may 

have helped mitigate bank runs during the depression era, but it 

came at a very high cost. It created moral hazard and adverse selection problems, give increased incentives and continued to do so, 

for risk taking in the banking industry. As a result, protecting the 

FDIC’s insurance fund, protecting the taxpayers, remains a major 

justification for heavily regulating the banking sector by restricting 

their activities, capital structure, and asset composition. 

The tragedy is that this system is enormously complex, breeds 

regulatory capture and special interest lobbying, imposes high costs 

on the private sector, destroys the competitive process, crowds out 

private capital, and ultimately weakens financial markets. While 

there is no doubt that some banks, especially community banks, 

want and need to improve their access to funds to grow their business, the best way to help those banks is to eliminate the Federal 

backing so that Congress can remove regulations that impose these 

high costs on the banks. That is how you bring more private capital 

into the market. 

That brings me to my second point, which is, that expanding the 

use of Federally insured brokered deposits in any way compounds 

the moral hazard and adverse selection problems that exist in our 

system. It is certainly true that the Banking Act of 1933, which 

created the FDIC, accounted for the possibility that individuals 

might have a claim on an FDIC-insured deposit account that a 

third party opened on their behalf, and it may still make sense, in 

some very limited cases, to allow FDIC insurance to pass through 

to such a deposit owner. However, markets have evolved such that 

deposit brokers now use FDIC insurance to back wholesale funding 

for banks. This sort of operation was clearly not the original intent 

behind FDIC insurance, and perpetuating it suggests that we 

should Federally back all sources of funds for banks simply for the 

purpose of supplying credit. 

This sector of the market now makes it very easy for individual 

investors to obtain deposit insurance in excess of the FDIC coverage limit, as you have just heard. And no reading of the historical record supports the notion that Congress originally had such 

10 

a purpose in mind. It is its expansive use of Federally backed deposit insurance that led the FDIC in 1984 to introduce regulations 

to limit the ability of investors to obtain Federal deposit insurance 

on brokered deposits. It is also the main reason that in 1991, the 

U.S. Treasury Department recommended completely eliminating 

FDIC insurance for brokered deposits. And this action, eliminating 

FDIC insurance for brokered deposits, would now be the wisest 

course of action. 

That brings me to my final point, which is that bills such as H.R. 

4116 and, to a degree, H.R. 5660, do not move us in the right direction. H.R. 4116 redefines reciprocal deposits so that they are no 

longer considered brokered deposits. The bill essentially provides a 

regulatory carve-out for a type of brokered deposit. Because adequately and undercapitalized banks are currently restricted in how 

they can use brokered deposits, redefining reciprocals in this manner would free institutions from those specific restrictions. 

It is true that H.R. 4116 limits the use of newly defined reciprocals to institutions with a composite condition of outstanding or 

good, a CAMELS rating of 1 or 2. But that standard is not as objectively difficult to meet as the well-capitalized standard, which is 

kind of the point of the restriction, that currently restricts the use 

of brokered deposits. If the bank is good, there is no problem. There 

is no restriction. Thus, H.R. 4116 is likely to increase the use of 

reciprocal deposits, at least at the margin. 

I have similar concerns with H.R. 5660, a bill that could be 

viewed as an alternative way to give reciprocals a regulatory carveout. Many people in the industry feel that these reciprocals should 

be viewed differently because they are safer, and they consist mostly of stable retail deposits. And while there is a plausible case that 

those reciprocals are safer than other types of brokered deposits, as 

the FDIC has recently argued, we simply do not have enough data 

yet to conduct a proper comparison of those risk characteristics 

across brokered deposits. We shouldn’t be doing anything in the 

meantime that expands the use of or the reliance on FDIC deposit 

insurance. Congress can strengthen financial markets by lowering 

the coverage limit, requiring coverage to be aggregated to the individual level, and removing coverage for brokered deposits. Thank 

you, and I am happy to answer any questions you have. 

[The prepared statement of Dr. Michel can be found on page 36 

of the appendix.] 

Chairman NEUGEBAUER. I thank the gentleman. Members will 

now be recognized for 5 minutes for questions. And the Chair recognizes himself for 5 minutes. 

Dr. Turner, in 2014, the 9th Circuit Court of Appeals ruled that 

credit education, credit monitoring, and credit counseling all kind 

of fall under the Credit Repair Organization Act, or CROA. This 

ruling has really the potential to freeze the offering of many services beneficial to consumers as they look to make strategic decisions to improve their credit. Can you kind of explain the difference 

between credit education and counseling versus credit repair? 

Mr. TURNER. That is a very important question, and this is really 

the core of the proposed legislation. Let me provide an analogy just 

from day-to-day life. When you take your car to the garage to have 

the tires rotated, or the oil changed or a regular tune-up quarterly, 

11 

every 6 months, that is maintenance. That is enhancing the performance of your car moving forward. When you are in a collision 

and your car is towed to a garage, that is repair. It is basically a 

completely different domain. Credit education is helping consumers 

improve their behavior to improve their score moving forward. 

Credit repair is retroactive. It is helping people repair things that 

have already happened, so that is a very critical and important distinction. 

Chairman NEUGEBAUER. Do you think there is a more clear way 

to make that definition so that are clearly distinguished between 

the two? Are we there? 

Mr. TURNER. I think that the bill before this committee does a 

very good job balancing the need to protect consumers and to promote competition, and enable innovation in the credit education 

space. I do think that a product-based approach is feasible. I completely disagree with the FTC’s position. The FTC, by the way, testified before the Senate that they were very sympathetic to the 

credit bureaus and the need for exemption from CROA on this type 

of issue, but they professed being stuck, being unable to find some 

product-based approach that would enable the exemption and the 

benefits of this credit education, but filter out bad actors. I think 

there are ways to do it. I think there is an array of options before 

Congress, and I think that this is one that is quite feasible. 

Chairman NEUGEBAUER. Thank you. Mr. Paul, the brokered deposit statute was enacted many years ago, and since then, many 

changes have occurred in how financial products and services are 

offered to consumers, namely, the offering of prepaid cards, 

through third parties, deposit-placing networks that help community banks find nationwide funding. What are some of the challenges of the brokered deposit statute, and how do these bills, do 

you think, help address that issue? 

Mr. PAUL. I think what is critical is the fact of being able to better define the word ‘‘relationships.’’ Everything that we are talking 

about, at least in my testimony, is based on that relationship. You 

have many, many relationship that have been for many, many 

years that deposit money into community banks. As a result of the 

FDIC insurance, apparently that trigger recreates a different definition of a relationship, which we don’t believe to be the case. A 

relationship is a relationship, ones that we have built for many, 

many years. And, therefore, that core deposit that we have with 

that relationship is part of what we define as core deposits, and, 

therefore, should be part of what we could then turn around and 

use that liquidity to be able to put back into the community in 

lending. 

Chairman NEUGEBAUER. One of the things, we have seen a lot 

of technology advances in the financial services world and how 

banks are able to offer their services today with online banking and 

using your iPhone and all of those. And today, consumers have a 

vast variety of ways to access financial products. Has this regulatory environment kept up with the technology, and is it time to 

address issues like this one? 

Mr. PAUL. Clearly, the regulatory environment is getting tougher 

and tougher for community banks to be able to work with them. 

The answer is yes in many different ways. The extent that we are 

12 

required now through compliance, through BSA, through a variety 

of acts that are all very appropriate, but unfortunately, to the extreme, has created more and more problems. Our branching network is only 21 branches. We are not big branch believers, because 

of the technology side, and we feel that the regulatory world needs 

to keep up with the IT side to allow us to be able to operate within 

a reasonable cost. 

Chairman NEUGEBAUER. I thank the gentleman. The ranking 

member of the subcommittee, Mr. Clay, is recognized for 5 minutes. 

Mr. CLAY. Thank you, Mr. Chairman. I would like to submit for 

the record a letter from the National Urban League in regard to 

H.R. 4116. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. CLAY. Thank you. Mr. Turner, in your testimony you mentioned that you are currently doing a joint study with HUD and six 

public housing authorities in participation with the credit reporting 

agencies about rental payment history of public housing households. This study, which we understand is currently underway and 

has no published results to date, is specifically looking at the question of the consumer-level impacts of reporting rental payment history for public housing, rather than currently housing authorities 

do not report this data to HUD, and we have no real way of understanding how the reporting of alternative data will affect these 

households. 

We understand that there should be a published report in 6 

months to a year. Do you think it would be more appropriate to 

wait to move on including HUD-assisting households in H.R. 4172 

until we know more, including the results from your joint study? 

Mr. TURNER. That is a terrific question, and let me try and 

unbundle it. Rent reporting is discussed in Congressmen Ellison 

and Fitzpatrick’s bill. And, in fact, our study looked as public housing authorities’ subsidized rental data, as well as other rental data, 

but it is important to note that other rental data is already being 

reported. TransUnion has fully reported rental payment lines in 

credit files. Experian has positive data. So it is already out there. 

We are looking at how data from public housing authorities would 

perform relative to other data that is already in the market. 

So if we are asking specifically about whether to move forward 

or not with encouraging PHAs to voluntarily report until the research findings are completed, I would say that makes sense. But 

by the same token, and with that same yardstick, we have over a 

decade of research, irrefutable empirical research based on the experience of millions of Americans that show the benefits of energy, 

utility, and telecom data being fully reported. So if it is logical to 

wait for research until we know on the one hand for PHA data, 

well, it is also logical to act now on the energy, utility, and telecom 

data. 

Mr. CLAY. Okay. That is fair. That is fair. Given the chronic 

underfunding of public housing in the recent decade, some PHAs 

have struggled to maintain accurate rent roll data. We have especially heard recent reports of this as PHAs are converting public 

housing to other forms of rental assistance through the rental assistance demonstration. H.R. 4172 does not address the need to enVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
13 

sure that the data provided by PHAs to consumer reporting agencies is accurate. How do you suppose we address this issue? 

Mr. TURNER. Another terrific question. Procedurally, there are a 

couple of things that would happen. Again, we are looking at what 

are the credit market impacts, and if they look like they are positive impacts, then there could be some basis for encouraging PHAs 

to fully report to national consumer reporting agencies; but you 

can’t just switch that data on. You don’t make the decision, report, 

and the bureaus take it. Their whole process is to ensure that the 

quality, and reliability, and integrity of data, the timeliness in reporting. 

So a lot of those wrinkles would be ironed out just in creating 

the relationship with the national credit bureaus. In addition, there 

are plenty of organizations—I would be remiss if I didn’t mention 

Credit Builders Alliance—that are focused like a laser on this very 

issue in terms of how PHAs with their disparate practices may actually establish that relationship to ensure their tenants get the 

benefit. So there are options, should that move forward in a voluntary system. 

Mr. CLAY. Thank you. Mr. Paul, H.R. 4116 exempts only reciprocal deposits from being considered funds obtained through a deposit broker. Reciprocal deposits are a subject of custodial deposits. 

Would the bill be improved by broadening the exemption to include 

all custodial deposits while still using the same institutional quality measures? 

Mr. PAUL. The ICBA doesn’t have a position on the custodial 

side. Obviously, the reciprocal is what we are focused on in being 

the relationship-driven deposit that goes out and then comes back, 

so we don’t have a position on the custodial side. 

Mr. CLAY. All right. Thank you so much, and my time is up. 

Chairman NEUGEBAUER. I thank the gentleman, and now the 

vice chairman of the Financial Institutions and Consumer Credit 

Committee, Mr. Pearce, is recognized for 5 minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. I really appreciate this 

hearing. The 2nd District of New Mexico has 52 percent Hispanics, 

60 percent overall counting Native Americans and other minorities, 

60 percent minority population. We are one of the poorest two or 

three districts in the country, and so we are right on point into 

things that affect the elements like Mr. Clay had mentioned, that 

many people just don’t have access to credit. 

So I really appreciate the approach that you have taken. I would 

also like to compliment the gentleman from Minnesota, Mr. Ellison, 

that the bill that he has put forward is very thoughtful and going 

right at one of the sources. 

Mr. Turner, Dr. Turner, have you done, has your study—you said 

you got information from a decade-long study. Have you all worked 

on the HUD payments? Do you know that that would ultimately 

result in positive credit information for a lot of right now 

invisibles? 

Mr. TURNER. So there are a couple of things here. We have 

looked at different types of alternative data, prioritizing the most 

logical. The data that is more credit-like than cash-like, the data 

that has the highest coverage of the 54 million credit invisibles, 

and then data from more concentrated industries, just from a busiVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
14 

ness process perspective it is easier to acquire. So we prioritize energy, utility, and media data, wire-lined, wireless, broadband, cable 

TV, and so forth. And we have done probably more than a dozen 

studies at this juncture, both in the U.S. and abroad, looking at the 

impacts. And what we find is that to your initial point, the largest 

net beneficiaries are members of minority communities, 22 and 21 

percent increase in credit access as a result of alternative data for 

African American and Hispanics; 14 percent for Asian; 14 percent 

for elderly Americans. And this is very significant— 

Mr. PEARCE. I appreciate that. I don’t mean to interrupt, but the 

clock is ticking. We have 5 minutes. So, specifically, to the HUD 

and even to education loans, the government, college tuition loans, 

does your study include that or not? That is just a fairly straightforward question. 

Mr. TURNER. Right. So we are looking at data from public housing authorities that would come directly to credit bureaus, not 

HUD data. The PHAs would report the data, not HUD. 

Mr. PEARCE. But essentially, it would come from those projects, 

so is the ultimate effect going to be positive to the people that are 

right now credit invisible, or is the overall result going to be negative? That is what I am trying to drive at. 

Mr. TURNER. Unfortunately, we would have to wait until the 

study is complete. But based on our other research, we have good 

reason to believe it would be a net positive. 

Mr. PEARCE. Fair enough. What about the education? You mentioned that also, and, again, I feel like that that has great upward 

potential. Have you done any work to see about which demographics that your positive impacts affect? In other words, does it 

affect the entire education spectrum, or are the positives clustered 

towards more education and the less effect on less education? I personally think, with education, you are going to find positive impacts up and down the education spectrum, but I would like to 

know your input? 

Mr. TURNER. Terrific question. I will be quick. We are on our 

third study right now. Our first study looked at tens of thousands 

of individuals, a very reflective sample, and it showed that the personalized credit education had a material impact, meaning people 

moved into a better score tier at twice the rate of those who just 

looked at generic information like you get from mint.com. 

We have worked with now four different community development 

organizations, Operation Hope, the National Urban League, United 

Way Atlanta, United Way Charleston, so it is not a reflective population. It is a population of people who are oftentimes financially 

distressed, and we have seen those same results replicated in that 

population. 

Mr. PEARCE. Right. Mr. Paul, the gentleman to your left—I think 

he is actually to your right, but he is sitting to your left—he had 

some compelling arguments. Did you want to make observation on 

any of those and things that could impact our decisions as we move 

forward? I mean, you made good points, too, but do you have anything to offer? 

Mr. PAUL. Sure. I respectfully disagree. 

Mr. PEARCE. Oh, okay. I suspected that, but I was going to look 

for a little more meat on the bone. 

15 

Mr. PAUL. I think that the FDIC is a critical, critical part to community banking. And I think that based on the fact that we know 

that currently over 70 percent of the deposits in this country are 

in the ‘‘too-big-to-fail’’ banks, those are not the banks that are giving and supporting the small businesses that we so desperately 

need to continue to support. We believe that it would be a devastation to the community banking world if FDIC insurance was modified and believe strongly that it is critical for us to be able to continue to have the liquidity under the safety and soundness parameters to be able to continue to fund the loan growth in our community. 

Mr. PEARCE. I appreciate both of your inputs on that. And I yield 

back, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. The gentleman 

from Georgia, Mr. Scott, is recognized for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. First of all, I want to commend my colleague, Mr. Keith Ellison from Minnesota, for the excellent work he is doing on 4172, which I support. And I want to, 

first of all, ask you, Mr. Turner, because you raised a good point 

there, when you mentioned the credit Catch-22. I liked that. I saw 

the movie when I was much, much younger, as we all were, Catch22. And I think it is very important for us to understand, I think 

what you mean is in order to qualify for credit, you already have 

to have credit. But what I want to point out is that this is not just 

a problem for consumers. It is also a problem for small businesses. 

It is a huge problem for small businesses. 

According to the 2015 Small Business Credit Survey, the top reason why new businesses were denied credit is insufficient credit 

history. That is very important. And I understand that some 

progress has been made recently with the establishment of the National Consumer Telecom & Utilities Exchange database and the 

FICO XD score. 

So, Dr. Turner, what I want to know is if you have any concerns 

as we work with H.R. 4172 in terms of looking at this degree of 

progress that has been made with this database and the FICO XD 

score in solving your credit Catch-22 problem? 

Mr. TURNER. Great question. And, yes, my concern is that the 

data is just not flowing because of the regulatory uncertainty. The 

terrific effort by FICO and LexisNexis and Equifax really relies on 

overwhelmingly wireless telecoms data, none of the other media 

data, and just a paltry sum of utility data. So that is just not 

enough, frankly. So it does highlight the promise and the potential, 

and it is a great first step, but much more can be done, and this 

would be facilitated by Congressman Ellison and Congressman 

Fitzpatrick’s bill. 

Mr. SCOTT. Absolutely. Mr. Chairman, if I may, I have a letter 

here from Equifax, which is a very, very important part of my district down in Georgia, that I would like to submit for the record 

if I may. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. SCOTT. Ranking Member, would you please take him that. 

Thank you. Now, let me turn to the panel as a whole. It occurred 

to me that just last week, the CFPB used its UDAP to sue a credit 

repair company for deceptive practices. And even though this acVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
16 

tion did not involve a credit bureau, I think it still highlights the 

many existing tools that regulators and watchdogs currently have 

at their disposal to protect consumers. So my question would be to 

the panel, is that there is a general concern that H.R. 347, the Facilitating Access to Credit Act, might give the big three credit bureaus a license to scam consumers. Do you share this concern? 

Mr. TURNER. Let me start, if that is okay? 

Mr. SCOTT. Yes, please, Mr. Turner. 

Mr. TURNER. Not at all. I think your initial observation is correct. There are layers and layers of regulations protecting consumers from any such behavior. And importantly, let’s go back to 

the difference. What we are talking about is delineating credit education from credit repair. The credit bureaus, or any of the organizations that would be exempted under H.R. 347 are not offering 

credit repair services. They are offering credit education. And even 

if they were, you still have the CFPB scrutiny that didn’t exist 

when CROA was passed in 1996, and you have all the protections 

under both UDAP and the Fair Credit Reporting Act. So those organizations are uniquely situated to be the lowest risk, and the 

most logical institutions for consumers to turn to for credit education. 

Mr. SCOTT. Thank you. And also, panel, in 2015, after a settlement was reached with 31 State attorneys general, one of which 

was the State attorney general in my home State of Georgia, there 

was a commitment by the big three reporting agencies to create a 

national consumer assistance plan in an effort to improve consumer 

interaction with the big three credit bureaus, and improve the accuracy of data in those credit reports. It has been a year now since 

the settlement, so are you seeing any improvements in the customer experience thanks to the National Consumer Assistance 

Plan? Mr. Turner. 

Mr. TURNER. I think the bureaus made massive investments as 

part of that agreement, but I would like to point out the study, the 

national study that we did, that the FTC cited extensively in their 

report to Congress, there is a high level of satisfaction with the dispute resolution process in place, and also, the accuracy rate of data 

in the national credit bureaus is remarkably high. This was back 

in 2010 or, yes, 2011 when we published that report. Even more 

progress has been made since then. 

Mr. SCOTT. Thank you, Mr. Chairman, for your courtesy with a 

little more time. I appreciate it. 

Chairman NEUGEBAUER. I thank the gentleman. The gentleman 

from Missouri, Mr. Luetkemeyer, the chairman of our Housing and 

Insurance Subcommittee, is recognized for 5 minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman, and welcome to 

our guests this morning. 

I want to start out with Mr. Paul. I appreciate your comments 

with regards to H.R. 4116. You know, Mr. Michel talked about 

other ways he didn’t believe FDIC insurance was important. Whenever you talk to your customers, and they want to have secure deposits, you know, especially with regards to, like, your subdivisions, 

your local city and county funds, they are required to secure those, 

are they not, somehow, or insure them, correct? 

Mr. PAUL. That is correct. 

17 

Mr. LUETKEMEYER. So, my way, my limited knowledge here, 

there are a couple different ways to do that. You can use FDIC insurance on the first 250; you can buy private insurance as well as 

put up other securities to secure this. Is that correct? 

Mr. PAUL. That is correct. 

Mr. LUETKEMEYER. What kind of costs do you incur to do this 

with all these different sorts of things? 

Mr. PAUL. Well, one of the biggest problems in terms of buying 

additional security is to be able to securitize their deposits is, clearly, that would take the liquidity out of the lending side. So, unfortunately, those that require repos and securities as an alternative, 

which is certainly an alternative, all that does is take the liquidity 

out of our ability to turn around and lend back into the community. 

When we designed the program with Montgomery County, that 

was one of the discussions that we had with them. And they were 

very clear that the driving force for them was that they wanted to 

create jobs. And that is why we created the program where, literally, we said that for every dollar that the county puts into 

EagleBank or other community banks, that we would agree to provide $2 worth of lending into the community, small business lending within the community, which ultimately provides those jobs. 

So having the ability to take that liquidity, to put it back into 

the lending world, is really the driving force in the design of these 

programs. 

Mr. LUETKEMEYER. Okay. The costs that you incur, for instance, 

if you have to purchase private insurance on everything above 250, 

would you pass that cost on to your customer? 

Mr. PAUL. No. We couldn’t, because it would be extraordinarily 

expensive, even if you could find that opportunity. 

Mr. LUETKEMEYER. Well, I know that we do that sometimes with 

banks that I am familiar with. 

Mr. Michel, you made the comments with regards to that, that 

you think we don’t need it anymore. How do you solve the problem 

when you have these political subdivisions that require security for 

the deposits if you are going to do away with FDIC insurance? And 

it makes it more difficult to leverage these deposits and secure 

them and cuts the ability of banks to then actually give access to 

credit to their other customers in the community. What is your answer to that? 

Mr. MICHEL. Well, my answer to that is that the system that we 

have has evolved because of FDIC insurance, which is something 

that has been expanded over the years, which has led to the highcost problem that you are talking about. So I don’t think that— 

Mr. LUETKEMEYER. High cost? How do you— 

Mr. MICHEL. High cost for private insurance. It has crowded out 

private insurance. It has essentially made private deposit insurance companies leave. 

Mr. LUETKEMEYER. No. No, they are still around. 

Mr. MICHEL. There are, but I mean, comparatively speaking. I 

don’t think that we could say they haven’t crowded private—that 

the FDIC insurance hasn’t crowded out private deposit insurance. 

Mr. LUETKEMEYER. I think the private folks are on the top end 

of this. You use FDIC on the bottom, and it is sort of like a reinsurance program in a way, and you provide the back end with the priVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
18 

vate insurance. I mean, we do that all the time where I am from. 

I mean, it is not— 

Mr. MICHEL. No, I understand that. But I still think that the empirical evidence would suggest that some private companies have 

been crowded out of that. 

Mr. LUETKEMEYER. My question, though, is, how do you rationalize, or how do you solve the problem, though, of the private entities that want some security, some insurance, to make sure—these 

are taxpayer dollars that you are dealing that need to be 

securitized. You want the taxpayer dollars to be at risk? You do not 

want them diversified among different banks to minimize the risk? 

I mean, that is what we are talking about here. We are talking 

about reciprocal deposits. These aren’t deposits that are brokered. 

These are private deposits that are taken and used in a way that 

securitizes them in a way from the fact that you diversify, put in 

different banks, which, you know, spreads your risk. 

Mr. MICHEL. No, sir, I do not believe that we should be putting 

taxpayer dollars at risk in any way. 

Mr. LUETKEMEYER. Then how do you solve this problem if you 

don’t have FDIC insurance, private insurance, or enough collateral 

to securitize them? 

Mr. MICHEL. Again, as I started to say, I believe that if you did 

lower and restrict the brokered deposits to a larger extent with 

FDIC insurance, that you would bring private capital back into the 

market. And under the current law, without 4116, you can still do 

this. This doesn’t change that. The restrictions are only applied to 

less-than-well capitalized banks. So this is a blatant lowering of 

that restriction from well to adequately, or less-than-well-capitalized banks going to a CAMELS rating. I don’t think that is—I don’t 

think that is something that we should be doing. 

Mr. LUETKEMEYER. I see my time has expired. With that, I yield 

back the balance of my time, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. 

Now the gentleman from Minnesota, Mr. Ellison, is recognized 

for 5 minutes. 

Mr. ELLISON. Thank you, Mr. Chair. 

And, Mr. Turner, I am glad you mentioned the Credit Builders 

Alliance. They worked with Experian to help subsidize housing 

renters. In their analysis, 75 percent saw a credit score increase. 

The majority saw a credit score increase of at least 11 points. Only 

3 percent saw a score decrease of 11 points, and 21 percent saw 

no change. 

And I ask unanimous consent to add the written reporting pilot 

to the record. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. ELLISON. Thank you. Thank you, Mr. Chairman. 

Let me ask you this, Dr. Turner: We do have substantial empirical evidence about the benefits of reporting on-time utility and 

telecom payments. We don’t have as much research into reporting 

rental payments for assisted housing tenants. Do you see any potential harm to tenants if their on-time rental housing payments, 

or their late payments, are reported to credit reporting agencies? 

What would be the best practices for a housing provider to look 

like? 

19 

Mr. TURNER. I mean, look, having the positive data reported, this 

is what the Experian-Credit Builders Alliance study shows, and, 

you know, minimal number of folks who have a score reduction, 

and even smaller number who are negatively materially impacted. 

And that is logical. 

I guess the question is, how does that compare to fully reporting 

the data, and then what percentage of the tenant population may 

see a movement into a lower tier? The reality, though, is that 

thickening files, having another trade line, ending credit invisibility, those offer opportunities to have a better life through better 

credit. So it also makes the system more forgiving. The negative 

data right now from PHAs and from landlords is being reported. 

If you are evicted, it goes into your public record. So we are still 

punishing people for their credit transgressions, but not rewarding 

them for their good behavior. So that logic applies to the current 

rental practices as well as the utility and telecoms and media data 

as well. 

Mr. ELLISON. Thank you. Also, if I may ask you this on this similar line of questioning: As you can see from the slide, utilities make 

up about 7 percent of the collections. So we know that late utility 

payments are reported right now. In addition, about 3 million people have their utility payments reported to the National Consumer 

Telecom & Utilities Exchange. 

So can you talk about and explain how, if and when utility payments are reported to credit agencies? And also, you can chime in 

on this question of if we were to make a change, if H.R. 4172 became law, how would that make lives better for people? 

Mr. TURNER. Great question. A couple of things. We are doing a 

project right now called Credit Deserts with the Mission Asset 

Fund, Jose Quinonez’s Circle Lending Group in the Bay area. And 

we are looking at—and this is sponsored by the Silicon Valley Community Foundation. We are going to map and show exactly how 

having alternative data, the utility/telecom/rental data, changes the 

lending landscape, how it affects the ratio of high-cost lenders to 

mainstream lenders, and how it changes the nature of access for 

credit invisibles away from high-cost credit toward mainstream 

credit. So that is forthcoming. It is all based on the decades of empirical research that shows what a powerful tool this is. 

In terms of the utility data in collections, again, this goes back 

to the point that the status quo is a harm, that the 11 years that 

I have been coming here, each year, billions of dollars of wealth 

and assets are stripped from the credit invisible population because 

they can’t access mainstream affordable credit. 

This tool, which costs Congress nothing, which is already in practice and could easily be enhanced, because your bill would end the 

regulatory uncertainty. I have talked to many utility companies 

who have gone to their State PUC and PSC and have said, We 

would like to fully report to a credit bureau, and their public—their 

State regulator says, No, over our dead body, largely because either 

they have been misinformed by local advocacy groups about the 

consequences, or they simply don’t understand it. 

And why would they? They set telecom’s tariffs. They are media 

people. They set utility rates. They don’t understand the Fair CredVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
20 

it Reporting Act. So this is actually quite potent and, again, no cost 

to Congress. 

Mr. ELLISON. Thank you. If either one of you gentlemen want to 

weigh in on 4172, we welcome your views. 

Thank you very much. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

And now the gentleman, Mr. Royce from California, is recognized. 

Mr. ROYCE. Thank you, Mr. Chairman. 

Dr. Turner, I was going to ask you a question. When constituents 

hear this concept of credit repair, I think the first thing they think 

about are those ads that say, too-good-to-be-true emails. The subject is: Credit problems? No problem. No problem. Or signs, sometimes you see them on the street, and they say, We can erase your 

bad credit, 100 percent guaranteed. 

So clearly, these aren’t legitimate actors, but how do we separate 

out the good from the bad? I think people need access to credit 

counseling. They need education services. That is what they need, 

but they don’t need to get ripped off. And, as you know, with H.R. 

347, we tried to get this right by exempting the supervised credit 

bureaus, given that they want to provide credit education and not 

credit repair, and they are examined and overseen by the CFPB, 

as opposed to these outfits that put the signs up around town. 

So, Dr. Turner, in simple terms, what are the differences between the credit repair scams that CROA was intended to stop, 

and the credit education services that could be offered if H.R. 347 

were passed out of this committee? 

Mr. TURNER. And, again, this is the most important point that 

your legislation addresses. Look at golf. 

Credit repair would be someone who after you have completed 18 

holes of golf says, Let me see your scorecard. Here, I think you double counted here and let me shave a few strokes off there. So it is 

trying to change your score after the fact. 

Credit repair would be a person who coaches you on your technique, your driving ability, your short game, so that, moving forward, you improve in future rounds. It is this retrospective versus 

prospective. It is a very simple, but quite important distinction. 

Mr. ROYCE. Let me ask you another question. I previously submitted for the record a letter from the Congressional Black Caucus, 

and Hispanic and Asian Pacific American Caucus, and the Congressional Progressive Caucus, which was sent to FHFA Director 

Watt in April of last year. And in it, they wrote: ‘‘The current FICO 

score version designated for use by the GSEs are not the most current innovations in the marketplace. Newer credit scoring models 

have been introduced and are valuable, and the GSEs should update their current FICO model and implement other credit scoring 

models that provide enhanced benefits to homeowners.’’ 

So I would ask you, do you agree that this is exactly what the 

other bill, H.R. 4211, is designed to do? 

Mr. TURNER. I do agree. And we have done research on this 

topic, and we found there is no market failure in the credit score 

market, but there is enormous path dependency. So that, for example, FICO is having problems dislodging earlier versions of FICO. 

You know, so there is this dynamic. 

21 

And the other issue is that when this GSE guideline was created 

in 2004, there wasn’t competition, there was a dominant player, 

and that guideline now reflects an anachronistic market. And there 

have been lots of versions of FICO—we are on FICO 9 now—and 

other scores that have entered that actually have many of these 

benefits to other communities that just aren’t reflected. So your bill 

does— 

Mr. ROYCE. And what would that mean for access to credit for 

these communities? 

Mr. TURNER. Well, we believe that in different credit segments, 

it would make access to credit more inclusive, fairer, and more responsible. 

Mr. ROYCE. Thank you, Mr. Chairman. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

The gentleman from North Carolina, Mr. Pittenger, is recognized 

for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman, for calling this important hearing. 

I thank each of you for being here. Mr. Paul, thank you for your 

role as a community banker. I served on a community bank board 

for a decade, from the time we chartered until the time we sold it. 

I certainly appreciate the important role that you play in our community and how vital it is for our local economies. 

To that end, I would like to ask, relative to the demand for loans, 

which had been much lower in recent years, and obviously, we 

have a low growth in our economy, do you see a co-relationship between the two? 

Mr. PAUL. We are very fortunate to be in a wonderful market in 

the Washington, D.C. area. We currently have approximately 100 

percent loan-to-deposit ratio. So it gives you a little bit of an indication as to—and by the way, with pristine credit quality. So we are 

making loans to the small business. We have 100 percent loan to 

deposit. So clearly, deposits are critical for us to continue to fund 

our loan growth. 

So we believe that this is a sustainable growth that we have had, 

about 12 percent loan growth that we have had, and believe that 

will continue. 

Mr. PITTENGER. Thank you. This is a remarkable region, obviously unique and not shared universally around the country. Do 

you see the loan demand increasing with H.R. 4116? Will this be 

an enhancement? 

Mr. PAUL. Absolutely. I just attended two national conferences. 

And in the 18 years that I have been doing this, I have never heard 

the discussion as much as we did this past week on the need for 

deposits. So it was a remarkable change—and I do this probably 

every quarter. It was a remarkable change in the discussions on 

panels, institutional investors, as to so many banks within our 

communities in the urban settings that are looking and issuing 

concerns on the ability to continue to raise deposits. Again, these 

are community banks; these aren’t the bigger banks. 

Mr. PITTENGER. Thank you. The logs I am referring to referencing brokered deposits, that they are defined as being hot 

money. Can you explain why core deposits, what they are, and how 

reciprocal deposits are core deposits and not hot money? 

22 

Mr. PAUL. Sure. I will give you a perfect example of this. We 

have a relationship with a class action suit law firm, a relationship 

that we have had for over 10 years. And they could average $75 

million worth of deposits in the bank, that we obviously take that 

$75 million and put it back into loans. 

The issue with the class action suit is that the court requires 

those deposits to be insured. And, as the Congressman asked earlier, the issue has to do with whether or not those deposits would 

be put into a repo or put back into the lending market. So, as an 

example, those deposits need to be FDIC-insured, and we put them 

through the network system, we get those deposits back, and then 

we are able to put that back out into the lending side. So clearly, 

if that wasn’t the case, we would have a problem. 

Mr. PITTENGER. Thank you. To all the witnesses, I would like to 

ask who, in your opinion, is in a better position with the resources, 

the budgets, the technical knowledge, experience to develop and deploy new financial products, services and delivery mechanisms, the 

large regional and national banks or community banks? Mr. Turner, just quickly, if we could go down the line, and give us— 

Mr. TURNER. I defer my time. The other panelists are more 

knowledgeable about this than I. 

Mr. PITTENGER. Good. Mr. Paul. 

Mr. PAUL. I’m sorry, could you repeat the question? 

Mr. PITTENGER. Well, who has the better capacities to deliver 

new financial products, the large regional banks or the community 

banks? 

Mr. PAUL. We feel that we are in an ideal position, being in that $6.5 billion size, that we understand the needs of the community, 

but we are nimble enough to be able to design the products that 

the community requires. So we feel really good in the position we 

are to be able to satisfy the needs of the community. 

Mr. PITTENGER. Mr. Michel. 

Mr. MICHEL. Well, I don’t have anything against community 

banks or regional banks or the larger banks. And I think they are 

all having problems, and we should address the overall high regulatory cost and the issues that affect the industry in general, and 

the economy in general as opposed to carving out any particular 

benefits for any of the particular groups. 

Mr. PITTENGER. So you don’t see that there is a certain niche or 

capacity that the community banks might have that would— 

Mr. MICHEL. I mean, yes. I mean, certain banks have certain advantages over other banks, and size by itself is not always the factor. So I wouldn’t want to single out any particular group, no. 

Mr. PITTENGER. Thank you. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

Now the gentleman from Pennsylvania, Mr. Rothfus, is recognized for 5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Dr. Turner, I would like to talk a little bit about some of the research you have done on the efficacy of credit education services. 

Based on your research, can you describe the types of consumers 

that would benefit from personalized credit education? 

Mr. TURNER. Sure. There have been independent studies that 

show differences among segments of the population in terms of 

23 

credit awareness and credit invisibility. We didn’t actually look at 

this from a segmentation analysis perspective. The groups that we 

worked with, the community development organizations, like Operation HOPE and the National Urban League, people came to them 

seeking financial literacy. And most of those people were in distressed situations. 

And let me give you an example. A woman named Jeannine from 

Ohio, she had her first exposure to credit in college with credit 

cards and ran into some trouble, and basically ignored it for 20 

years until her car that she got in college died. She is married, has 

six children, two grandchildren; she needs a car. So she needed 

credit, and she needed to address her credit problems. 

She went to Operation HOPE. Operation HOPE sent her to a 

personalized credit education service from one of the national credit 

bureaus. Working with them, she was able to increase her score by 

over 150 points. So not only did she then qualify for a new car, but 

she also was able to qualify for a higher-paying job that required 

a threshold credit score, which then, in turn, allowed her to buy a 

home. So there was this positive cascade. And that is exactly the 

type of person who would stand to benefit from this credit education service. 

Mr. ROTHFUS. Is that more reactive or proactive? That sounds 

like that counts as a more reactive kind of scenario. 

Mr. TURNER. What she learned, she is applying moving forward. 

She will be applying these lessons for the rest of her life. It is a 

very compelling story, and I am going to feature it in our final report. And what I heard from her, I heard from many of the others 

whom I have interviewed who went through this. 

So reactive would have been if she went to a credit repair organization and, you know, places like Lexington Law Firm that basically swamp the bureaus with contesting everything, every derogatory, whether it is accurate or not. That is reactive. And it doesn’t 

necessarily get triggered by an incident; it is just someone wants 

to improve their score for whatever purpose. 

The coaching, the explaining how your behavior can impact your 

score, that is proactive. 

Mr. ROTHFUS. Mr. Paul, I want to talk to you a little bit on 4116. 

You state in your testimony that reciprocal deposits allow community banks to compete with larger institutions for deposits. You 

note that, ‘‘The largest banks have a definite advantage in soliciting deposits that exceed the insurance limit because of the perception, validated during the financial crisis, that they are too-bigto-fail, and that they and their depositors will be propped up by the 

government.’’ You also said, ‘‘Size alone is used as a proxy for safety.’’ 

How would the constriction of reciprocal deposits impact your 

bank’s competitive position vis--vis larger institutions? 

Mr. PAUL. Sure. The niche that EagleBank has within the community is, again, on the commercial small business side. As I said, 

about $700,000 or less is our average size loan. So the ability to 

understand the needs of the community and understand the needs 

of the businessperson is what is so important in their needs. The 

hardware store, the restaurant, et cetera, that is the backbone of 

24 

what we deal with every single day, and, again, needing that liquidity to continue to fund those particular businesses. 

So the reciprocal deposit issue for us is just an absolutely critical 

instrument for us to be able to continue the ability to be able to 

loan that back into the community. 

Mr. ROTHFUS. Dr. Michel, in your testimony, you note that reciprocal deposit networks are ‘‘merely facilitating what an individual 

could do on his own by opening several accounts at several banks.’’ 

But instead of an individual having to travel from bank to bank to 

open multiple accounts, banks can do this with their own services, 

like CDARS, a Certificate of Deposit Account Registry Service. You 

argue that this violates the original intent of FDIC insurance. Reciprocal deposits give banking customers the peace of mind that 

their deposits are safe. This should naturally prevent or limit the 

potential for bank runs. 

If that is the case, would you agree that this practice is consistent with the idea behind deposit insurance, namely to prevent 

or arrest bank runs? 

Mr. MICHEL. Well, I am not sure that it really did prevent the 

bank runs as we think that it does. I think that is sort of a conventional myth, to some extent. But, again, I don’t think that typical 

customers have any idea what reciprocal deposits are, or brokered 

deposits, for that matter. I mean, I think we are talking about 

large investors or institutional investors versus the typical mom 

and pop. 

Now, of course, the funding is being used to help some of those 

people, I understand that. But the bill that we are talking about 

simply removes one layer of restrictions from well-capitalized 

banks having no constrictions at all, to something that is a little 

bit less than well-capitalized. I mean this is a marginal change at 

best, but I think the implication is that it is something that we 

should not be doing. And I understand that the FDIC insurance is 

required for some of these accounts, but, again, that is something 

that we should not be doing. 

Mr. ROTHFUS. I yield back. Thank you. 

Chairman NEUGEBAUER. I thank the gentleman. 

The gentleman from Colorado, Mr. Tipton, is recognized for 5 

minutes. 

Mr. TIPTON. Thank you, Mr. Chairman. Again, thank you for 

holding this legislative hearing today. 

And after listening to the comments from our panel and some of 

the questions that have been offered today, I do want to extend my 

thanks again to Mr. Royce from California for introducing the 

Credit Score Competition Act. And I thank the chairman for including it in today’s legislative hearing. 

H.R. 4211 will allow Fannie Mae and Freddie Mac to be able to 

consider alternative scoring models when determining whether to 

be able to purchase a residential mortgage, and allow two government-sponsored entities to be able to make mortgage purchases 

based on alternative scoring models. And I believe this will open 

up the home ownership opportunities for those people who are 

creditworthy but unable to be able to build credit based on the traditional credit scoring models, as well as supporting many Americans’ dream of owning a home. 

25 

The Credit Score Competition Act will increase innovation, alleviate portfolio risk, and lower systemic risk in the housing market. 

I would like to encourage all of my colleagues to support this important piece of legislation. 

I would also like to be able to ask maybe Mr. Paul from the independent banker’s perspective on a piece of legislation that we have 

introduced, H.R. 6162, the Protect Prepaid Accounts Act. 

Mr. Paul, I appreciated your testimony on brokered deposits and, 

as I mentioned earlier, my bill, the Protect Prepaid Accounts Act, 

ensures that prepaid accounts fulfill the primary purpose exception 

included in the statutory definition of deposit broker. 

How is a bank going to be impacted when prepaid accounts are 

defined as brokered deposits, and does this lead to additional cost 

in compliance burdens for our banks? 

Mr. PAUL. Yes, it certainly does increase the cost to the bank because of the regulatory requirements. But, having said that, it is 

another great source of deposits for community banks in being able 

to get these prepaid cards and, again, just creates the liquidity for 

us to be able to put back into the marketplace. 

Mr. TIPTON. And I appreciate your point on that, because we 

know that 67 million Americans are considered unbanked or underbanked. As a way to access the financial market system, and they 

need the prepaid card products to be able to achieve that. How are 

they impacted if banks cannot shoulder some of those compliance 

costs? As I am listening, and it is a little follow-up on Mr. 

Pittenger’s comments in regards to the community banks that we 

are seeing in Colorado that are being crushed by regulatory compliance. One more burden, one more charge, one more cost is inhibiting their ability to be able to provide and create service for people 

that are underserved in the banking institution. 

Mr. PAUL. As you can imagine, the number of prepaid cards that 

are out in the marketplace right now creates a huge regulatory 

burden. Every one of those cards needs to be analyzed as to where 

the money is coming from, why it is coming, why it is not part of 

your core business as defined as core business. 

So the regulatory issues associated with it and, therefore, the 

costs associated with it are enormous. Alternatives that these people have is just incredibly expensive. Cash checking, a variety of 

things like that. So the ICBA definitely supports the prepaid cards. 

Mr. TIPTON. And I appreciate your comments on that. You know, 

in June of this year the FDIC concluded the government benefit 

cards could fall under the primary purpose exception to the definition of brokered deposits. Considering that the FDIC recognized in 

this context that prepaid cards have the primary purpose of facilitating certain types of payments and not brokering deposits, 

shouldn’t this rationale be applied to most prepaid accounts? 

Mr. PAUL. Yes. 

Mr. TIPTON. That is the answer we wanted to be able to hear. 

Mr. PAUL. Short and sweet. 

Mr. TIPTON. That is just common sense. So, you know, individual 

prepaid products and programs do have an ability to petition the 

FDIC for a determination on whether the product fits into that primary purpose exclusion. Is it helpful to the industry, your banking 

industry and banks, to have the FDIC rule on a case-by-case basis 

26 

in a time-consuming manner with potential for conflicting determinations? 

Mr. PAUL. Tough question. Obviously, the broad-brush stroke 

that most regulatory agencies take becomes a very, very difficult 

part of the examination that we go through on a regular basis. So 

individualization, based on CAMELS rating, credit quality, et 

cetera, is something that I think is a driving force that we need to 

look at more and more. 

Going back to the car example, for those that have clear, great 

car experience driving, their insurance premiumis very low. In our 

world right now, when it comes to FDIC insurance and a variety 

of things, it is just that broad brush. If you part within a certain 

amount, regardless of your CAMELS rating, you have a certain 

cost associated with it. And I just don’t think that is a fair, balanced approach and cost. 

Mr. TIPTON. Thank you so much. 

I yield back, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. 

The gentleman from Massachusetts, Mr. Capuano, is recognized 

for 5 minutes. 

Mr. CAPUANO. Thank you, Mr. Chairman. Mr. Chairman, I was 

listening to this in a secure location elsewhere and I have read 

some of the documentation, and I think there are some reasonable 

questions and issues being raised here. 

I can remember when I first got started as a young man and 

married with my wife trying to figure out how to access credit so 

that someday we could buy a house and all that other kind of stuff. 

And the truth is, it was a maze to me, no different than anybody 

else. I had a law degree, but nobody ever taught me about how to 

build up my own credit, because there were no classes to take, 

there was nothing to do, and kind of just struggled through it. 

And, to be perfectly honest, I had no idea what my credit rating 

was for years, and even today, I barely know what it is. I think 

it is okay now, but, you know, we have done okay so I got no complaints. 

I guess for me, I am interested in people that don’t know these 

things, not stupid people, but educated people, thoughtful people, 

capable people, who don’t know how to do these things, having 

been one. 

There are ways I know to educate people how to improve their 

credit score. First, find out what it is; second of all, try to improve 

it. And I am just curious, do you think that an effective way to do 

it is to find ways to specifically educate people on how their credit 

score is created and how to change it, and is it something that is 

worthwhile doing for the average person? I guess we will start with 

you, Mr. Turner. 

Mr. TURNER. It is incredibly important, and it has been 

impactful. Again, the personalized credit education, what we have 

seen in our experience in interviewing, you know, a thousand different people who participated, this is a fearful relationship. They 

have a lot of anxiety about their credit, their credit report, and 

their credit score. 

I have heard references made to what is online, which is helpful. 

They say it is like going to a library and checking out a book, and 

27 

there is lots of useful information, but it doesn’t tell me how to 

apply it to my situation. And when they connect with that person, 

that credit educator that talks to them, that answers all their questions, it assuages their fears and makes them feel comfortable. 

That gives them the confidence—I kept hearing confidence in my 

interviews—to move forward and address their issues, moving forward to change their behavior in ways that they now understand 

impact their report and their score. 

We have seen twice the materiality, meaning that twice as many 

people move into a better risk tier with a personalized credit education than with just the generic information. 

Another really important point is, this is convenient. It is fingertip access. They can access it online, set up an appointment, 

call, set up an appointment; but it is this wait, this barrier. Life 

happens. Jeannine herself, she has kids. She missed her first appointment. It took her 2 weeks to reschedule, and she almost 

didn’t. She rescheduled, she made the appointment, and look what 

happened. 

Mr. CAPUANO. Mr. Paul, would you agree with those general 

comments, that it is good for some people to access that type of 

services? 

Mr. PAUL. Yes. 

Mr. CAPUANO. Mr. Michel, how about you? 

Mr. MICHEL. That it is good for some people to— 

Mr. CAPUANO. To access the ability to learn how to improve their 

credit score. Most of us don’t know. I know you guys all know this 

stuff cold. Most of us don’t know. 

Mr. MICHEL. Sure. Denying access to stuff like that would be 

silly. 

Mr. CAPUANO. I guess during some of my discussions with other 

people, some people have raised some concerns about these things. 

They figure, well, if I open myself up to people that I am trying 

to provide this stuff, I am a little concerned they can charge me 

too much, they can screw around with me, they can put me into 

different financial products that I can’t afford. 

And I guess I am just wondering, do you think there are proper 

and sufficient safeguards against those kinds of concerns? Those 

are legitimate concerns. I am looking to educate people, but I am 

not looking to put them in a position where they can be taken advantage of. Again, we will start with you, Dr. Turner. 

Mr. TURNER. Sure, those are concerns. But there are layers of 

regulations in place already. And, again, we are talking about credit education. We are talking about exempting 603(p)s and 603(f)s 

under the FCRA, national consumer reporting agencies, who have 

an obligation to maintain maximum accuracy of their data. They 

don’t have an incentive to push people into financial products they 

can’t afford, to overextend them. That incentive simply doesn’t 

exist. So, while that may be the case with other organizations that 

are also seeking an exemption for reasons of their own, it is certainly not the case for those that are identified in H.R. 347. 

Mr. CAPUANO. Thank you. My time is pretty much up. I appreciate the opportunity. 

Thank you, Mr. Chairman. 

Chairman NEUGEBAUER. I thank the gentleman. 

28 

And now the gentleman from Texas, Mr. Williams, is recognized 

for 5 minutes. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

Thank you all for being here today. I am a small business owner. 

In full disclosure, I am a car dealer. And I deal with credit every 

single day, and that is one reason, for the record, I support H.R. 

347 for my colleague, Congressman Royce. 

According to the FDIC’s community banking study, more than 

1,200 U.S. counties out of 3,283 counties encompassing 16.3 million 

people would have limited physical access to mainstream banking 

services without the presence of community banks. That is why I 

think my bill, 5660, is needed for community banks and Main 

Street America. 

And, Mr. Paul, I want to start with you by asking you some yesor-no questions. Do you believe community banks are important to 

our Nation’s economy? 

Mr. PAUL. Yes. 

Mr. WILLIAMS. You know, you mentioned that reciprocal deposits 

represent core deposits of long-term customers that are one of the 

most stable sources of funds; and, again, that is a reason why I 

think was my motive behind 5660. Would you agree that a bank’s 

core deposits should also not be deemed to be brokered, simply because a community bank is partnered with a third-party service 

provider? 

Mr. PAUL. Yes. 

Mr. WILLIAMS. And do you believe community banks caused the 

2008 financial crisis? 

Mr. PAUL. Absolutely no. 

Mr. WILLIAMS. Do you believe that the measures that were put 

in place to better supervise large Wall Street firms have resulted 

in more regulatory costs and burdens for community banks? 

Mr. PAUL. Yes. 

Mr. WILLIAMS. And do you believe that today’s regulatory climate 

and burdens have caused some community banks to withdraw service and/or delay investment in developing new financial products 

and services to help the customer? 

Mr. PAUL. Yes. 

Mr. WILLIAMS. And finally, do you believe regulatory costs and 

burdens have contributed to industry consolidation and the lower 

number of community banks we have as compared to just 5 years 

ago? 

Mr. PAUL. Absolutely. 

Mr. WILLIAMS. Now, a couple more questions which you can explain a little bit, if you don’t mind. Would you agree that, in general terms, community banks, the business model is relationshipbased, whereby loans are made based on sound financial documentation and a personal understanding of an individual or 

business’s needs? 

Mr. PAUL. Absolutely. We all talk about knowing your customers. 

And EagleBank spends an enormous amount of time knowing the 

customers, having access to decision-makers, certainty of execution. 

Those are all the things that we take a lot of pride in, and being 

able to continue to do that and being able to support our commuVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
29 

nities, understand our communities, understand the needs of our 

communities. 

Eighteen years ago, when I was one of the founders of 

EagleBank, we made the decision to stay within the Washington 

metropolitan area for the sole purpose of understanding our customers, and understanding the needs of our customers. Being one 

of the largest community banks in the Washington metropolitan 

area, we still only have 3 percent of the market. So it just goes to 

show that the need of community banking is growing more and 

more and more. 

Being $6.5 billion from zero 18 years ago is an indication of just 

how critical and how the need that we have for community banking, so we can understand our customer and understand what they 

need. Going back to the earlier question of our ability to design 

products that they need, we have a product committee that meets 

every other month to be able to understand those needs of the community. So the answer is, is that we think community banking is 

an absolute integral part of our economy. 

Mr. WILLIAMS. Well, it is people doing business with people. And 

I can tell you, being in the car business for 44 years, community 

banks are probably a need now more than ever and they are hurting now more than ever. 

Mr. PAUL. Yes, sir. 

Mr. WILLIAMS. Next question: Would you agree that low-cost deposits residing in accounts opened by and utilized by local residents 

who have their paychecks directly deposited to their accounts, who 

regularly use electronic services to pay bills online and who use 

their accounts’ debit cards to pay for small everyday transactions 

represent relation-based deposits? 

Mr. PAUL. Absolutely. We have—our logo, to follow up on your 

point, is relationships first, because that is the backbone of what 

a community bank is, is based on those relationships. The fact that 

we have been able to have the millennials and younger people that 

are drifting more and more towards the online banking side doesn’t 

mean that it is not a relationship. It is just their access to be able 

to do what they want to do within their funds. But clearly, it is all 

driven by that relationship. 

Mr. WILLIAMS. Finally, do you believe that relationship-based deposits do not pose any of the risks that bank regulators associate 

with brokered deposits, specifically fully insured funds residing in 

individually held accounts? 

Mr. PAUL. That is correct. 

Mr. WILLIAMS. Thank you for your testimony. 

And, Mr. Chairman, I yield back. 

Chairman NEUGEBAUER. Thank you. I thank the gentleman. 

Mr. Emmer is now recognized for 5 minutes. 

Mr. EMMER. Thank you, Mr. Chairman. 

At the outset, I would like to offer over 30 letters from 23 different States, at least 23 different States, in support of H.R. 4116 

for the record. 

Chairman NEUGEBAUER. Without objection, it is so ordered. 

Mr. EMMER. Thank you. Mr. Chairman, again, I want to thank 

Congresswoman Moore for her leadership on this issue, and the 13 

members of this committee who have cosponsored this policy proVerDate Nov 24 2008 19:22 Mar 09, 2018 Jkt 025965 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\25965.TXT TERI
30 

posal, which include Ranking Member Waters and Representatives 

Beatty, Cleaver, Duffy, Heck, Huizenga, Luetkemeyer, Maloney, 

Mulvaney, Pittenger, Schweikert, Sinema, and Stivers. I also want 

to thank the 25 State banking associations and all of the national 

associations that have endorsed H.R. 4116. 

As we can see, H.R. 4116 is widely supported by industry and 

Members of Congress, ranging from the Freedom Caucus to the 

Progressive Caucus. Thanks to the hard work of these people and 

the commonsense provisions contained in this bill, we will 

strengthen the economies of our local communities, benefit many of 

our civil institutions, like nonprofits and schools, and reduce the 

likelihood of taxpayer bailouts of private financial institutions. This 

legislation will do so by updating the Federal Deposit Insurance 

Act to differentiate the way the Federal Government regulates reciprocal deposits from traditional brokered deposits. 

Specifically, it enables adequately capitalized banks to hold up to 

the lesser of 10 billion or an amount equal to 20 percent of the 

total liabilities in brokered deposits, something the FDIC effectively allows today via waivers. This is because, unlike brokered 

deposits, traditional brokered deposits, reciprocal deposits are stable, meaning they do not flow from bank to bank, chasing interest 

rates. Additionally, reciprocal deposit customers are loyal, longterm, and generally use multiple services from the bank. 

On the other hand, brokered deposits, traditional brokered deposits, may be more likely to chase the yield, meaning they take deposits from bank to bank, and consequently, present more risk for 

banks, especially when the economy becomes turbulent. 

By enabling deposits from patrons to effectively stay in these 

communities, which often include underserved urban or rural communities, this much-needed capital will be lent out to local residents and businesses. Currently, many large depositors are leaving 

these underserved areas and community banks for larger banks in 

financial districts of larger cities, which stifles job growth and 

wealth creation in the places that need this most. 

The thought by some consumers is that their money is more safe 

in a larger bank, but this bill reassures consumers that their 

money is just as safe in a small bank as it is in a big bank, thus 

reducing the moral hazard that arises from too-big-to-fail. 

However, it isn’t just elected officials at the Federal level and 

banks who recognize the need for improved regulatory framework 

for reciprocal deposits. Many States have amended their laws or 

regulations as well. I will spare you the litany of States but, by my 

count, at least 30 States have done so so far. As you can see, there 

is a great deal of support for this bill and I am looking forward to 

hearing from our panel. 

Mr. Paul, if you would, with the exception of the broker, the term 

‘‘broker,’’ isn’t it accurate that traditional brokered deposits, which 

actually became a concern in the early eighties with the savings 

and loan crisis, and reciprocal deposits, which, frankly, are relatively recent, maybe the last decade they have come into fore, are 

not the same. Isn’t that correct? 

Mr. PAUL. Completely, completely different. It goes back to the 

word, where did the relationship start? Where did the deposit 

start? 

31 

Mr. EMMER. If I can, in fact, traditional—I am going to outline 

this for you and, hopefully, we are in agreement. In fact, traditional brokered deposits can be problematic because they can be— 

I think Representative Pittenger referred to it as hot money. This 

is because traditional brokered deposits are not local and may easily run from bank to bank, and this is because traditional brokered 

deposits are often obtained by offering rates above the rates in the 

bank’s local market, correct? 

Mr. PAUL. Yes. 

Mr. EMMER. Reciprocal deposits, on the other hand, are really 

traditional core deposits that come from local depositors and are 

obtained at the rate offered in the local market, correct? 

Mr. PAUL. Correct. 

Mr. EMMER. Now, H.R. 4116 is based on this critical distinction 

between core and traditional brokered deposits. Would you agree 

that reciprocal deposits are generally more stable than traditional? 

Mr. PAUL. Yes, absolutely. 

Mr. EMMER. And why? 

Mr. PAUL. Well, again, it is back to the relationship. You clearly 

have to drill back down to where the money started. And if the 

money started based on a relationship, that relationship will continue within that bank for an extended period of time. There is no 

reason for it to leave. 

Mr. EMMER. And are these particularly valuable to minorityowned and community development banks, and in whatever time 

could you explain why if you agree they are? 

Mr. PAUL. Sure. A lot of it goes back to CRA, being able to do 

CRA-type loans, being able to do SBA-type loans. So the answer is 

that, yes. In Montgomery County, as an example, 50 percent of the 

population in Montgomery County wasn’t born in Montgomery 

County. So the ability that we have to be able to do this type of 

lending as a result of Montgomery County donating—donating, 

gifting, not gifting either—being able to deposit the money into our 

community bank allows us to be able to make those loans back into 

the community. 

Mr. EMMER. Thank you. I see my time has expired. 

Chairman NEUGEBAUER. I thank the gentleman. 

The gentleman from Kentucky, Mr. Barr, is recognized for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. Thanks for holding this 

hearing. 

And I want to commend my colleague, Congressman Ellison, for 

looking at the issue of credit invisibility and looking at the possibility of helping improve credit accessing and inclusion, particularly for low-income Americans. And, Dr. Turner, I appreciate your 

testimony. 

I do, though, have a few questions about the legislation that I 

have cosponsored, H.R. 4172. And the first one to Dr. Turner, the 

first question to Dr. Turner would be how you would expect credit 

reporting agencies to weigh on-time payments, timely payments of 

utility bills and media bills, telecom bills, and landlords furnishing 

that kind of data. How would they weigh that with other credit information, and how significant would the enhancement be to their 

credit score? 

32 

Mr. TURNER. So I am not going to portend inside knowledge of 

the weights assigned by various players in that space. We have 

built scorecards, and we have knowledge of how this is done. 

Generally, right now, because there is insufficient data in the 

main databases, the FCRA databases of the big three, they are 

general purpose credit, they are weighed in consistent fashion with 

that. However, as more data becomes available, the models will be 

optimized over time, primarily because it is a competitive marketplace, and they would want to show an advantage using this data. 

I’m sorry. 

Mr. BARR. I was going to say, I generally agree that more information is better, alternative data inclusion is better. But just to refine my question, would you anticipate that the credit reporting 

agencies would assign equal weights to derogatory or negative information, late payments, as they would to the inclusion of positive 

information? 

Mr. TURNER. So the negative data is already being weighted. 

Usually, it comes and it is a serious derogatory so it is quite substantial. The positive data, this could be, for the credit invisibles, 

for the thin-file population, this may be their only trade line, their 

only piece of information. So that could have very substantial 

weight, and that would enable them to more quickly build or rebuild and repair their credit than if that weren’t reported. 

Mr. BARR. How about any potential negative implications of inclusion of this information? What would be the risk, if any, to a 

consumer that this information be included? Under this legislation, 

do consumers have to opt in? Are they allowed to prevent information from being disclosed? 

Mr. TURNER. Well, a couple of things. I want to offer comfort in 

that presently, there are at least 28 countries around the world 

that permit fully reported nonfinancial payment data into credit 

bureaus. This covers about one-third of humanity and about twothirds of all adults who have credit reports around the world. In 

many cases, this has gone on for as much as 50 years, and none 

of the sky-is-falling negative consequences that opponents have put 

forward have been borne out. 

Here in this country, the same thing. We don’t see any evidence 

of that. Now, we don’t consider it a harm if someone’s score is negatively impacted because they have been late paying bills. That actually protects them from overextension and getting credit they 

can’t afford, which would lead to far worse things. 

Mr. BARR. One final question related to this, and that is, that 

there have been some objections raised to the legislation by I think 

Equifax. Are you familiar with those? 

Mr. TURNER. Yes, I am. 

Mr. BARR. The National Consumer Telecom & Utilities Exchange 

has written the committee, raising the prospect of unintended consequences of the legislation. And I think that the specific concern 

is that reporting data to multiple credit bureaus and managing disputes from several sources can be expensive and time-consuming. 

And the concern that is cited is the possibility that requiring reporting to multiple credit bureaus would actually discourage fulsome disclosure. 

I take it you disagree with that analysis, and why? 

33 

Mr. TURNER. Well, there is precedent. Most data furnishers 

today, lenders, creditors, those who report report to all three. And 

with information communications technology, the marginal cost of 

reporting to one, two, three or a thousand is basically zero. 

Mr. BARR. Anything else about the objections from the NCTUE? 

Mr. TURNER. No. I mean, I think that that highlights the value, 

especially to the credit invisible population, of having this data in 

the origination process. That is a mousetrap. But there is not 

enough data right now. We would like more of that data, to your 

point that more information allows for better risk assessment. We 

would like that to be pervasive. 

Mr. BARR. Thank you. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

The gentleman from South Carolina, Mr. Mulvaney, is recognized 

for 5 minutes. 

Mr. MULVANEY. I thank the chairman. I appreciate the opportunity. 

I don’t have a lot of questions for the panel, although I was sort 

of disappointed that Professor Jordan was not here as I take every 

opportunity I get to point out when we have a fellow Georgetown 

alum here and not a Texas A&M person. 

And I do apologize for being late. There were several of us who 

were participating in a classified briefing on the Iran payment, so 

my apologies. And for that reason I won’t ask any questions, because they may have already been asked. 

I do want to say a couple things for the record. Because it is rare, 

Mr. Chairman, that I actually get phone calls from back home 

about some of the more esoteric bills that we take up on this committee, but there are actually two of them on the list: One of them 

is Mr. Emmer’s H.R. 4116, of which I am a cosponsor; and the 

other is H.R. 347. So if I can, for the record, I would like to say 

just a couple things. 

First of all, regarding Mr. Royce’s bill, I have both credit education and credit repair services in my district. And I understand 

what Mr. Royce is trying to do. I think he is trying to do what we 

all try and do, which is sort of weed out the bad actors, but still 

not punish the good actors. And that is to be commended. I do understand that he does that by looking at an entity-based system as 

opposed to an activities-based system; and I think he appreciates 

after several folks, myself included, have spoken to him and his 

staff that there are some weaknesses to an entity-based system. 

An activities-based system might be the better way to weed out 

the bad actors. Just because you fall into this credit repair doesn’t 

mean you are a bad player, by any stretch of the imagination. So 

I appreciate Mr. Royce’s efforts generally, and I also appreciate his 

efforts and hope we can continue to talk about ways to make the 

bill do what we all want it to do. 

On Mr. Emmer’s bill, which is a really big deal where I come 

from, because even though I sit on the suburbs of Charlotte, North 

Carolina, which is a major banking center, most of the banks in my 

district are very, very small. We do not have a large footprint from 

the large money center banks in my district. My district is fairly 

rural. And if we do not allow these types of syndicated loans, the 

loans to be shared, they will be out of the business of handling the 

34 

bigger accounts. They won’t be able to handle money for the State. 

They won’t be able to handle money for the Department of Education. Might not even be able to handle the money for the local 

school board, simply because the amounts involved exceed the insurance. 

So I applaud what Mr. Emmer is doing and, like I said, for a rare 

occasion, some stuff that we are doing—the big stuff, you know, 

when we do financial choice, it obviously affects the financial services operations in my district. But it is nice to have a couple of 

these smaller bills that most folks don’t pay attention to, they don’t 

get the same attention, they are not as glamorous, they are not as 

sexy, but they are just as important. 

So I appreciate you having the hearing on them. I appreciate Mr. 

Emmer’s work, Mr. Royce’s work, and look forward to working with 

everybody to see if we can pass this. 

With that, I yield back the balance, unless somebody else wants 

some additional time. I yield back. 

Chairman NEUGEBAUER. I thank the gentleman. 

And I want to thank our witnesses. You know, the purpose of 

this hearing today was to open up a record on these particular 

pieces of legislation. I thought we had some good discussion and 

good debate, some good input, as these bills move forward. 

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. 

With that, this hearing is adjourned. 

[Whereupon, at 11:51 a.m., the hearing was adjourned.] 

(35) 

A P P E N D I X 

September 27, 2016 

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