LET'S GET STARTED WITH NINETY MINUTES WHICH IS A BIT OF A HODGEPODGE OF EVERYTHING WHICH IS GREAT. AND CONSUMERS MAY BE SMALL BUSINESS DISCUSSION. I AM HERE AT THE UNIVERSITY OF MICHIGAN MY NAME IS JOHN. I'M LAW FACULTY ALL THE WAY ACROSS THE PARKING LOT FROM THE FORD SCHOOL BUT HAPPY TO BE INVOLVED AND THE SUNNIER SIDE OF THE BLOCK. [LAUGHTER] I WILL MODERATE THE PANEL OF MY OWN, BUT I WILL PUT THEM AT THE END. WE WILL RESERVE SOME TIME FOR GROUP DISCUSSION. I APOLOGIZE IN ADVANCE I HAVE TO DISAPPEAR SHORTLY AFTER THIS BATTLE IS OVER. WILL INTRODUCE THE PANELIST AS THEY COME UP ONE BY ONE.I WILL START WITH MITCHELL McCOY WHO IS THE HORRIBLE WORLD OF ACADEMIC. AND AS BE THE UNFORTUNATE OF DOING PRACTICE. OF THIS AREA TO IMPART KNOWLEDGE ON TO OLIVIA. SHE IS CURRENTLY, AS LIGHTS ARE WELL PRINTED, AT BOSTON COLLEGE. IF YOU CAN INTRODUCE YOUR OWN TOPIC. CAN YOU HEAR ME, EVERYBODY? I WOULD LIKE TO THANK YOU FIRST OF ALL JOHN. THANK YOU. MICHAEL FOR ORGANIZING THIS INCREDIBLE EVENT. TRACY, KRISTI AND ALL OF YOUR COLLEAGUES HERE AT THE CENTER FOR ORGANIZING THIS REALLY TERRIFIC CONFERENCE. OUR THEME OF THIS PANEL IS EMERGING ISSUES IN FINANCIAL PROTECTION. I THOUGHT I WOULD FOCUS ON MORTGAGES.AND WHAT I WILL FOCUS. IF YOU WILL BEAR WITH ME. IT'S A HUGE LOOMING ISSUE IN MORTGAGE REGULATION THAT IS FLYING UNDER THE RADAR FOR THE MOST PART. IT IS GETTING ALMOST NO PRESS ATTENDANCE. IT IS TECHNICAL. I WILL TRY TO RUN THROUGH THE TECHNICALITIES IN ALL OF SEVEN MINUTES. AS WE KNOW, RECKLESS MORTGAGES THAT THE 2000 FINANCIAL CRISIS IN MOTION. NEXT TO MILLIONS, FORESIGHT, AND THE PERSISTENCE OF MICHAEL BARR AND ERIC STEIN. AT A NUMBER OF OTHER PEOPLE IN THIS ROOM. THE UNITED STATES MADE MAJOR REFORMS TO MAJOR LENDING AFTER THE CRISIS. THERE WERE A LOT OF REFORMS BUT I THINK THE THREE BIGGEST REFORMS WERE BETTER MORTGAGE DISCLOSURES. BETTER MORTGAGE SERVICING ALTHOUGH THAT IS A WORK IN PROGRESS. THE ABILITY TO REPAY. I THINK OF THESE THE ABILITY TO REPAY RULE WAS THE MOST IMPORTANT. THE RULE, IT IS WHAT I CALL A DUH RULE. IT IS SIMPLE. A MORTGAGE CANNOT EXTEND LENDING UNLESS IT MAKES REASONABLE THE BORROWER HAS THE ABILITY TO REPAY THE LOAN AT THE INCEPTION OF THE LOAN. APPARENTLY THAT WASN'T BEING DONE BEFORE 2008. THE CFPB ADMINISTERS THIS RULE. UNDER THE DODD FRANK PATH LENDERS WHO VIOLATE THIS RULE CAN BE SUED BY INJURED BORROWERS. BORROWERS CAN READ CITY VIOLATIONS IF THEY ARE FORECLOSED UPON AS A DEFENSE. IN REALITY THE LIKELIHOOD OF THIS LIABILITY IS REALLY, REALLY SMALL. NEVERTHELESS VENDORS AND TEND TO BE. IN THE DODD FRANK ACT CONGRESS PROVIDED AN INCENTIVE TO LENDERS TO MAKE EVEN SAFER MORTGAGES THAN ONES THAT COMPLY WITH THE ABILITY TO REPAY THE LOAN. AND IF THEY MAKE SAFER MORTGAGES THE MORTGAGES ARE KNOWN AS QUALIFIED MORTGAGES. OR QM. THE QUID PRO QUO IS THAT THE LENDERS TAKE A QUALIFIED MORTGAGE WITH FAVORABLE TERMS IT WILL GET A MODICUM OF PERHAPS GREAT PROTECTION FROM LIABILITY. THE ABILITY TO REPAY. THEY WILL GET SOME PROTECTION FROM LEGAL EXPOSURE. AND I HAVE LISTED THE FAVORABLE TERMS OF THE MOST IMPORTANT ONES HERE. NOW IT TURNS OUT THERE ARE SEVERAL WAYS TO ATTAIN THE STATUS OF A QUALIFIED MORTGAGE. THE BIGGEST WAY OF DOING SO IS KNOWN AS THE GOVERNMENT-SPONSORED ENTERED SPIES PATCH. THIS APPLIES TO ANY LOANS SOLD TO FANNIE MAE OR FREDDIE MAC. AND FOR LOANS THAT ARE SOLD TO EITHER ONE OF THESE ENTITIES TO QUALIFY FOR THIS REJECTION FROM LEGAL LIABILITY. THEY HAVE TO MEET A NUMBER OF CONDITIONS. THE THREE PIGS ARE THEY HAVE TO BE FULLY AMORTIZING. IN OTHER WORDS EVERY TIME YOU MAKE A MORTGAGE PAYMENT IS BASED ON THE PRINCIPLE. IT CAN'T BE FOR NO MORE THAN 30 YEARS IN TOTAL POINTS AND FEES ARE CAPPED AT THREE PERCENT. NOW WE HAVE A LITTLE PROBLEM. THIS PATCH ACCOUNTS FOR ALMOST HALF OF MORTGAGES MADE IN THE UNITED STATES TODAY. BUT THE PATCH IS TEMPORARY AND IS EXPIRING NO LATER THAN JANUARY 2021. THAT RAISES THE SPECTER OF ENORMOUS POTENTIAL DISLOCATION IN THE MORTGAGE MARKET. WE DON'T REALLY GRAPPLE WITH HOW TO PROCEED. THIS DECISION IS IN THE CFPD CORNER. IT HAS THREE MAJOR OPTIONS AND OBVIOUSLY THERE ARE VARIATIONS ON THE THREE THEMES. ONE IS REPEALED THE PATCH. ONE IS RENEW IT. AND THE THIRD WOULD BE TO EXPAND THE PATCH TO ALL MORTGAGES. MOST IMPORTANTLY TO MORTGAGES SOLD WHICH IS NOT TRUE TODAY. SO, IT TURNS OUT THAT THIS IS AN EVEN MORE COMPLICATED DECISION THAN IT SEEMS TO BE. BECAUSE MANY AND FREDDIE ALMOST FAILED IN 2008. CONSERVATORSHIP AND THAT IS WHERE THEY REMAIN. HIS PARTISAN DEBATE OF WHAT TO DO WITH FANNIE MAE AND FREDDIE MAC. THERE HAVE BEEN SERIOUS MOVES AND CONTINUE TO BE SERIOUS MOVES IN THIS CONGRESS. PRIVATIZE FANNIE MAE AND FREDDIE MAC AND SHIFT MORE OF THE FINANCING OF HOME MORTGAGES TO WALL STREET. IN THE MORTGAGE INDUSTRY RIGHT NOW FANNIE MAE AND FREDDIE MAC ARE PURPLISH. THEY RECEIVE A COMPETITIVE ADVANTAGE OVER WALL STREET AND FINANCING HOME MORTGAGES. WHAT WILL HAPPEN TO PRIVATIZATION IS ANYBODY'S GUESS. AND A LONG CONVERSATION WITH PEOPLE RIGHT IN THE MIDDLE OF THIS. AT THE ACTUALLY DON'T THINK PRIVATIZATION WILL HELP IT. ANYTIME SOON. WE WILL SEE ABOUT THAT. WHAT IS CLEAR IS CFPD AS A DECISION OVER THE PRIVATIZATION. CFPD WHATEVER IT HAS TO DO WITH THE QM PATCH CAREFULLY AFFECT THIS LARGER ONGOING DEBATE ABOUT WHAT TO DO ABOUT FANNIE AND FREDDIE. SO, WHAT MIGHT THE CFP DO? ONE IS SHOULDN'T STICK AND SHOULD STICK WITH THE PATH OF LEAST RESISTANCE? JUST REMOVE THE GSE PATCH? THERE WILL BE A LOT OF PUSHBACK FROM INDUSTRY. WITH THE ARGUMENT, FOR THE GSE PATCH GIVE FANNIE AND FREDDIE AND UNFAIR ADVANTAGE. THERE WILL BE POLITICAL PRESSURE THAT COULD GO IN ONE OF TWO DIRECTIONS. YOU WOULD GO IN THE DIRECTION OF CANCELING THE GSE PATCH. OR GO IN THE DIRECTION OF EXPANDING IT. THERE IS LIBERAL CONCERN ABOUT CANCELING, AT LEAST IN SOME QUARTERS BECAUSE IT HELPS EXPAND MORTGAGE CREDIT TO UNDERSERVED BORROWERS. ON THE OTHER HANDS, LOANS SOLD TO WALL STREET FOR FROM THE FIRST.THEY HAVE THE HIGHEST DEFAULT RATES CERTAINLY HIGHER THAN FANNIE AND FREDDIE LOANS. FANNIE AND FREDDIE AND LENDING TO UNDERSERVED BORROWERS. THEY DID 10 YEARS AGO. I THINK THAT IS ALL TO SAY THE JURY IS OUT ON HOW THIS WILL PLAY OUT. WE HAVE TO SEE THIS DECISION IS PENDING AND COULD AFFECT ACCESS TO CREDIT. IN PARTICULAR STAY TUNED. THANK YOU. THIS IS A WELL CAPTIONED CONFERENCE IN AN AGE OF UNCERTAINTY.THAT IS ONE OF THE FEW THINGS WE CAN GENERALIZE FROM CURRENT ACTION OR NONACTION IS WE ARE IN A PROFOUND STATE OF UNCERTAINTY. WE HAVE TO KEEP WATCHING THIS. WE GO TO LISA NEXT BUT LISA RICE IS THE PRESIDENT AND CEO BUT YOU WILL BE PLEASED TO KNOW SHE TAKES AN ANTIDISCRIMINATION DECISION ON THE PART OF ORGANIZATION. SHE WILL TALK TO US. AGAIN, I WILL LET THE SPEAKERS INTRODUCE HIMSELF. I THINK THEY HAVE DIFFERENT ON WHAT THEY WILL TALK ABOUT. Lisa Rice: THANK YOU, JOHN. I WILL BE FOCUSING MY COMMENTS ON THE LEGACY OF DISCRIMINATORY HOUSING POLICIES. AT HOW THEY STILL ARE PLAGUING US TODAY. AND IMPACTING THE MARKET TO PROVIDE CREDIT ACCESS TO CONSUMERS. WHAT ARE THE MAJOR CHALLENGES THAT WE ARE STILL DEALING WITH IS THE FALLOUT AND NEGATIVE IMPACTS OF CENTURIES OF LAWS AND POLICIES AND PRACTICES. THAT WERE RACE-BASED. THESE WERE LAWS AND POLICIES THAT WERE EXPRESSLY RAISED BASED LAWS OR POLICIES THAT WERE PURPOSEFULLY DESIGNED TO WITHHOLD AND WITH STRICT OPPORTUNITIES FROM PEOPLE OF COLOR IN TERMS OF ACCESSING HOUSING. OR ACCESSING CREDIT OPPORTUNITIES. THESE POLICIES WERE SPECIFICALLY WEAPONIZED OR TARGETED AGAINST AFRICAN-AMERICANS AND OTHER GROUPS. FOR EXAMPLE WE ALL ARE FAMILIAR WITH THE BEVY OF NEW DEAL PROGRAMS. THE HOLC AND FHC. HOLC DEVELOPED RESIDENTIAL SURVEYS AND RESIDENTIAL SURVEY MAPS. WE COMMONLY REFER TO THEM AS RED LINING MAPS. THOSE RED LINING MAPS WERE BASED ON RESIDENTIAL SURVEYS THE HLC, FEDERAL GOVERNMENT HIRED REAL ESTATE PROFESSIONALS ACROSS THE COUNTRY.TO SERVE A GEOGRAPHICAL AREA. SO SMALL COMMUNITIES. EACH OF THESE COMMUNITIES WERE GRADED ON A NUMBER OF THINGS. THE QUALITY OF THE HOUSING STOCK UNDER THE AGE OF THE HOUSING STOCK, THE QUALITY OF THE INFRASTRUCTURE. BUT EVERY SINGLE COMMUNITY WAS ALSO CREATED BASED ON THE RACIAL COMPOSITION OF THE NEIGHBORHOOD. IN FACT IF YOU LOOK AT THE RESIDENTIAL SURVEY THERE IS A FIXED CATEGORY FOR THE REAL ESTATE PROFESSIONAL TO INDICATE HOW MANY AFRICAN AMERICANS. IT IS THE ONLY CATEGORY THAT IS AFFIXED ON THE RESIDENTIAL SURVEY. THE HOLC, THE FEDERAL GOVERNMENT WANTED TO KNOW HOW MANY BLACK FOLKS AREN'T LIVING IN THIS NEIGHBORHOOD. NO I HAVE NOT LOOKED AT EVERY SINGLE RESIDENTIAL SECURITY SURVEY FOR EVERY SINGLE MAP THAT WAS GENERATED.THERE ARE ABOUT 200 OF THEM. I HAVE LOOKED AT A LOT OF THEM. THERE HAS EVER BEEN A TIME THAT ANY LEVEL OF AFRICAN-AMERICANS LIVING IN THE COMMUNITY THAT DID NOT RECEIVE THE WORST GRADE. IN D GRADE. IF THERE IS FIVE PERCENT. AT FIVE PERCENT IT GOT CODED RED. THAT IS HOW STRONG THE CONNECTION BETWEEN RACE AND RISK WAS IN OUR HOUSING AND LENDING POLICIES. AND THIS RESIDENTIAL SECURITIES SURVEYS AND THOSE MAPS WERE OF COURSE USED BY THE FHA WHEN THE FHA GENERATED ITS MORTGAGE LENDING PROGRAMS. WHICH HELPED FUEL, RATE, THE MIDDLE CLASS. TO PROVIDE A FOUNDATION FOR WEALTH ACCUMULATION FOR MANY AMERICANS.AND UPLIFT MANY AMERICANS INTO THE MIDDLE CLASS. THE FHA THEIR OWN UNDERWRITING GUIDELINES TALKED ABOUT TALKING ABOUT THE RACIAL CONSERVATION BEFORE MAKING THE LOAN IN A NEIGHBORHOOD. AND FURTHER CEMENTED THIS ASSOCIATION BETWEEN RACE AND RISK. BUT IT WASN'T JUST THESE POLICIES. BY HOLC THE FEDERAL HOME LOAN MORTGAGE. THE BEVY OF POLICIES. THE INDIAN REMOVAL ACT. THE CHINESE EXCLUSION ACT. THE SOCIAL SECURITY ACT. MODEL CITIES, URBAN RENEWAL, ALL OF THESE PROGRAMS AND POLICIES THAT WERE RACE-BASED. THAT WERE USED IN A WAY THAT HARMED AND HEARD AND WITHHELD OPPORTUNITIES AND WEALTH FROM PEOPLE OF COLOR. AT AFRICAN AMERICANS IN PARTICULAR. SO, WE HAVE THESE CENTURIES OF DISCRIMINATION, DISCRIMINATORY PRACTICES. THAT ARE INCULCATED THEY ARE BAKED INTO OUR SYSTEMS. THEY ARE BAKED INTO OUR DATA. THEY ARE BAKED INTO OUR SOCIETY. AND WHAT WE HAVE NEVER DONE IS JUST A RACE BASED COMMITTEE TO EXTRACT THAT HARMFUL INFORMATION FROM OUR SOCIETY. FROM OUR SYSTEMS. NO, WHAT WE HAVE DONE IS BUILT UPON IT. THIS DATA THAT IS HARMFUL. IF YOU THINK ABOUT THE ADAGE THAT DATA IN, BAD OUTCOMES. DISCRIMINATORY DATA INCOME DISCRIMINATORY OUTCOMES. THERE IS NO OTHER WAY AROUND IT. IT IS ONE OF THE REASONS WE HAVE A DUEL CREDIT MARKET IN THE UNITED STATES. SO LET ME SAY A COUPLE OF THINGS. ONE OF THE REASONS IT WAS SO EASY TO HAVE RACE-BASED POLICIES THAT WERE RECOGNIZED AGAINST COMMUNITIES OF COLOR. IT IS BECAUSE AFTER THE CIVIL WAR, AFTER THE ENDING OF SLAVERY WE HAD OVER 100 YEARS OF JIM CROW. THIS LEGALIZED APARTHEID IN WHICH WE CREATED SEGREGATED AND SEPARATE SOCIETIES AND OUR NEIGHBORHOODS BECAME SEGREGATED. OUR NEIGHBORHOODS WERE NOT SEGREGATED. WE ARE MORE SEGREGATED TODAY THAN WE WERE 100 YEARS AGO. WE SET UP THIS EASY DESIGN WHERE WE CAN GO IN AND TARGET PREDOMINANTLY WHITE COMMUNITIES WITH GREAT CREDIT. AND WITHHOLD GOOD CREDIT OPPORTUNITIES. SAVE CREDIT OPPORTUNITIES FOR COMMUNITIES OF COLOR. BUT, SIMULTANEOUSLY TARGET THE SAME COMMUNITIES OF COLOR FOR BAD AND CRIPPLING AND DEBILITATING CREDIT WHICH IS WHAT WE HAVE DONE. THIS IS THE U.S. MARKET IN WHICH WE OPERATE TODAY. I JUST SAY A COUPLE OF THINGS. THE TEAM SITE REPRESENTS THE FRENCH MARKET. THE PLUS SIDE REPRESENTS THE SAFE MARKET. LET ME FOCUS ON THE 10TH SIDE AND LOOKED UP SOME THINGS BEFORE I TAKE MY SEAT. WHEN YOU ACCESS CREDIT IN THAT CREDITOR NOT THE CONSUMER. THAT IS IN THAT 10 SPACE SYSTEMATICALLY. THOSE POSITIVE PAYMENTS WITH CREDIT REPOSITORIES BUT MY MOTHER AND MY FATHER GOT THEIR LOAN FROM A SUBPRIME LENDER BECAUSE NO PRIME LENDER WOULD GIVE MY PARENTS A LOAN. THAT POSITIVE PAYMENT THEY MADE EVERY SINGLE MONTH NEVER GOT REFLECTED IN THE CREDIT REPOSITORY SYSTEM. THEREFORE NEVER DID THEY BENEFIT. CONVERSELY FOR YOUR OBLIGATIONS GO TO COLLECTIONS AND THAT NEGATIVE INFORMATION IS REFLECTED IN THE CREDIT REPOSITORY SYSTEM. SO, I COULD REALLY GO ON ALL DAY. I WILL NOT. I WILL TAKE MY SEAT. BUT I WANTED YOU TO SEE WE ARE DEALING WITH STRUCTURAL ISSUES HERE. WE ARE DEALING WITH STRUCTURAL BARRIERS. AND ONE OF THE THINGS WE HAVE TO DO IS PUNCH A HOLE THROUGH THIS BARRIER AND CREATE MECHANISMS THAT HELP VERY PEOPLE FROM THAT 10 SPACE INTO THAT BLUE SPACE. John: THANK YOU. [APPLAUSE] I THINK WE WILL SHIFT TO LAUREN. LAUREN WILLIS IS NEXT. SHE IS ALSO IN OUR RAREFIED WORLD OF BEING A LAW PROFESSOR. SHE COMES TO US FROM CALIFORNIA OR AT LOYOLA LAW SCHOOL. AND LAUREN, I THINK I CAN SUMMARIZE HER CORPUS OF LITERATURE PRICING WE CAN PRETTY MUCH SOLVE EVERYTHING WITH FINANCIAL LITERACY AND EDUCATION. Lauren: JUST SO YOU KNOW I AM ACTUALLY THE WORLD BIGGEST CRITICAL FINANCIAL LITERACY.I AM CALLED UPON DESPITE THE FACT THAT I AM TIRED OF TALKING ABOUT IT. BECAUSE NO ONE WILL SPEAK AGAINST IT. SO, I WILL TALK ABOUT SOMETHING TOTALLY DIFFERENT. AND THIS RELATES TO THINGS THAT COMMISSIONER WAS TALKING ABOUT. SORRY. HERE? OKAY. I WILL TALK ABOUT DIGITAL DECEPTION. I WILL JOINING BY THAT? I MEAN THE USE OF MODERN TECHNOLOGY. BIG DATA TRACKING. ANALYZING THE DATA WITH ALGORITHMIC FICTION. MACHINE LEARNING AND A.I. TO RECEIVE PEOPLE OR TREAT THEM UNFAIRLY. USUALLY THROUGH SOME KIND OF DIGITAL INTERFACE. AND JUST EXAMPLES OF HOW THE TECHNOLOGY IS USED. EACH HOMEPAGE OF THIS CASINO IS PERSONALIZED. SO, THERE IS NO SINGLE HOMEPAGE IT DEPENDS ON YOUR CHARACTERISTICS. IF YOU ARE SOMEBODY WHO GETS EXCITED BY A WOMAN'S CLEAVAGE THEN THEY GIVE YOU THAT ONE AND YOU HAVE SIGNIFICANT PASSAGES OF THE CASINO THEY THINK YOU ARE A HIGH ROLLER. IF YOU ARE THE PERSON WHO WANTS TO IMPRESS FRIENDS ACCORDING TO THEIR ANALYSIS. IT WILL SHOW YOU THE ONE ON THE LEFT. THE TECHNOLOGY KNOWS WHERE YOU ARE, WHEN YOU ARE. IT IS LUNCHTIME AND YOU'RE NEXT TO THIS RESTAURANT AND MOBILE PHONES INTO AN ENTICEMENT FOR IT. HERE AGAIN AT THE TIME OF DAY ONE. SO IT IS NOT AS IF EVERY BUSINESS DOES THIS THEMSELVES THE HIGHER OPTIMIZE, THEY PERSONALIZE THESE VARIOUS SERVICES. TO HELP THEM DO IT. FINANCIAL SERVICE INDUSTRIES IS INCREDIBLY SOPHISTICATED ABOUT THIS. AND FOR GOOD REASON. THEY HAVE DEVELOPED THIS FOR FRAUD DETECTION. DEPENDING ON THE ANGLE OF WHICH YOU HOLD YOUR CELL PHONE. HOW HARD YOU PUSH THE CELL PHONE WHEN YOU ARE HITTING TO TYPE THINGS. THE CADENCE OF ABOUT YOU ARE RUSS USED BY BANKS FOR FRAUD DETECTION. HOWEVER THAT SAME DATA CAN BE USED TO DETERMINE THINGS LIKE, ARE YOU ANXIOUS, ARE YOU INTOXICATED, ARE YOU EXHAUSTED OR DEPRESSED? OBVIOUSLY, ALL OF THIS IS ABOUT PREDICTIVE ANALYTICS. NONE OF IT IS 100%. UNTIL RECENTLY I RECEIVED ONLINE ADS FOR THE LARGER WOMEN CLOTHING THING. THE BIG AND BEAUTIFUL WOMEN. SO, CLEARLY IT'S NOT TOTALLY ACCURATE OF COURSE YET, BUT THAT'S THE DIRECTION THAT WE ARE MOVING IN. SO, IT'S EVEN MORE THAN SIMPLY TAKING END DATA. BUT THINGS LIKE IN GAME ADVERTISING. SURE, THEY CAN SEE WHETHER YOU ARE WINNING OR LOSING TO DECIDE WHAT ADS TO DELIVER TO YOU. THEY CAN SEE WHAT YOU SEEM TO BE IN A FLOW STATE. WHICH MEANS YOU ARE LIKELY TO PUSH ANY BUTTON TO GET RID OF WHATEVER POPS UP ON THE SCREEN SO YOU CAN KEEP PLAYING RIGHT? BUT THEY ALSO CAN MAKE THE GAME HARDER OR EASIER, DEPENDING ON WHETHER IT SEEMS BENEFICIAL TO MAKE YOU FRUSTRATED OR EXHILARATED. AND, YOU KNOW, AFTER SOME OF THIS MOVE MANIPULATION STUFF CAME OUT FROM FACEBOOK, THEY QUOTED ONE GUY SAYING, WHAT DO YOU MEAN THIS IS A PROBLEM, THIS IS WHAT SOCIAL NETWORKS DO. WE MANIPULATE PEOPLE'S MOODS. THAT'S OUR WHOLE JOB. SO, CLEARLY IT'S VERY WIDESPREAD. YOU MIGHT THINK OH THIS IS CRAZY,STUFF. BUT, YOU KNOW, ONCE YOU LOOK OUT THERE YOU SEE HOW WIDESPREAD IT IS. SO, THIS IS SORT OF A DATED AND VERY RUDIMENTARY VERSION OF HOW IT HAPPENS. YOU KNOW, TODAY RATHER THAN TESTING THREE DIFFERENT IMAGES EACH WITH THREE DI TYPES OF TESTS, COMBINED WITH 13 DIFFERENT PERSONALITY PREDICTION TYPES, PLUS CONTEXT -- SO WHERE YOU ARE WHEN YOU ARE BEING SHOWN THE STUFF -- IT'S BLOW THIS UP A THOUSAND TIMES RIGHT? BUT IT GIVES US THE BASIC IDEA. I HAVE WRITTEN AT THE BOTTOM WHAT THEY CALL REAL TIME PERSONALIZATION BUT WHAT I WOULD CALL REALTIME OPTIMIZATION OF WHAT THEY CALL CONVERSES WHICH MEANS IT MAKES IT MORE LIKELY THAT YOU WILL DO WHAT THEY WANT YOU TO DO. CONVERSION MEANS DO WHATEVER IT IS THE PERSON WHO IS DELIVERING THIS TO YOU, THE COMPANY DELIVERING THIS TO YOU WANTS YOU TO DO. NOW, ALL OF THIS IS SET UP FOR MACHINES TO OPTIMIZE CONVERSIONS, OPTIMIZE PROFIT. AND INEVITABLY THAT MEANS WHERE DECEPTION IS PROFITABLE, THESE MACHINES WILL EVOLVE TOWARDS DECEPTION. DECEPTION DIDN'T ALWAYS PROFITABLE. NOT IN EVERY PLACE BUT CERTAINLY SOME PLACES AND SOME CIRCUMSTANCES IT IS. SO YOU START READING AS WE SCAN AND YOU SEE THAT DON'T WORRY YOUR CARD WILL NOT BE CHARGED SO YOU IMMEDIATELY MOVE ON. YOU CAN GO TO DARK PATTERN.ORG AND SEE A DOZEN OF THESE COMMON PATTERNS THAT ARE USED. HERE IS WHERE I AM SPECULATING. I HAVE NOT BEEN ABLE TO GET VERY MUCH INFORMATION FROM THE CFPB. THE CFPB ONLY PUT OUT VAGUE INFORMATION ABOUT WHAT HAPPENED IN THIS CASE. THIS IS A CASE AGAINST PAYPAL IN AND PAYPAL WAS SIGNING PEOPLE UP FOR PAYPAL CREDIT, AND PEOPLE DIDN'T REALIZE THEY WERE PAYING WITH PAYPAL CREDIT. HOW DID THIS HAPPEN? WELL I'M SPECULATING AS TO HOW IT HAPPENED. I IMMEDIATELY GOT ON DO YOU SEE THE PAY WITH PAYPAL, PAY WITH DEBIT CREDIT ET CETERA. YOU CLICK ON PAY WITH SOMETHING ELSE. YOU SEE THERE'S THREE TABS AT THE BOTTOM? WELL A MACHINE MIGHT DECIDE TO TRY VARIOUS COMBINATIONS OF WHICH TAB IS SHOWING TO YOU RIGHT. NOW AT LEAST ON MY COMPUTER, IF I WANT TO BUY SOMETHING, I JUST PRESS ONE BUTTON AND IT AUTO FILLS. SO I AM NOT EVEN LOOKING AT WHICH TAB IS OPEN THERE. SO, I DON'T SEE THAT I AM ACTUALLY SIGNING UP FOR PAYPAL CREDIT. I THINK I'M JUST PAYING WITH MY DEBIT OR CREDIT CARD LIKE I NORMALLY DO. SO, I'M SPECULATING THAT IS HOW IT HAPPENED, BUT CLEARLY IT HAPPENED. AND YOU CAN IMAGINE THAT A MACHINE TESTING VARIOUS ITERATION OF THIS WEBSITE WOULD FIGURE OUT WHAT'S THE MOST LUCRATIVE RIGHT. AND, OBVIOUSLY, FOR SOME PEOPLE IN SOME STATES, IT'S BETTER NOT TO SHOW THEM THIS. THEY MIGHT COMPLAIN. PEOPLE WHO ARE LIKELY TO COMPLAIN. THERE'S MORE AND MORE DATA USED TO IDENTIFY WHO THOSE FOLKS ARE AND NOT OFFER THEM THINGS THAT MIGHT CAUSE A COMPLAINT, FOR EXAMPLE. AND THIS ALSO BRINGS UP SOMETHING THAT THE COMMISSIONER MENTIONED EARLIER, TOO. SO, CFB GOT $10 MILLION IN SIL CIVIL PENALTIES IN THIS CASE, THAT WAS .003 PERCENT OF PAYPAL'S INCOME FOR THAT YEAR AND THEY HAD BEEN DOING THIS FOR A NUMBER OF YEARS. SO HOW WIDESPREAD IS THIS? CREATIVE CONTENT PERSONALIZATION, MEANING THAT MACHINES ARE DOING THIS, IS BEING USED -- THE BLUE LINES ARE COMPANIES ALREADY DOING IT, THE ORANGE ONES ARE ONES PLANNING TO DO IT, AND THE GRAY ONES ARE THE ONES THAT ARE NOT. SO, IT'S REALLY VERY COMMON NOW. SO, THE RESULTING DECEPTION THOUGH RESULTS IN SOME SERIOUS CHALLENGES FOR THE WAY WE NORMALLY HANDLE DECEPTION LEGALLY. HOW WE NORMALLY GO AFTER IT. I MEAN, OBVIOUSLY, ONE THING IT IS VERY HARD TO EVEN PERCEIVE IT'S HAPPENING, TO PROVE THAT IT HAPPENED BECAUSE THINGS ARE MOVING AND THAT KIND OF THING. BUT, ONE ISSUE IS WE OFTEN LOOK FOR BUSINESS INTENT OUT OF THIS, RIGHT. BUT IF IT IS A MACHINE DOING IT, YOU ARE NOT GOING TO HAVE BUSINESS INTENT EVIDENCE WHEN YOU GO AFTER THIS WITH EITHER A PRIVATE ACTION OR PUBLIC ENFORCEMENT ACTION. WE ALSO FOR ASSESSING DECEPTION LEGALLY WE USE FREQUENTLY THE REASONABLE PERSON STANDARD THAT THE JUDGE APPLIES. BUT NONE OF THIS IS DEVELOPED FOR THE REASONABLE PERSON. IT'S DEVELOPED ULTIMATELY FOR AN AUDIENCE OF ONE. THE SINGLE WOMAN WITH KIDS WHO IS VERY ANXIOUS BECAUSE SHE'S GOT A WHOLE BUNCH OF DEBTS AND SHE'S WILLING TO BELIEVE THIS WEBSITE THAT TELLS HER IF SHE SIGNS UP FOR THIS DEBT CONSOLIDATION PROGRAM THAT SHE WILL NOT BE CHARGED ANY FEES. SO, IT'S NOT -- THE JUDICIAL STANDARD JUST DOESN'T APPLY. THIS REASONABLE PERSON STANDARD DOESN'T APPLY. IT'S REALLY JUST THIS PARTICULAR PERSON. SO, THE JUDGE LOOKS AT IT AND THINKS THIS ISN'T DECEPTIVE, I CAN SEE THE TINY STAR THAT SAYS OH BY THE WAY WE'RE GOING TO CHARGE YOUR CREDIT CARD, RIGHT. SO, ANOTHER THING WE USE IS EXPERT ANALYSIS. FACIAL ANALYSIS OR THEY CALL IT USE ABILITY ANALYSIS IN THE UX WORLD. AND THE PROBLEM THERE IS THAT, AGAIN, IT IS THE AUDIENCE OF ONE, AND ALSO, YOU DON'T KNOW WHAT'S GOING ON THAT GOT THE CONSUMER TO THAT PARTICULAR INTERFACE. ARE THEY HOLDING THEIR PHONE IN SUCH A WAY TO INDICATE THEY'RE INTOXICATED? SO THE EXPERT DOESN'T HAVE ACCESS TO ALL THAT INFORMATION THAT THE PHONE DOES. BY THE WAY, IT'S NOT LIKE THE FIRM KNOWS THE PERSON IS INTOXICATED. THE FIRM KNOWS THERE IS A PARTICULAR PATTERN WHICH YOU HOLD YOUR PHONE WHICH MAKES YOU MORE LIKELY TO DO CERTAIN THINGS. SO, THERE'S NO KNOWLEDGE, PER SE, ABOUT THIS NECESSARILY. THEN SORT OF THE GOLD STANDARD I THINK THE FTC HAS CALLED IT IN ENFORCEMENT OF DECEPTION CASES. SO, TO DO A RANDOMIZED CONTROLLED TRIAL. SOUNDS SO SCIENTIFIC. SEND THIS WEBSITE OR THIS, YOU KNOW, MOBILE PHONE APP OR WHATEVER, SHOW IT TO A BUNCH OF DIFFERENT CONSUMERS AND GET THEIR RESPONSES. WERE THEY FOOLED BY IT? COMPARE IT TO A GROUP THAT'S SHOWN SORT OF A SANITIZED VERSION THAT DOESN'T CONTAIN THE MISLEADING WHATEVER IT WAS OBVIOUSLY YOU CANNOT MATCH THE CONSUMER SUBJECTS TO WHO WOULD HAVE BEEN SHOWN THESE ADS. AND YOU CAN'T RECREATE THE CONTEXT. JUST LIKE THE EXPERT DOESN'T KNOW THE CONTEST. IN ADDITION FOR ALL OF THESE THREE FORMS OF EVIDENCE HERE, THEY CAN END UP WITH, I THINK DIRECT TV SAID THEY HAD 20,000 DIFFERENT ITERATIONS OF THEIR WEBSITE, RIGHT. YOU CAN'T TEST THAT MANY. YOU CAN'T TEST A STATISTICALLY REPRESENTATIVE SAMPLE OF THAT MANY RIGHT. EVEN IF THEY HAD 100 WEBSITES YOU WOULD HAVE TO TEST 49 WHICH IS VERY EXPENSIVE TO DO AND TIME CONSUMING. THE FTC AND SOME JUDGES HAVE REALLY LABORED ON ON THIS. IN 2010 I THINK THE COMMISSION REVIEWED 36 DIFFERENT ADVERTISEMENTS OR MARKETING MATERIALS IN ONE CASE. THERE WAS ANOTHER CASE IN 2015 WHERE A JUDGE WENT THROUGH 125 DIFFERENT ONES OVER THE COURSE OF LIKE A COUPLE YEARS. SHE DIDN'T DO IT ALL AT ONCE. BUT DIRECT TV, FTC LOST IN PART, AND ONLY IN PART ADMITTEDLY, ON THE BASIS THEY HAD NOT TESTED A SAMPLE, A STATISTICALLY SIGNIFICANT SAMPLE OF DIRECT TV'S 20,000 ITERATIONS. SO, THE AFFECT HERE, ALTHOUGH IT WAS NOT INTENDED, THE AFFECT OF THIS TECHNOLOGY COULD BE TO IMMUNIZE FIRMS FROM LIABILITY FOR DECEPTION. SO WHAT TO DO ABOUT THIS? SO ONE THING IS TO REALIZE THAT THE REASONABLE PERSON UNDER THE CIRCUMSTANCES, WHICH IS ACTUALLY THE LANGUAGE OF THE TEST FOR DECEPTION, IT HAS TO BE A REASONABLE PERSON UNDER THE CIRCUMSTANCES WOULD BE DECEIVED, IS THE ONE PERSON WHO RECEIVED IT. SO, RATHER THAN HAVING TO SHOW, OH, REASONABLE PEOPLE WOULD BE DECEIVED BY THIS, THAT YOU WOULD HAVE TO SHOW THAT THE ACTUAL CUSTOMER WHO TOOK THE ACTION THAT WAS DESIRED BY THE FIRM WAS DECEIVED BY THE MATERIALS. CUSTOMER BEHAVIOR EVIDENCE. SO, ALL THESE PEOPLE OPENING ACCOUNTS AND NONE OF THEM ARE USING THE ACCOUNTS. THAT MIGHT BE SOME INDICATION THAT THEY DIDN'T KNOW THEY HAD OPENED THE ACCOUNTS. LET'S SEE. ANOTHER THING I THINK WE SHOULD DO IS TAKE A BRILLIANT MOVE IN DODD-FRANK, WHICH WAS THE CREATION OF THE ABUSE [ INAUDIBLE ]. I THINK THIS SHOULD QUALIFY FOR UNFAIRNESS, TOO. RATHER THAN REQUIRING THE ENFORCEMENT AGENCY OR THE PRIVATE PLAINTIFF TO PROVE CAUSATION FROM THE PARTICULAR MATERIALS TO THE PARTICULAR CONSUMER, JUST SAY IT IS DECEPTIVE, IT'S BUS ABUSIVE, IT IS UNFAIR TO TAKE ADVANTAGE OF CONSUMER CONFUSION. REGARDLESS OF WHETHER YOU CAUSED THE CONFUSION OR NOT. AND I'M NOT SURE WHY MY SLIDES ARE ALL RUNNING OFF HERE, BUT THE LANGUAGE FROM DODD-FRANK WOULD SUPPORT THAT. OBVIOUSLY THAT'S LIMITED TO THE CONSUMER FINANCE CONTEXT. ONLY THE CFPB CAN ENFORCE IT BUT WE SHOULD -- AND STATE AG'S AS WE TALKED ABOUT YESTERDAY -- BUT WE SHOULD EXPAND THE USE OF THAT. AND THE AVAILABILITY OF THOSE STANDARDS TO ADDRESS THIS NEW PROBLEM. AND THEN FIRMS WOULD HAVE AN INCENTIVE TO CONTINUE TO OPTIMIZE CONVERSIONS WITHIN THE CONSTRAINT OF NOT CONFUSING CONSUMERS. OKAY. THANKS. John Pottow: THANK YOU, LAUREN. [ APPLAUSE ] OKAY. WE'RE GOING TO GO TO ROB NEXT. ROB IS THE SENIOR COUNSEL WITH THE LEADERSHIP CONFERENCE ON CIVIL AND HUMAN RIGHTS AND THE LEADERSHIP CONFERENCE EDUCATION FUND AND HAS THE SINGULAR PLEASURE OF WORKING IN OUR NATION'S CAPITAL AND DEALING WITH THIS. HE WILL UPLIFT US ALL NOW. [ LAUGHTER ] Rob Randhava: THANKS, JOHN. I FEEL NAKED BEHIND ME ALL OF A SUDDEN BEING THE ONLY PERSON WITHOUT A POWER POINT. SO, ROB RANDHAVA. WE ARE A COALITION OF 200 NATIONAL ORGANIZATIONS FOUNDED IN 1950. WE'VE BEEN INVOLVED IN EVERY SINGLE MAJOR CIVIL RIGHTS LEGISLATIVE CAMPAIGN SINCE THEN. OUR MEMBERSHIP RANGES FROM -- I MEAN, INCLUDES A LOT OF GROUPS THAT WERE INVOLVED IN THOSE LEGISLATIVE FIGHTS FROM THE GET-GO. AND THEN MORE RELEVANTLY FOR TODAY'S DISCUSSION IT ALSO INCLUDES A NUMBER OF CONSUMER ORGANIZATIONS -- CENTER FOR RESPONDING LENDING, NATIONAL CONSUMER LAW CENTER AND MANY OTHERS. AND I'VE BEEN THERE SINCE 2001. UNLIKE SOME PEOPLE WHO TALKED ABOUT THEIR FIRST JOB YESTERDAY, THIS IS MY THIRD JOB, THANK YOU WADE HENDERSON. AND I'VE BEEN INVOLVED IN HELPING SHAPE OUR COALITION'S POLICY AND MESSAGING AROUND HOUSING AND LENDING ISSUES SINCE AROUND 2005. IMPECCABLE TIMING I KNOW. JUST IN TIME FOR THE CRISIS. I WANTED TO JUST BUILD ON THE CONTEXT THAT LISA LAID OUT ABOUT THE HISTORIC PATTERNS OF DISCRIMINATION AND TAKE IT FORWARD TO TALK ABOUT WHERE OUR COALITION IS ON ISSUES AROUND FIN TECH. THEN IF I HAVE TIME LEFT I'D LIKE TO TALK ABOUT OUR BROADER COALITION'S PRIORITIES ARE HOUSING AND LENDING ISSUES MOVING FORWARD. LIKE MOST PEOPLE I'M STILL STRUGGLING TO WRAP MY BRAIN AROUND WHAT FINTAC ACTUALLY IS. THE FIELD IS EVOLVING SO FAST IT'S HARD TO FORM CONCRETE OPINIONS. LIKE THE EARLY DAFZ THE INTERNET I WANTED TO THRIVE AND DO WELL BUT I ALSO KNEW THERE WOULD BE A LOT OF BUMPS ALONG THE WAY. WHAT WE'VE SEEN SO FAR IS A MIXED BAG. WITH SOME PRODUCTS THAT CAN BE HELPFUL AND OTHERS THAT ARE THE SAME PREDATORY WINE BEING POURED OUT OF NEW SKINS. FOR EXAMPLE, THERE ARE PRODUCTS THAT LET CONSUMERS ACCESS THEIR OWN WAGES AHEAD OF THEIR PAYDAY. SOME LIKE PAY ACTIVE, A PRODUCT BY WALMART, HAVE PRETTY MODEST FEES AND THEY'RE DIRECTLY TO PAYROLLS AND THEY COST A WHOLE LOT LESS THAN A PAYDAY LOAN. THEN THERE ARE OTHERS. LAUREN TALKED ABOUT SOME OF THE KINDS OF DECEPTIONS THAT GET WRITTEN INTO PRODUCTS. THERE'S ONE LIKE UREN THAT LOOK FLASHY AND NEW BUT POSE THE SAME CONTINUE CONCERNS AS PAYDAY LOANS. THIS USES SOME SYSTEM OF TIPS IN PLACE OF FEES. I WOULD JUST POINT FOLKS TO THE NATIONAL CONSUMER LAW CENTER DID A GREAT REPORT SEVERAL WEEKS AGO ON THE WHOLE RANGE OF FINTEC PRODUCTS AND THE PROS AND CONS. I WOULD DEFINITELY TAKE A LOOK AT THOSE. I WANT TO START WITH A MORE GLOBAL CONCERN. I THINK FOR THE MOST PART THE REGULATORY FRAMEWORK TO PROTECT CONSUMERS AND TO HELP DEFEND ANTI-DISCRIMINATION STATUTES IS STILL THERE BUT IT COMES DOWN WHO IS DOING THE REGULATING. AND BY COMPARISON IN THE YEARS BEFORE THE MORTGAGE CRISIS IN FACT SINCE THE 1990S, REGULATORS UNDER LAWS HAD THE AUTHORITY TO -- THE FRAMEWORK IN PLACE TO STOP MORTGAGES THAT WEREN'T IN THE INTEREST OF CONSUMERS. THIS IS SOMETHING THAT LISA AND MIKE CALHOUN AND OTHERS OF US WENT TO THE REGULATORS AND TRIED TO GET THEM TO INVOKE, BUT THEY DIDN'T DO THAT UNTIL IT WAS TOO LATE. SINCE THE CFPB HAS OPENED ITS DOORS I THINK THEY'VE DONE A GOOD JOB OF TRYING TO KEEP UP WITH THE INDUSTRY. BUT THE BIGGEST CONCERN FOR US IS WHO IS IN CHARGE OF THE CFPB IN THE COMING YEARS AND WHAT THEY PLAN TO DO WITH THE LAWS ON THE BOOKS. WHEN IT COMES TO ANTI-DISCRIMINATION LAWS, AS YOU KNOW LAST YEAR MICK MULVANEY ANNOUNCED HE WAS BREAKING UP THE OFFICE OF FAIR LENDING AND MOVING ITS FUNCTIONS AROUND. FOR US THIS WAS A BIG STEP BACK FROM THE COMMITMENT TO FAIR LENDING ENFORCEMENT. AND OUR CONCERNS OVER THAT EXTEND TO FIN TECH. MAYBE EVEN MORE. THAT'S BECAUSE ALL TOO OFTEN CONSUMERS DON'T KNOW THEY FACE DISCRIMINATION. AND IF YOU HAVE REGULATORS WHOSE MISSION IS FAIR LENDING BUT THEY DON'T HAVE THE SUPERVISORY AUTHORITY, THEN DISCRIMINATION GOES UNDISCOVERED. IF THOSE REGULATORS DON'T HAVE ENFORCEMENT AUTHORITY, EVEN IF THE DISCRIMINATION IS DISCOVERED, IT GOES UNAWE DRESSED. AND THAT GETS EVEN MORE COMPLICATED WHEN YOU ARE TALKING ABOUT NEW TECHNOLOGIES THAT ARE HARDER FOR REGULATORS TO UNDERSTAND. MULVANEY TOLD US THAT HIS DECISION WAS ABOUT EFFICIENCY AND RESPONSIVENESS. NOT THAT HE MEETS WITH US A WHOLE LOT FACE-TO-FACE BUT I DID GET A CHANCE TO ASK HIM DIRECTLY AND DIDN'T GET ANY EXPLANATION OF HOW HIS DECISION WOULD ENSURE THE CIVIL RIGHTS LAWS WOULD BE ENFORCED JUST AS VIGOROUSLY MOVING FORWARD. AND THE DIRECTOR HASN'T GIVEN US THE ASSURANCE WE NEED EITHER. SO, THAT'S GOING TO BE AN AIR WE'RE GOING TO CONTINUE PRESSING THE CFPB. BUT I WANT TO TOUCH ON A FEW SPECIFIC CONCERNS. THIS CAME UP A CUP OF TIMES YESTERDAY, THE ISSUE OF SANDBOXS. THERE'S A LOT TO BE SAID ABOUT GIVING COMPANIES THE CHANCE, GIVING THEM THE RIGHT SETTING TO TEST NEW PRODUCTS AND DISCLOSURES. BUT WHAT THE CFPB WANTS TO DO IS SO BROAD IT POSES A MUCH MORE SIGNIFICANT THREAT ON CONSUMER PROTECTION. A TRADE ORGANIZATION COULD APPLY ON BEHALF OF AN ENTIRE INDUSTRY. AND WITHOUT SENSIBLE AND CLEAR TIME CONSTRAINTS EITHER. SO, THERE'S A PLACE FOR NARROWLY TAILORED NO ACTION LETTERS. BUT WITH THESE SANDBOX PROPOSALS WE'RE TALKING ABOUT AN EXCEPTION THAT SWALLOWS NOT JUST ONE RULE BUT A WHOLE LOT IN THE PROCESS. AND WE'VE VOICED OUR CONCERNS TO THE CFPB BUT WE DON'T KNOW THAT WE'RE LIKELY TO PERSUADE THEM. BUT IT'S SO BROAD AND SO BEYOND THE CFPB'S AUTHORITY THAT WE THINK IT'S GOING TO WIND UP FACING LEGAL CHALLENGES AS IT MOVES FORWARD. ANOTHER CONCERN THAT'S ALREADY IN THE MANAGING IS THE OCC TAKING APPLICATIONS FOR WHAT THEY CALL SPECIAL PURPOSE NATIONAL CHARTERS. THIS IS WHERE FIN TECHS CAN OBTAIN THE SAME POWER AS OCC BANKS TO PREEMPT STATE CONSUMER PROTECTION LAWS. THERE'S A LONG HISTORY OF OCC AGGRESSIVELY PREEMPTING STATE LAWS AND THAT HISTORY IS NOT GOOD GOING BACK TO THE SUB-PRIME BUBBLE. THE OCC HAS DOES LITTLE TO REASSURE US THINGS WILL BE DIFFERENT THIS TIME. ON A SIMILAR NOTE, THIRD CONCERN IS WITH AN ONGOING EFFORT IN CONGRESS TO OVERTUSH THE MADDEN V. MIDLAND CASE OUT OF THE SECOND CIRCUIT. THIS WOULD ALLOW NON-BANK LENDERS TO ESSENTIALLY RENT FEDERALLY CHARTERED BANKS IN ORDER TO DO AN END RUN AROUND STATE USERY CAPS. WE HEARD THIS REFERRED TO AS VALID WHEN MADE LEGISLATION OR THE PROTECTING CONSUMERS ACCESS TO CREDIT ACT. THAT NAME SOUNDS PRETTY BENIGN BUT EVERY TIME I HEAR ACCESS TO CREDIT COMING UP MY GUARD -- I MEAN, JUST AS A RESULT OF WHAT WE'VE SEEN, THAT TERM WAS THROWN AROUND SO MUCH IN THE YEARS BEFORE THE CRISIS BY PEOPLE WHO WERE FIGHTING REGULATION AND SO MY GUARD ALWAYS GOES UP AND I HOPE IT DOES FOR YOU AS WELL. FINALLY I WANT TO GIVE A LITTLE OVERVIEW OF WHAT OUR COALITION SEES AS PRIORITIES FOR THE NEXT TWO YEARS AND BEYOND. NEEDLESS TO SAY WE'RE LOOKING AT A SENATE AND ADMINISTRATION THAT IS NOT LIKELY TO GIVE US A LOT OF WHAT WE WANT. BUT THERE ARE A LOT OF GOOD IDEAS OUT THERE AND WE'RE WORKING WITH OUR ALLIES IN THE HOUSE AND THE SENATE TO LIFT THEM UP AND SHOW THEY HAVE WIDESPREAD SUPPORT AND HOPEFULLY KEEP BUILDING THE PRESSURE FOR CHANGES WHEN WE CAN GET THEM. FIRST, WE WANT TO ENSURE THAT THE FAIR HOUSING ACT, ECOA, AND OTHER CIVIL RIGHTS ARE FULLY AND FAIRLY ENFORCED. FOR ONE, THIS INCLUDES BILLS BY MAXINE WATERS TO UNDO SOME OF THE RECENT CHANGES MADE BY THE CFPB AND BY HUD AROUND THE FAIR HOUSING ACT AND THEIR FAIR LENDING OFFICE. IT ALSO INCLUDES A BILL BY AL GREEN TO PROVIDE A LOT MORE MONEY FOR FAIR HOUSING ACT TESTING AND ENFORCEMENT. SECOND, AFFORDABLE HOUSING IS SO CRUCIAL TO OVERALL FINANCIAL HEALTH THAT WE HAVE TO KEEP MAKING THE CASE FOR MORE OF IT. WE'VE SPENT A LOT OF TIME IN THE PAST FEW MONTHS WORKING WITH SENATOR WARREN ON A BILL TO DRASTICALLY INCREASE HOUSING SUPPLY AND JUST TAKE SOME STEPS THROUGH DOWN PAYMENT ASSISTANCE AND CRA IMPROVEMENTS TO HELP ADDRESS SOME OF THE LASTING DAMAGE DONE BY RED LINING. IT'S NOT A PERFECT BILL. THERE ARE SOME GREAT IDEAS IN THERE, SOME THAT NEED WORK, BUT I THINK -- I REALLY HOPE IT'S GOING TO DO A LOT TO PUT AFFORDABLE HOUSING ON THE NATIONAL SPOTLIGHT OVER THE NEXT YEAR AND A HALF. AND I'M GLAD THAT PAT MENTIONED GSEs BECAUSE THERE'S A LOT AT STAKE FOR AFFORDABLE HOUSING POLICY IN THAT DEBATE. AND RUNNING FROM THE AFFORDABLE HOUSING GOALS TO THE NATIONAL HOUSING TRUST FUND AND THERE ARE HEARINGS NEXT TUESDAY AND WEDNESDAY IN SENATE BANKING, AS A MATTER OF FACT, ON PROPOSALS THAT WOULD POSE A REAL THREAT TO THOSE. THIRD, WE WANT TO HELP PROMOTE POLICIES THAT WILL INCREASE INCLUSIVE AND RESPONSIBLE FINANCIAL PRODUCTS IN THIS CHANGING INDUSTRY. AMONG OTHER THINGS THAT INCLUDES GETTING RID OF FORCED ARBITRATION AND PROMOTING CREDIT REPORTING REFORMS. STUDENT LENDING IS ANOTHER AREA AND I'M LOOKING FORWARD TO WADE'S PANEL ON THAT THIS AFTERNOON. THEN FINALLY WE'RE GOING BE SPENDING A LOT OF TIME WITH MAXINE WATER'S COMMITTEE IN ITS OVERSIGHT ROLE. NOT JUST ON WHAT THIS ADMINISTRATION IS DOING WRONG. WE COULD SPEND A LOT OF TIME ON THAT BUT ALSO THERE'S A NEW DIVERSITY AND INCLUSION SUB-COMMITTEE HEADED BY JOYCE BEATTY WHERE I THINK WE CAN DO A LOT OF WORK HELPING TO PROMOTE WHAT THE INDUSTRY CAN DO TO GET IT RIGHT. I'LL STOP THERE. THANK YOU. John Pottow: THANKS VERY MUCH. [ APPLAUSE ] I'M GOING TO EXERCISE SOME CHAIR'S DISCRETION HERE AND I'D LIKE TO JUST SHARE. I WANT TO LEAVE SOME TIME FOR DISCUSSION AND THE PANEL'S INVOLVEMENT. BUT I'LL GIVE MYSELF A COUPLE OF MINUTES TO TALK ABOUT SOMETHING THAT I AM INTERESTED IN AND EXPLOIT MY CAPTIVE AUDIENCE. SO, I'M TRYING TO FIGURE OUT, I'M NEW TO THE GAME HERE ABOUT WHAT TO DO ABOUT THE RENT TO OWN MARKET. WHICH I FIND ONE OF THE MOST TROUBLING AREAS OF DEALING WITH WHAT LISA CALLED THE FRINGED LENDING SECTOR. I'M TROUBLED BY IT BOTH -- WHAT I'LL SAY IN LAW PROFESSOR TALK IS NORM ACTIVELY AND ALSO DOCTRINELY. I'M NORMALLY TROUBLED BY IT BECAUSE SOME OF MY CYNICISM OF CONSUMER REGULATION STUDY MAKES ME SUSPECT OF IT BECAUSE I THINK IT'S PREDATORY BOTTOM FEEDING. ON THE OTHER HAND, I'M MORE ATTRACTED TO IT THAN I AM WITH STRAIGHT UTSDZ TET ERD PAYDAY LENDING AND WAGE ADVANCE THINGS BECAUSE AT LEAST IT'S BOUNDED. YOU ARE BHOUNDED BY WHATEVER THE TV OR FRIDGE IS IN QUESTION. YOU ARE GOING TO PAY FIVE TIMES FOR THE TV OR FRIDGE BUT IT IS A LESSER EVIL IN MY MIND. SO MUCH SO IT MIGHT WIN ME OVER TO THE ACCESS TO MARK RECEIPT RHETORIC THAT I KNOW IS THROWN AROUND EASILY AND CHEAPLY AND EXPLOITIVELY BY LOBBYIST WHO USE IT. IT IS A BIG INDUSTRY. IT'S ABOUT 8 BILLION, ACCORDING TO WHAT I FOUND. IT IS DOCTRINALLY CHALLENGING BECAUSE IT'S REALLY HYBRIDY BETWEEN LEASES AND PURCHASES TO GET TO THE COMMERCIAL LAW AREA. IT IS RENT. BUT IT'S ALSO RENT TO OWN. SOMETHING WE WRESTLE WITH IN THE FIELD OF COMMERCIAL LAW IS THE DISTINCTION BETWEEN A REAL LEASE AND PURCHASE. THERE'S DIFFERENT REGULATORY REGULATIONS. AND THIS KIND OF SITS IN THE MIDDLE. ONE OF THE THINGS THAT WE FALL BACK ON IN OUR AREA OF LAW WHEN WE TRY TO CUT THROUGH THE THICKET AND FIGURE OUT WHAT THIS REALLY IS, A LEASE OR PURPOSE, WE LOOK AT ECONOMIC RISK AND REALITY. ON ONE HAND, THIS IS WHY IT'S SO DIFFICULT, FACIALLY THE ECONOMIC RISK IS ON THE LESSOR, RIGHT. THE RENT A CENTER CAN GET IT BACK SO THEY HAVE THE RESIDUAL INTEREST AND SAY IT IS A REAL LEASE. IF YOU START TO DRILL DOWN ON THE CONTRACTAL PROVISIONS THERE'S A LOT OF RISKS. LIKE IF IT BURNS OUT, GUESS WHO THAT GETS PASSED ON TO. AND I WON'T EVEN GET INTO WHAT THE FEES ARE. THERE WAS A GREAT STUDY BY THE BUREAU OF ECONOMICS IN TWO THOUSAND, AND IT'S ALREADY NOW OUTDATED BUT IT HAD GOOD INFORMATION AND IT FOUND THERE WAS A HIGH SATISFACTION RATE WITH IT. BUT THEN THERE WAS A FOLLOW-UP STUDY IN 2003 THAT EXPLOREED THE SATISFACTION MORE. AND ACTUALLY SUGGESTED THAT THE CONSUMERS OF THIS MARKET ARE MORE STRATIFIED AND MIGHT BE SORTING INTO TWO SAT GOERS AND IT'S GOING BE IN MY OPINION WORR WORRISOME. WHEN IT IS A RENT TO OWN SITUATION, SOME PEOPLE ACTUALLY JUST DO RENT AND THEY TREAT IT AS A RENTAL OF CHATTELS THEN THEY GO AWAY. AND OTHER PEOPLE TREAT IT AS A FINANCING PLAN OF HOW THEY'RE GOING TO PURCHASE SOMETHING. GUESS WHO IS HAPPY WITH IT AND GUESS WHO IS UNHAPPY WITH IT? THE PEOPLE HAPPY ARE THE PEOPLE WHO ARE MOVING SHORT-TERM, RENT FOR A BIT AND MOVE ON. THE PEOPLE UNHAPPY ARE THE PEOPLE WHO GO INTO THE STORE, ARE COMPLETELY DECEIVED BY THE DEOFK THAT'S FOR RENT A CENTER BECAUSE THEY THINK THEY'RE BUYING THE FURNITURE AT THE FURNITURE STORE AND NOT REALIZING THEY'RE GOING TO A THIRD PARTY FINANCIER THEN REALIZE THEY'RE PAYING THREE, FOUR, FIVE TIMES FOR IT. I'M ALSO INDIRECTLY SUPPORTED IN MY ANXIETY ABOUT THIS BY TWO HELPFUL DATA POINTS. ONE IS THAT THE BUSINESS MODEL SEEMS LARGELY PREMISED UPON MISS CALCULATION AND DECEPTION OF FEES. SO, THERE'S HUGE BALLOON PAYMENTS INVOLVED IN WHEN YOU MAKE YOUR OPTION TO PURCHASE AT THE END. ANY TIME YOU RELY ON BALLOON PAYMENTS THAT SHOULD START TO BE YOUR YELLOW FLAG AREA. SECONDLY, THERE'S MORE FEES THAN I CAN SHAKE A STICK AT THAT MAKES A CREDIT CARD AGREEMENT SEEM STRAIGHT FORWARD AND TERSE. THOSE ARE NOT JUST THE PRICE DISCLOSURE BUT MY FAVORITE IS THERE'S A PURCHASE FEE. ONCE YOU HAVE MADE THE PAYMENTS, A STANDARD TERM IS IF YOU WANT TO BUY THE THING AT THE END YOU GOT TO PAY A FEE. I GUESS THAT'S TO PROCESS THE BILL OF SELL FOR THE CHATTELS. I DON'T KNOW. SO WHAT DO WE DO -- BY THE WAY IT WILL MAKE YOU MORE ANXIOUS. IF YOU START TO DRILL DOWN ON WHO ARE THE PURCHASES AND THE RENTERS THREE GUESSS ON WHICH WAY THE DEMOGRAPHICS GO. ANY REGRESSIVE CONCERNS YOU HAVE ARE VICINITY KATEED BY THIS. THE THEME OF OUR CONFERENCE IS UNCERTAINTY. WHAT DO YOU DO IN AGE OF UNCERTAINTY. I ASKED THE QUESTION YESTERDAY AND I JUST -- I DON'T KNOW IF IT'S -- I'M GETTING OLDER SO MY BRAIN IS GETTING MORE TIRED, BUT I LIKE THE OPEN ENDED ABUSIVENESS STANDARD TO SCARE PEOPLE BUT I ALSO LIKE THE APPEAL OF GOOD REGULATIONS. LET'S HAVE MINIMUM CAPITAL REQUIREMENTS FOR BANKS. WHAT WE'VE DONE FOR REGULATION OF THIS AT THE STATE LEVEL IS STATES THAT HAVE REG LATE HAVE GONE FOR REALLY HARD NUMBERS. MICHIGAN HAS A 45 PERCENT RULE. IF YOU HAVE PAID OFF THE RENTAL PAYMENTS YOU CAN MAKE THE FULL PURCHASE WITH A DEDUCTION 45%. CALIFORNIA HAS A 2 AND A QUARTER RULE. SO, THE ACTUAL NOMINAL ADDITION OF THE RENT PAYMENTS CAN'T BE MORE THAN 2.25 TIMES THE CASH PRICE OF THE ACTUAL GOOD. WHICH IS STILL 125% MARK-UP. WE'LL CALL THAT A GENEROUS USERY REGULATION. NEW YORK HAS STATUTORILY A MATRIX WHERE IT'S LIKE IT DEPENDS ON THE AGE OF THE PRODUCT, THE CONDITION OF THE PRODUCT AND THAT'S WHAT OUR MAXIMUM RATES ARE GOING TO BE. FINELY REGULATED ALL WITH HARD NUMBERS. THEY HAVE LIKE SHUMRY BOX THINGS THAT SAY THIS IS YOUR TOTAL PURCHASE PRICE. OF COURSE, THE MORE EFFECTIVE THE DISCLOSURE IS, AND THE MORE SALIENT THE DISCLOSURE IS THE MORE YOU HAVE TO START STUFFING IN FEES WHICH IS WHY THE FEES MAKE ME ANXIOUS. THE FEE DEPENDENCY OF THE MODEL MAKES ME SUSPECT OF ITS COME PREHENCEBILITY TO CONSUMERS. THE SECOND THING THAT GIVES ME A FLAG THAT I AM IN TO THE RIGHT AREA THAT WE SHOULD BE REGULATING IS WHEN THE CFPB WENT AFTER RENT ACENTER. RENT ACENTER FOUGHT LIKE HUNGRY DOGS THE SUGGESTION THE WERE SUGGEST TO REGULATION FOR THIS BEHAVIOR. WE'RE NOT A FINANCIAL SERVICE WE'RE JUST MERCHANTS. WE JUST SELL STUFF. AND THERE'S A LITTLE BIT OF FINANCING ON THE BACK END. THE CFPB REJECTED THAT POSITION. RENT-A-CENTER IS BASED IN PLANO TEXAS. LET ME TELL YOU HOW TEXAS REGULATES THIS. TEXAS HAS CRIMINAL LAWS FOR A WONDERFUL CRIME WHICH CAN BE A FELONY CALLED THEFT OF SERVICE. AND THE IDEA OF THE LAW WAS FOR PEOPLE WHO SKIP OUT ON THEIR HOTEL ROOMS. IT'S NOT THEFT OF CHATTELS IT'S THEFT OF SERVICE. WELL IN PLACES LIKE MCCLELLAN COUNTY WHERE WACO IS IN CENTRAL TEXAS, 98 PERCENT OF THE PROSECUTIONS OF THEFT OF SERVICE AT THE LOCAL OFFICE FOR PEOPLE WHO DON'T TURN BACK THE CHATTEL FOR THEIR RENT TO OWN CONTRACTS. THEY'RE BEING CRIMINALLY PROSECUTED AS A COLLECTION TECHNIQUE TO LIGHT A FIRE UNDER THEM TO THINK ABOUT WHETHER THEY WANT TO PAY FOR THEIR NO LONGER USED CHATTEL. THE TEXASTYTRY BUN DID A STUDY AND THEY FOUND OUT THEY'VE GONE AFTER MOM AND DAD CONSUMERS FOR TVs AND STUFF LIKE THAT. AND THEY ADMIT, IF THEY PAY WE DROP THE PROSECUTION. WHICH IS PRETTY MUCH IN MY BANKRUPTCY WORLD A CIVIL ATTEMPT TO COLLECT A JUDGEMENT. ANYWAY. I'LL STOP THERE. I WANT TO TALK ABOUT 30 SECONDS THEN WE'LL OPEN IT FOR DISCUSSION. WE DIDN'T GET A CHANCE TO TALK ABOUT SMALL BUSINESS. BUT THE PANEL SAID WE MIGHT LOOK AT SMALL BUSINESS MARKET. I DO WORK FOR NOW FOR THE FEDERAL GOVERNMENT INVOLVED IN UNITED NATIONS WORK. WE'LL SEE HOW LONG THAT LASTS. AND THE UNITED NATIONS TRIENAL COMMISSION IS TRYING TO WORK ON INSOLVENCY STANDARDS FOR MICRO-, SMALL, MEDIUM ENTERPRISES WHICH IS A BIG THING. MICRO-ECONOMIES. IT IS ONE OF THE HARDEST THINGS FOR TO US DO BECAUSE WE CAN DEAL WITH BIG CROSS-BORDER CHAPTER 11 TYPE THINGS. BUT WHEN YOU GET DOWN TO REGULATE SMALL BUSINESS WHAT WE REALIZED IN THE SOLVENCY IS IT BLENDS SO QUICKLY INTO THE PERSONAL IT'S HARD TO TAKE A CONCEPTION OF DISCRETE BUSINESS ENTITIES LIKE LIMITED LIABILITY. THEY'RE SOLE PROPRIETORS AND EVEN IF THEY HAVE SOME SORT OF ORGANIZATION THEY'RE ALL INDEPENDENTLY GUARANTEEING THE DEBT. SO, WHEN YOU START TO TALK ABOUT SMALL BUSINESSES YOU REALLY ARE TALKING ABOUT INDIVIDUALS AND IT IS A VERY DIFFICULT BORDER TO DO. THAT'S A LITTLE BIT OF DESPAIR. THAT'S ALL I'M GOING TO SAY. I'D LIKE TO ASK A COUPLE QUESTIONS THEN OPEN FOR GROUP DISCUSSIONS. AND YOU GUY CANS SAY I DON'T HAVE TIME TO TALK ABOUT THAT. LET'S START WITH PAT. PAT, I WANT TO KNOW, FIRST OF ALL, I'LL GIVE YOU A SOFTBALL. YOU CAN SAY GOODNESS SHOULDN'T THE MARKET DISCIPLINE WHETHER BORROWERS HAVE THE ABILITY TO PAY. THEN I'M GOING ASK A MORE SERIOUS QUESTION WHICH IS WHAT ABOUT THE ARGUMENT OF THE GSC PART. IS THAT LAW ECONOMICS VOODOO OR IS THERE SOME STUFF THERE AND YOU ARE WORRIED ABOUT THE SUBSTANTIVE. WHAT DO YOU THINK? Patricia McCoy: TO ANSWER THE FIRST QUESTION, NO. I THINK EXPERIENCE PROOF THAT LEAVING THE MARKETS TO UNDERWRITE ABILITY TO REPAY DIDN'T WORK. AND INFLICTED UNTOLD HARM ON PEOPLE IN THE LOWER HALF OF THE INCOME SPECTRUM. WITH RESPECT TO THE SUBSIDY. I HAVE TO SAY, I'VE REALLY BEEN ON THE FENCE ON THIS ONE. I WENT INTO MY TIME AT THE CFPB BEING A PRETTY ARDENT FANNIE/FREDDIE SUPPORTER. AND THEN IN MY TOWN THERE FOUND IN PERSONAL INTERACTIONS WITH THE GSEs FOUND THEM THROWING THEIR POLITICAL WEIGHT AROUND IN REALLY SHAMELESS WAYS THAT WERE ANTI-CONSUMER. FOR EXAMPLE, IN THE FIGHTS OVER TRYING TO WATER DOWN FORECLOSURE PROTECTIONS IN STATE LAW FOR BORROWERS. I THINK WE NEED TO THINK VERY CAREFULLY WHEN WE'RE SUPPORTING FANNIE AND FREDDIE WHAT ARE THE STANDARDS TO WHICH THEY'RE HELD, WHAT ARE THE STANDARDS TO WHICH THEY'RE HELD WITH RESPECT TO THEIR POLITICAL LOBBYING, WHICH CONTINUES IN CONSERVATORSHIP. IT WAS NOT SUPPOSED TO, BUT IT DOES CONTINUE. THE GSE PATCH DOES OPERATE AS AN IMPLICIT SUBSIDY BECAUSE IT IS MORE LIBERAL THAN THE REGULAR QM EXCEPTION AND IT'S ALSO MORE LIBERAL THAN THE TREATMENT OF LOANS SOLD TO WALL STREET. THE PREMISE FOR THAT IS THAT CSE UNDERWRITING IS REGULATED. IT IS MORE CAREFUL THAN LOANS SOLD TO WALL STREET. I THINK CERTAINLY BASED ON PRECRISIS EVENTS THERE ARE REASONS TO TAKE THAT POSITION. BUT WHEN I WAS AT THE CFPB MY ARGUMENT WAS WE SHOULD JUST HAVE ONE DEFINITION OF QM AND NOT SPLINTER IT AMONG THE GSEs, AMONG LOANS HELD IN PORTFOLIO VERSUS WALL STREET WHICH IS THE MESS WE HAVE TODAY. John Pottow: THANK YOU. I WOULD LIKE TO APOLOGIZE BECAUSE I DON'T THINK MY MICROPHONE OR PROBABLY USER ERROR. FOR THOSE ONLINE I APOLOGIZE IF MY COMMENTS AREN'T BEING PICKED UP. MAYBE THEY'LL BE TRANS KRIEBED IN THE MINUTES. LISA, I WANTED TO ASK YOU A QUESTION, BY THE WAY I DIDN'T EVEN UNDERSTAND SOME OF THE, I MEAN, I GOT THE STRUCTURAL HISTORY OF RED LINEING AND I GET THE JAPANESE INTERNMENT. I DIDN'T EVEN KNOW THERE WAS STRUCTURED STUFF INTO THE SOCIAL SECURITY ACT SO THAT SHOWS HOW NAIVE I AM ABOUT THAT. IS IT TOO BORING FOR TO YOU EXPLAIN WHAT THAT IS? WHAT IS THE STRUCTURAL STUFF? CAN IT BE EXPLAINED RELATIVELY EASY TO THE GROUP? Lisa Rice: SO IN THE SOCIAL SECURITY ACT WAS FIRST IMPLEMENTED THERE WERE CERTAIN CATEGORIES OF LABOR THAT WERE EXCLUDED. AND THOSE CATEGORIES OF LABOR CORRELATED VERY HIGHLY WITH COMMUNITIES OF COLOR. SO, YOU WILL FIND THINGS THROUGHOUT THE LATELY OF LAWS THAT I'VE LISTED AND THOSE WERE JUST A HANDFUL OF THEM. THE POINT WAS THAT THE DISCRIMINATION EMBEDDED INTO OUR MARKETPLACE WAS SO SYSTEMIC IT REACHED SO DEEPLY, SO FAR BACK, SO BROAD AND WIDE, THAT THE ARGUMENT TODAY THAT WE'LL JUST IMPLEMENT RACE-NEUTRAL POLICIES AND EVERYBODY WILL BE TREATED FAIRLY, JUST DOESN'T HOLD WATER. AND IT IS ONE OF THE REASONS WHY WE SO FERVENTLY NEED THE DESPAIRIT IMPACT DOCTRINE BOTH UNDER THE FEDERAL FAIR HOUSING ACT AND UNDER THE EQUAL CREDIT OPPORTUNITY ACT AMONG OTHER LAWS -- EMPLOYMENT, ET CETERA -- SO THAT WE CAN TEAR DOWN THESE STRUCTURAL BARRIERS THAT ARE KEEPING PEOPLE FROM OPPORTUNITIES. WE CAN CHANGE SYSTEMS TO MAKE THEM FAIR FOR EVERYONE, AND HOPEFULLY IN THE PROCESS TRY TO ELIMINATE SOME OF THE DESPAIRIT HARM. THE HARM THAT IS CAUSED BY THESE INEQUITIES, THESE INNATE INEQUITYS THAT WE'VE BEEN TALKING ABOUT John Pottow: THANK YOU. AND THAT ACTUALLY TIES IN WITH THE RENT TO OWN STUFF TOO BECAUSE ONE OF THE HOOKS THEY GIVE FOR PEOPLE IS TO SAY DO YOU WANT TO BUY OR DO A RENT TO OWN CONTRACT. THEY SAY THE GREAT THING ABOUT A RENT TO OWN CONTRACT IS YOU START TO ESTABLISH A CREDIT HISTORY. SO, YOU'LL GET MORE MONTHLY PAYMENTS WHICH WILL HELP YOU OUT. SO, THERE'S QUITE EFFECTIVE EXPLOITATION. LAUREN, I'M OVERWHELM PED BECAUSE THE ROBOTS ARE COMING TO TAKE OVER. AND I'M SCARED. [ LAUGHTER ] I DO WANT TO SAY THAT ONE OF THE MAJOR MODELS TO DISCLOSURE FIXES EVERYTHING. ONE OF THE MAJOR PREMISES OF THAT MODEL IS THAT, HEY, IF WE JUST GET ALL THE INFORMATION OUT THERE, EVEN IF NOT EVERYBODY READS IT, ALL WE NEED IS, YOU KNOW, RALPH NADER READING IT OR SOMEONE IS GOING TO READ IT AND THEN THAT INFORMATION WILL DISSEMINATE AND THAT WILL DISCIPLINE. BECAUSE AS LONG AS SOMEONE READS IT WHO KNOWS WHAT'S GOING ON THE OTHER PEOPLE CAN FREE RIDE OFF THAT OPERATIONAL CROSS SUBSIDY. HOW DOES THAT WORK IN AN INDIVIDUALIZED ENVIRONMENT Lauren Willis: IT DOESN'T EVEN WORK WELL IN THE MOUSE ENVIRONMENT. EVIDENCE THAT PEOPLE DON'T ACTUALLY READ THEM LIKE INCREDIBLY SMALL NUMBER. NOT NUFD TO TAME THE MARKET. IT'S EVEN BETTER WHEN YOU CAN MAKE SURE THOSE YOU THINK MIGHT TAME THE MARKET LIKE PERHAPS US DON'T GET THAT TERM John Pottow: YOU HIDE THE STUFF THAT MIGHT RAISE SUSPICIOUS Lauren Willis: ALTHOUGH I MUST ADMIT I RECENTLY HIT A BUTTON THAT I THOUGHT MEANT I WAS WATCHING A MOVIE THAT WAS COVERED BY THE AMAZON PRIME MEMBERSHIP THAT I HAVE AND IT WASN'T. I HAD SIGNED UP FOR AN ENTIRELY NEW FORM OF AMAZON PRIME. I GUESS THERE ARE MULTIPLE KINDS. I HAD NO IDEA. I WAS DOING THIS, LIKE, IN THE DARK TRYING TO NOT, YOU KNOW, DOING IT QUICKLY BEFORE MY KIDS WOKE UP. SO, PERHAPS THERE WAS SOME SENSING GOING ON THERE. BUT, YOU KNOW, IT'S NOT INTENTIONAL, I WOULD SAY. PERHAPS THERE'S RECKLESS INDIFFERENCE. BUT I THINK WE NEED TO SORT OF MOVE BEYOND WORRYING ABOUT THEY'RE TRYING TO GET US TO JUST, LIKE, LET'S -- HOW SHOULD WE RUN THIS SO IT'S FAIR FOR EVERYBODY RIGHT? AND I THINK THERE'S A LITTLE BIT OF A TENDENCY TO RUSH FOR TECHNOLOGICAL FIXES. BUT THE GOVERNMENT IS NOT GOING TO BE AS GOOD AT FIGURING OUT THOSE TECHNOLOGICAL FIXES AND STAYING AHEAD OF THE CURVE. SO, THAT'S WHY I THINK RATHER THAN SORT OF ALL THESE SORT OF SPECIFIC KINDS OF RULES WHERE YOU CAN'T, YOU KNOW, HAVE THIS PHRASE HERE ON THE PAGE THAT INTEND WE NEED TO DO THINGS LIKE WORK WITH THE ABUSIVENESS RULE. OR STANDARD. AND CERTAINLY THERE COULD BE THINGS LIKE, WELL, LET'S JUST IDENTIFY A DARK PATTERN AND YOU CAN'T DO IT ANYMORE. ALSO I THINK THERE COULD BE A LOT OF VALUE TO STANDARDIZATION IN THE WAY IN WHICH INFORMATION IS PRESENTED AND CERTAIN KIND OF BUTTONS. BECAUSE, YOU KNOW, YOU THINK YOU ARE DOING YES, YES, YES, BUT TURNS OUT OR NO, NO, NO, BUT TURNS OUT ONE OF THOSE ACTUALLY PURCHASED THE EXTRA LEG ROOM ON -- OR THE TRAVEL INSURANCE OR WHATEVER. AND I KNOW WITH SOME OF THESE KIOSKSS THERE A BUNCH OF ISSUES WITH ELDERLY PEOPLE ENDING UP WITH THINGS THEY DIDN'T INTEND TO END UP WITH AT THE AIRPORT. SO, WE COULD HAVE SOME PER SE RULES AND SOME STANDARDATION THAT WOULD CERTAINLY HELP. BUT, YOU KNOW, THE MACHINES ARE PRETTY CREATIVE. AND, YOU KNOW, OBVIOUSLY WE'RE NOT THERE YET. THERE STILL IS ACTUALLY A LOT OF INTENT EVIDENCE THAT YOU CAN FIND. PEOPLE INTERNALLY AT SOME OF THESE COMPANIES WILL BRING UP, WAIT A SECOND, THIS IS FOOLING PEOPLE THEN YOU'LL FIND A PAPER TRAIL. BUT PEOPLE WILL CERTAINLY LEARN TO BE QUIET ABOUT IT AT SOME POINT John Pottow: GOD BLESS EMAIL. THERE'S ALWAYS SOME SORT OF PAPER TRAG Lauren Willis: NOT ANYMORE. PEOPLE ARE ANOTHER USING EMAIL SO MUCH John Pottow: ROB, BACK TO YOUR BROADER POINT WHICH I THINK IS ONE WORTH THINKING ABOUT, WHICH IS THAT THE IDENTITY OF THE REGULATORS CAN MATTER AS MUCH, IF NOT MORE, THAN THE CONTENT OF THE REGULATION. FOR A GROUP THAT HAS A MISSION LIKE YOURS, DOES THAT MEAN YOU SHOULD START GETTING INVOLVED IN PERSONNEL MATTERS? OR SHOULD YOU JUST STICK TO THE CONTENT. OR DO YOU DO THAT ALREADY? Rob Randhava: WE DO WEIGH IN ON WHO IS BEING NOMINATED TO THESE AGENCIES. OF COURSE, OUR INTENTION IS SPLIT A LITTLE BIT BETWEEN WHO IS REGULATING AND THEN ALSO MUCH MORE CRITICAL IN A LOT OF WAYS, WHO IS DECIDING THE CASES. I MEAN, THAT IS A HUGE PART OF OUR AGENDA AND HUGE PART OF WHERE OUR TIME GOES. AND YOU KNOW WHAT SHE DOES, I MEAN, SHE HAS A FIVE YEAR TERM, THERE ARE THINGS THAT SHE CAN DO THAT WE DON'T LIKE, BUT WHAT SOME OF THE JUDICIAL NOMS THAT ARE GETTING APPOINTED FOR LIFETIME POSITIONS, THAT DAMAGE IS GOING TO GO FOR DECADES AND FOR, YOU KNOW, WHEN THEY MAKE THE WRONG DECISIONS. John Pottow: WELL THIS IS THE CHEERY PANEL. SO, I'M GOING TO ASK IF THERE'S PEOPLE WHO HAVE QUESTIONS. WE HAVE MICROPHONES GOING AROUND IF PEOPLE HAVE QUESTIONS TO ANYONE ON THE PANEL AUDIENCE MEMBER: THANK YOU. IT IS A GREAT PAM. PANEL. THIS IS A DECISION FOR LISA RICE. I KNOW THAT NAFA SETTLED A LAWSUIT WITH FACEBOOK REGARDING ITS ADS. COULD YOU TALK A LITTLE BIT ABOUT THAT AND GIVE US A SENSE WHAT THAT WAS ABOUT? Lisa Rice: THANKS SO MUCH FOR RAISING THAT QUESTION, WADE. IT'S ACTUALLY A SCARY PROPOSITION FOR ME AS THE HEAD OF THE CIVIL RIGHTS ORGANIZATION WHEN I LOOK AT MY ORGANIZATIONAL CHART I AM USUALLY LOOKING AT FILLING POSITIONS LIKE INVESTIGATORS OR COUNSEL OR PUBLIC POLICY ANALYSTS OR RESEARCHERS. NEVER DID I THINK I WOULD HAVE TO BE TRYING TO FILL POSITIONS FOR TECH ANALYSTS AND ALGORITHMIC SPECIALISTS AND THINGS LIKE THAT. BUT IT'S WHAT THE WORLD IS COMING TO AND WHAT WE HAVE TO DO. AND THIS CASE AGAINST FACEBOOK INVOLVED A SITUATION WHERE FACEBOOK ENGAGED IN SEVERAL ACTIVITIES. ONE IS THEY ACTUALLY DESIGNED THEIR ADVERTISING PLATFORM WHERE ADVERTISERS FOR HOUSING AND CREDIT AND EMPLOYMENT SERVICES WERE UTILIZING THEIR PLATFORM. THE PLATFORMS WAS DESIGNED IN A WAY THAT NOT ONLY ENCOURAGED PEOPLE TO DISCRIMINATE BUT HELPED TO FACILITATE THAT DISCRIMINATION AND THE DISCRIMINATION WAS BUILT INTO THE DESIGN. FOR EXAMPLE, YOU COULD EXCLUDE AUDIENCES FROM SEEING YOUR ADS, AND YOU COULD INCLUDE TO HELP AMPLIFY CERTAIN AUDIENCES YOU WANT TO SEE YOUR ADS. WHEN YOU GO TO FACEBOOK'S WEBSITE AND YOU CLICK ON "EXCLUDE," THERE ARE MENUS THAT DROP DOWN. THESE ARE PRE-POPULATED LISTS UNDER MULTI-CULTURAL OR ETHNIC AFFINITIES BOXES DROP DOWN. AFRICAN-AMERICAN, NATIVE AMERICAN, ASIAN-AMERICAN, HISPANIC. YOU CAN EXCLUDE ALL OF THOSE AUDIENCES. THERE'S NO BOX FOR WHITE AUDIENCES. SO, YOU CAN NEVER EXCLUDE WHITE AUDIENCES. SAME THING FOR THE INCLUSION CATEGORIES. WHICH MEANS THAT WHITE AUDIENCES ARE THE DEFAULT. SO, THAT WAS BUILT INTO THE SYSTEM. BUT THE OTHER THING IS THEY HAVE ALGORITHMIC FORMULAS AS LAUREN WAS TALKING ABOUT THAT OPTIMIZE WHO GETS TO SEE WHAT TYPE OF AD. AND AS, YOU KNOW, TO THE POINT THAT WE WERE MAKING EARLIER ABOUT THE DISCRIMINATION THAT IS SORT OF EMBEDDED INTO OUR SYSTEMS, JUST LIKE IF YOU ARE FINDING THAT OPTIMIZING FOR DECEPTION IS MORE PROFIT BL, YOU CAN OPTIMIZE FOR DISCRIMINATION IF IT PROVES TO BE MORE PROFITABLE. SO, THOSE ARE THINGS WE ARE GOING TO.TO WORK WITH FACEBOOK ABOUT. I HAVE TO SAY, THOUGH THE SETTLEMENT IS HISTORIC, WE DIDN'T THINK THAT WE WOULD EVER GET TO A SETTLEMENT. WE THOUGHT WE WERE GOING TO BE LITIGATING THIS CASE FOR A LONG TIME. BUT OUR FRIENDS IN THE CIVIL RIGHTS COMMUNITY REALLY GOT BEHIND THIS CASE AND PUSHED IT. OUR FRIENDS AT LEADERSHIP CONFERENCE AND LDF AND NAACP, ET CETERA, AND PUSHED FACEBOOK TO SETTLE THIS ISSUE BECAUSE IT IS IMPACTING SO MANY AUDIENCES AS LAUREN EXPLAINED. IT IS SO CRITICALLY IMPORTANT. BUT THERE WILL BE DESPAIRIT IMPACT ISSUES RAISED AS WE GO FORWARD. FACEBOOK MADE EIGHT BIG CHANGES NOT ONLY TO THEIR PLATFORM AND THEIR SYSTEMS BUT TO THEIR POLICIES. BUT IT IS A FIRST STEP, REALLY. THERE'S MORE WORK TO BE DONE. AND, YOU KNOW, I'M GOING TO BE RELYING MORE ON PEOPLE LIKE LAUREN TO HELP US WALK THROUGH THESE KINDS OF ISSUES BECAUSE THEY'RE HIGHLY TECHNICAL. THEY'RE HIGHLY COMPLICATED. AND, I MEAN, IF YOU THINK ABOUT IT, THESE ARE PROPRIETARY SYSTEMS, RIGHT, THAT THESE COMPANIES DON'T WANT TO SEE SUNLIGHT. THEY DON'T WANT TO BRING SUNLIGHT TO. SO, WE NEED EXPERTS WORKING IN THIS SPACE TO HELP US TO GET BEHIND WHAT IS REALLY HAPPENING. IS THEY THOUGHT THEY HAD IMMUNITY UNDER THE COMMUNICATIONS DECENCY ACT AND ALL INTERNET PROVIDERS TO ROHIT'S POINT EARLIER, WE DO NEED TO DO WORK TO BRING OUR CIVIL RIGHTS LAWS UP TO DATE. THE FAIR HOUSING LAW WAS PASSED SEVEN DAYS AFTER DR. KING'S ASSASSINATION IN 1968. SO, IT DID NOT ANTICIPATE THESE NEW PLATFORMS, RIGHT, AND THESE NEW SPACES THAT WE'RE DEALING IN. THE CIVIL RIGHTS LAWS DID NOT ANTICIPATE THAT THE ROBOTS WERE COMING TO GET US. THEY REALLY ARE LAUREN. [ LAUGHTER ] AND SO WE DO NEED TO THINK ABOUT THIS AS WE MOVE FORWARD. BUT I WILL ALSO SAY THAT THE FAIR HOUSING ACT HAS BEEN INTERPRETED VERY BROADLY AND THE SUPREME COURT HAS SAID THAT THE FAIR HOUSING ACT SHOULD BE INTERPRETED AS BROADLY AS POSSIBLE TO SORT OF TRY TO COVER FOR SOME OF THESE EVENTUALITYS MY QUESTION IS FOR LISA RICE. IN TALKING ABOUT THE DISCRIMINATION BEING EMBEDDED IN VARIOUS LAWS I WONDERED IF YOU COULD SPEAK TO WHETHER THERE'S A HISTORY IN THAT SENSE WITH REVERSE MORTGAGES Lisa Rice: THAT'S A GREAT QUESTION AND I WOULD LOVE TO HAVE PATRICIA WEIGH IN BECAUSE SHE'S DONE A LOT OF WORK ON THIS AREA. ONE OF THE CHALLENGES THAT WE HAVE WITH REVERSE MORTGAGES IS THAT BECAUSE OF THE DUAL-CREDIT MARKET, BECAUSE OF THE HUGE DISPARITY IN WEALTH BETWEEN AFRICAN-AMERICANS AND WHITES, THE ABILITY OF AFRICAN-AMERICANS TO SUCCESSFULLY UTILIZE A REVERSE MORTGAGE IS PROFOUNDLY DIMINISHED. I MEAN, AFRICAN-AMERICANS ON AVERAGE JUST DO NOT HAVE THE TYPE OF EQUITY IN OUR HOMES THAT WHITE FAMILIES DO. AFRICAN-AMERICANS, AS A RESULT OF THE CRASH, ARE DISPROPORTIONATELY UNDERWATER. SO JUST THE ABILITY TO ACCESS THE PRODUCT IN AND OF IT SELF IS AN ISSUE BECAUSE THERE'S A HUGE GAP THERE. BUT THE WAY THAT THE PROGRAMS ARE JUST DESIGNED, THERE'S STILL SOME PROBLEMS. I THINK THAT THERE HAVE BEEN SOME EFFORTS TO TRY TO CLEAN THEM UP. THOSE EFFORTS HAVEN'T GONE ALL THE WAY AND THERE'S STILL MAJOR PROBLEMS. AND I APOLOGIZE, IT IS NOT MY AREA OF EXPERTISE SO I'VE GOT TO CALL ON MY COLLEAGUES TO HELP OUT. Patricia McCoy: I THINK WE HAVE TO SEE REVERSE MORTGAGES. OBVIOUSLY THEY'RE MUCH NEWER PRODUCT THAN THE TRADITIONAL FHA FORWARD MORTGAGE. BUT WE HAVE TO SEE IT AGAINST THE BACKDROP THAT ON AVERAGE AFRICAN-AMERICAN FAMILIES HAVE FAR FEWER RETIREMENT SAVINGS OR DECENT, DEFINED BENEFIT PENSIONS TO HELP THEM IN RETIREMENT. AND SO BEYOND SOCIAL SECURITY WHICH HAS ITS OWN PROBLEMS, WHAT THESE FAMILIES MAY BE LEFT TO FALL BACK ON IS ANY EQUITY IN THE HOME. AND SO WE HAVE TO LOOK AT THIS ISSUE NOT JUST AS IS THE REVERSE MORTGAGE A PROBLEMATIC PRODUCT FOR PEOPLE OF COLOR, BUT LOOK AT IT IN THE LARGER SYSTEM OF WOEFULLY INADEQUATE SOCIAL SAFETY NETS FOR AFRICAN-AMERICAN FAMILIES AS THEY ENTER INTO THEIR RETIREMENT YEARS. I'M NOT SURE THAT WE CAN CREATE A REVERSE MORTGAGE PRODUCT THAT WORKS WITHOUT EQUITY. THAT SAYS TO ME WE HAVE LARGER ISSUES TO SOLVE. AND THAT THERE IS PROBABLY A BETTER WAY OF GOING ABOUT RETIREMENT SECURITY THAN HINGING EVERYTHING ON THAT. Lisa Rice: AND THE ONE THING THAT I WILL SAY TOO IS THAT I DON'T THINK THAT -- I THINK THAT WE REALLY NEED TO THINK ABOUT WHETHER OR NOT IT IS THE RIGHT IDEA TO GIVE A LUMP-SUM PAYMENT IN THE REVERSE MORTGAGE PRODUCT. AND IF WE SHOULDN'T GO BACK TO MAKING IT MORE OF LIKE AN ANNUITY. BECAUSE THERE ARE SOME DANGERS THERE. WE'VE SEEN SO MANY SENIOR CITIZENS ABUSED WHEN THEY GET THAT LUMP-SUM PAYMENT. AND TALK ABOUT THE FEE EXTRAPOLATION. SO, I DO THINK THAT'S ONE AREA WE NEED TO REVISIT John Pottow: OTHER QUESTIONS? WE'VE GOT SOME UP HERE. AUDIENCE MEMBER: THANK YOU VERY MUCH TO THE MEMBERS OF THE PANEL. QUITE A VERY INTERESTING DISCUSSION. I'VE BEEN STRUCK BY SOME OF THE ISSUES WE'VE TALKED ABOUT EARLIER IN THE DAY AND CARRYING INTO THIS PANEL ABOUT UNSCRUPULOUS BEHAVIOR AND HOW IT AFFECTS CONTRACTS. I'M WONDERING WHAT YOUR THOUGHTS WERE ON WHETHER OR NOT YOU SEE UNCON SHENBILITY AS A DOCTRINE THAT CAN HELP TO PUSH BACK AGAINST SOME OF THE -- [ LAU [ LAUGHTER ] I THINK PROFESSOR MCCOY WANTS TO COMMENT. Lauren Willis: WE ARE ON THE MOST MISERABLE PROJECT ON THIS. PAT AND I HAVE BEEN WORKING ON THIS DRAFT RESTATEMENT OF CONSUMER CONTRACTS. I BROUGHT THIS UP YESTERDAY AT THE END OF THE DAY. AND IT TRIES TO RELY ON UNCON SHENBILITY AND SAYS BASICALLY CONSUMERS DON'T HAVE TO ASCENT TO ANYTHING. YOU ARE BOUND BY WHATEVER THE FIRM SAYS YOU ARE BOUND TO AND ALL YOU CAN DO IS DEFAULT AND DEFEND YOURSELF USING UNCON SHEN ABILITY. NOW THAT IS POINTLESS. THAT IS NOT GOING TO PREVENT BAD TERMS FROM GOING IN FOR ALL SORTS OF REASONS. LITIGATION REASONS PEOPLE ARE NOT GOING TO WANT TO DEFAULT FIRST. THERE'S ALSO THE ISSUE WHEN PEOPLE READ THE FINE PRINT OF CONTRACTS, WHICH THEY DON'T DO BEFORE ENTERING INTO A CONTRACT, BUT OCCASIONALLY THERE WILL BE PART OF THEM POINTED OUT TO THEM WHEN THEY COMPLAIN, THEY BELIEVE THAT'S BINDING. NO MATTER WHAT IT SAYS. IF IT SAYS YOU HAVE TO PAY A FEE THAT YOU WERE EXPLICITLY TOLD BEFORE YOU GOT INTO THE CONTRACT THAT YOU WOULDN'T HAVE TO PAY, YOU BELIEVE YOU HAVE TO PAY IT. I MEAN, THERE'S BEEN PSYCHOLOGICAL RESEARCH ON THIS RECENTLY. SO, ONCE YOU PUT A TERM IN THERE PEOPLE ARE GOING TO THINK THEY'RE BOUND BY IT REGARDLESS. IT DOESN'T MATTER HOW UNCONSCIONABLE IT IS. THERE'S A HISTORY OF COURTS NOT WANTING TO FIND THINGS UNCONS UNCONSCIONABLE. BACK IN THE HOPA DAYS WHEN WE WERE TRYING TO GET SOME OF THESE MORTGAGES LOOKED AT THERE WAS A CASE WHERE I THINK IT WAS 98% OF THESE WOMEN'S MONTHLY INCOME WAS GOING TO THEIR MORTGAGES. AND THAT WAS ENOUGH TO FIND UNCON SHENBILITY BUT THE COURT WAS HESITANT ABOUT IT. THAT WAS IN THE FIRST CIRCUIT. JUDGE YOUNG IN MASSACHUSETTS. SO, THINGS THAT WERE LESS THAN THAT WOULD NOT BE ENOUGH. Patricia McCoy: I THINK ONE OF THE REALLY IMPORTANT THINGS TO REALIZE HERE IS A FINAL FLAW OF THIS AI PROJECT IS IT KA PITCH RATES TO THE THAT TODAY SINCE WE DON'T READ CONTRACT TERMS WE MIGHT NOT EVEN OPEN UP THE DISCLOSURE TO LOOK AT THEM, IT CAPITULATES AND SAYS YOU ARE BOUND. UNLESS YOU CAN SOMEHOW PERSUADE SOME COURT ON A ONE BY ONE CONTRACT BASIS TO DENY ENFORCEMENT. ULTIMATELY WHERE I HEAD ON THAT IS THAT'S AN INVITATION TO REPLACING CONTRACT LAW WITH STATUTORY REGULATION. ULT ULTIMATELY. CONTRACT LAW IS FAILING US IF THAT'S THE PATH WE'RE GOING DOWN John Pottow: I THINK WE'VE GOT TIME FOR ONE MORE QUESTION BEFORE WE HAVE TO BREAK. WHO HAS JURISDICTION TO GET THE MICROPHONE THERE? REMEMBER, YOU KNOW, SEMINOLE UNCON SHENBILITY IMPLEMENTED BY REGULATION. THE FTC CAME AND TOOK OVER. MY QUESTION IS FOR ROBIN -- ROB AND THE PANEL IN GENERAL. I WANT TO KNOW MORE ABOUT HOUSING ASSISTANCE. RENTS IN DETROIT ARE RISING AT A FASTER PACE THAN NATIONALLY. AND THE WEST COAST THERE SEEMS TO BE A CRISIS. Rob Randhava: SO THERE'S A BILL BY SENATOR WARREN THAT -- ONE OF THE -- THERE'S A PROVISION IN THERE THAT PROVIDES DOWN PAYMENT ASSISTANCE TO PEOPLE WHO HAVE LIVED IN PREVIOUSLY REDLINEED NEIGHBORHOODS. I MEAN, THAT'S THE ORIGINAL CONCEPT OF THE BILL. THE NEWER VERSION OF THE BILL ALSO INCLUDES RECAPS FOR THE FAIR HOUSING MAPS AS AREAS THAT CAN BE TARGETED. WE'RE STILL WORKING ON, YOU KNOW, HOW CAN WE CONTINUE TO IMPROVE THAT COVERAGE? SO IT'S HELPING PEOPLE THAT DESERVE TO BE HELPED WHILE NOT MAKING IT A FREE FALL FOR PEOPLE WHO YOU KNOW WHO DIDN'T EXPERIENCE THE DISCRIMINATORY CONDUCT OF THE PAST. AND SO THERE IS THAT DOWN PAYMENT PART. THERE IS ALSO SIGNIFICANT INVESTMENTS IN THE NATIONAL HOUSING TRUST FUND TO HELP WITH RENTAL. I MEAN, OVERALL IT'S JUST -- IT PROPOSES ADDING A WHOLE LOT MORE HOUSING UNITS -- RENTAL, HOME OWNERSHIP AND THE BASIC LAWS LETTING THE BASIC LAWS OF SUPPLY AND DEMAND DO THEIR THING. AND THAT'S WHY I'M REALLY ENTHUSIASTIC ABOUT IT. AND I HOPE -- I MEAN, HOW IT GETS IMPLEMENTED OF COURSE THERE'S A LOT OF QUESTIONS AROUND THAT AS THERE IS WITH ANY LAW, BUT AT LEAST I'M GLAD THAT THIS APPROACH WOULD HOPEFULLY ELEVATE THE NATIONAL DEBATE AROUND HOUSING. BECAUSE THERE'S A LOT OF ISSUES TO PAY ATTENTION TO IN THE NEXT YEAR AND A HALF BUT HOUSING OFTEN GETS LEFT OUT OF THE AGENDA. John Pottow: SO LET ME CONCLUDE WITH A COUPLE THINGS. I WANT TO APOLOGIZE FOR THE MICROPHONE EARLIER. SECONDLY, IN CASE WE SOUND LIKE WE'RE TOO GLOOMY, I WILL CLOSE ON MY FAVORITE FEE I FOUNT FOR THE RENT TO OWNS WHICH IS THE REPOSSESSION FEE. IF YOU DECIDE TO PURCHASE IT, YOU HAVE TO PAY A FEE. IF YOU DECIDE TO GIVE IT UP YOU HAVE TO PAY A FEE. WHICH IS NOT INCLUDED IN THE PRICE. THE POSITIVE PART IS STATES THAT REGULATE CALIFORNIA HAS BANNED THOSE FEES. SO, THERE IS A ROLE FOR HARDLINE CAP REGULATIONS. PLEASE BEFORE WE GO TO LUNCH JOIN ME FOR THIS FANTASTIC PANEL AND THANK YOU FOR THE QUESTIONS.