Rohit Chopra: Consumer Protection in an Age of Uncertainty Keynote Conversation (Day 2) | Gerald R. Ford School of Public Policy

Rohit Chopra: Consumer Protection in an Age of Uncertainty Keynote Conversation (Day 2)

March 22, 2019 1:01:09
Kaltura Video

Rohit Chopra, American consumer advocate and Commissioner on the Federal Trade Commission talks about consumer uncertainty. Learn more about the conference here. 

Transcript:

I AM DELIGHTED TO WILL GIVE YOU 

BACK TO THE FORD SCHOOL OF POLICY 

AND THE CONFERENCE ON CONSUMER 

PROTECTION IN AN AGE OF 

UNCERTAINTY.

WELCOME BACK TO THOSE IN THE 

ROOM THANK YOU TO THOSE 

WATCHING ONLINE.

IT IS A REAL PLEASURE THIS 

MORNING TO BE ABLE TO BE IN 

CONVERSATION WITH ROHIT 

CHOPRA. HE  WAS A ASSISTANT 

DIRECTOR AT THE MANAGEMENT 

BUREAU UNCERTAINTY AGENCIES FOR 

STUDENT LOAN.

HE PLAYED AN INSTRUMENTAL ROLE 

IN THE AGENDA IN THE STUDENT 

LOAN FOR-PROFIT COLLEGE MARKET.

HE ALSO SERVED AS SPECIAL 

ADVISOR TO THE SECRETARY OF 

EDUCATION TO RETHINK THE 

DEPARTMENT'S OVERSIGHT OF 

INSTITUTIONS.

AND FOR CONTRACTORS.

I AM DELIGHTED TO WELCOME YOU 

BACK TO FORT SCHOOL OF IN 

OCTOBER 2017 TO SERVE OF THE 

FEDERAL TRADE COMMISSION.

AT UNANIMOUSLY CONFIRMED BY THE 

SENATE APRIL 2018.

HE HAS PLACED A STRONG EMPHASIS 

ON INCREASING MILITARY REMEDIES 

AND CONFRONTING THE CHALLENGES.

AND RATHER THAN A FORMER 

KEYNOTE ADDRESS ROHIT HAS 

AGREED.

LET ME START BY ASKING AFTER 

THE FINANCIAL CRISIS.

APPARENTLY I HAVE A AND BAKING 

REGULATORS WHO ARE OUTSPOKEN 

ABOUT NOT LETTING WHAT HAPPENED 

HAPPEN AGAIN.

THEY DO NOT WANT TO BE 

PREEMPTED.

THEY DO NOT WANT TO SIT ON THE 

SIDELINES WHILE THINGS GO AWRY.

THAT IS A MAJOR STRENGTH.

OBVIOUSLY WE ARE BOTH A LITTLE 

BIASED ON THIS BUT A MAJOR 

STRENGTH.

AT LEAST WE HAVE A CFPD AND 

THAT IS SOMETHING THAT IS NOT 

EVER GOING TO GO AWAY.

AND WE WILL MAKE SURE OF THAT.

BUT THERE ARE MIXED EVIDENCE A 

SOME OF OUR OTHER BANKING 

REGULATORS ARE DOING.

IF WE LOOK AT THE MACRO PICTURE 

OF LOW UNEMPLOYMENT.

LIKE WE ARE SEEING NOW.

WHY ARE WE SEEING THIS TYPE OF 

DELINQUENCY?

WHY ARE WE SEEING SUCH ONGOING 

PROBLEMS IN STUDENT LENDING?

WHEN WE PEEL BACK ONE LAYER OF 

THE ONION THERE ARE A LOT OF 

TROUBLES THAT I AM NOT SURE ALL 

OF OUR REGULATORS ARE ON THE 

GAME ON THAT.

AND THAT WORRIES ME.

THAT WORRIES ME THAT WE ARE NOT 

PREPARED AS WELL AS WE COULD BE 

FOR THE NEXT RECESSION.

WHICH I DON'T KNOW WHEN WILL 

COME BUT WILL COME.

MAYBE I WILL PUT YOU ON THE 

REGULATORY QUESTIONS.

YOU NOTED THE RISE OF ACTIONS 

BY STATE AG AND STATE 

REGULATORS.

AND THE DENUTION OF ENFORCEMENT 

OF THE ARE THEY UP TO THE TASK 

OF FILLING IN?

WHAT IS THE ROLE OF OCC AND 

FTIC AND THE FED.

OTHER BEING AGGRESSIVE ENOUGH?

ARE YOU SEEING THE FEDERAL 

LEVELS REACTION AMONG THE 

REGULATORS?

Rohit Chopra: THE FTC CANNOT 

FIT THE GAP.

WE ARE NOT RESOURCED TO DO SO.

WE DO NOT HAVE NEARLY THE 

EXPERTISE IN TERMS OF THE RANGE 

OF RESOURCES AND AUTHORITIES AS 

THE CFPD.

I'M HAPPY TO TALK ABOUT THIS 

MORE.

THERE ARE AREAS WHERE THE FTC 

HAS A UNIQUE ROLE TO PLAY BUT 

IT SHOULD NOT BE SEEN AS THE 

BACKSTOP FOR A WEAKENING 

ENFORCEMENT AGENDA OF THE CFPD.

OBVIOUSLY WILL RECEIVE THIS 

FEDERAL LEVEL IS OF GREAT 

CONCERN TO ME.

BECAUSE IT IS A SIGNAL TO THE 

MARKETPLACE THAT YOU CAN GO 

CLOSER TO THE LINE.

EVEN CROSS THE LINE AND YOU CAN 

MAKE A BUSINESS DECISION TO 

CROSS THE LINE.

EVEN IF YOU ARE CAUGHT MAYBE 

THERE WILL BE MUCH CONSEQUENCES 

AT ALL.

WHAT I WANT TO UNDERSCORE ON 

THAT IS THIS IS DEEPLY UNFAIR 

TO LAW ABIDING FINANCIAL FIRMS.

SEE A LOT OF FINANCIAL FIRMS 

THAT ARE WANTING TO FOLLOW THE 

LAW.

AND GUESS WHO WAS MOST HARMED 

BY THEIR PEERS AND COMPETITORS 

BREAKING THE LAW?

THAT IS FUNDAMENTALLY UNFAIR 

THIS IS NOT JUST ABOUT 

PROTECTING CONSUMERS.

BUT FOR EVERY LAW ABIDING 

BUSINESS THEY SHOULD BE ANGRY 

ABOUT WHAT IS WEAKENING 

ENFORCEMENT AT LARGE.

ROHIT CHOPRA LET ME IN A 

COUPLE AND LET ME START IN THE 

AUTO MODE LOAN MARKET..

AS MANY OF OF YOU KNOW THERE E 

IS A TUSSLE THE LEGISLATIVE 

PROCESS AND THE CONSUMER 

PROTECTION BUREAU WAS STRIPPED 

OF ITS AUTHORITY BACK IN THE 

DEBATE OVER DODD FRANK.

TO WRITE RULES OVER AUTO 

DEALERS WITH RESPECT TO LENDING 

PRACTICES.

BUT IN A STRANGE TWIST OF FATE 

IN THE LEGISLATIVE PROCESS.

DUE TO THE UNDERHANDED 

LEGISLATIVE SCHEMES OF ERIC 

STONE AND OTHERS.

MAGICALLY THAT SAME AUTHORITY 

APPEARED OVER AT THE FTC.

AND I WONDER WHETHER, ROHIT 

CHOPRA:YOU COULD COMMENT ON 

THIS.

IT IS A FUNNY SITUATION.

THE FTC WHICH GENERALLY DOES IT 

HAVE ROLE WRITING AUTHORITY IN 

MOST AREAS.

BUT IN THIS ONE AREA THEY HAVE 

REALLY CLEAR AUTHORITY.

IT IS THE ONLY THING FOR YOU 

HAVE EASY WAYS TO WRITE RULES.

I'M WONDERING IF YOU COULD 

COMMENT ON WHY HASN'T THE FTC 

FRONT WITH THIS AUTHORITY TO 

REGULATE LENDING IN THE AUTO 

DOING?

Rohit Chopra: LET ME GIVE 

CONTEXT TO ONE THING.

THE FTC CANNOT GET CIVIL 

PENALTIES UNLESS THERE IS A 

VIOLATION OF AN EXISTING ORDER 

OR RULES.

SO, WHAT BUGS ME.

EVEN WHEN WE FIND MISCONDUCT 

TODAY.

BECAUSE WE HAVE A RULE ON THE 

BOOK WE CANNOT SEEK CIVIL 

PENALTIES.

EVEN IF WE WERE TO SIMPLY 

RESTATE OUR EXISTING POLICY 

COULD TURN THIS ON.IT REALLY 

CHANGE THE MARKETS.

IT IS PRETTY DISAPPOINTING IT 

HAS BEEN 90 YEARS.

IT HAS BEEN DISAPPOINTING TO 

ME.

IT IS SOMETHING I WANT TO PUSH 

FOR.

LET ME GET BIG PICTURE ON AUTO.

WE ARE SEEING SOMETHING WEIRD 

GOING ON.

SINCE 2010 WE'VE SEEN A 

DRAMATIC RUN-UP OF OUTSTANDING 

AUTO LOANS.

I THINK WE HAD A BLOCKBUSTER 

YEAR OF AUTO LENDING.

IN 2018.

AND SOMETHING THAT IS IMPORTANT 

IS TECHNOLOGY IS REALLY 

CHANGING THIS.

MANY OF YOU MAY KNOW GPS 

TRACKERS, KILL SWITCHES, OTHER 

REPO TECH IS MAKING IT EASIER 

TO SNATCH A CAR FROM THE 

BORROWER DOESN'T PAY.

AND THE NET RESULT IS THERE ARE 

LENDERS OUT THERE ABLE TO GIVE 

A LOAN EVEN IF THEY KNOW IT 

WILL NOT BE REPAID.

THEY KNOW THEY CAN TAKE THAT 

CAR BACK.

I HOPE EVERYONE HAS SEEN THE 

JOHN OLIVER SEGMENT ABOUT A CAR 

THAT WAS SOLD AND REPOSSESSED 

SO MANY TIMES.

THAT IS WHEN A LENDER KNOWS IT 

DOESN'T EVEN MATTER THAT 

BORROWER CRASHES AND BURNS.

AND THE SHOULD BE OF REAL WORRY 

FOR US.

BECAUSE AN AUTOMOBILE IS 

LITERALLY THE VEHICLE IN WHICH 

YOU CAN GET TO EMPLOYMENT.

IN WHICH YOU CAN ACCESS 

HEALTHCARE.

IN WHICH YOU CAN PARTICIPATE IN 

SOCIETY FOR THE VAST MAJORITY 

OF AMERICANS.

IF WE ARE SEEING REPOSSESSIONS.

IF WE ARE SEEING AUTO LOAN 

DELINQUENCIES AT RATES WE 

SHOULD BE UNHARMED.

AND WE SHOULD NOT SIT AROUND 

DOING NOTHING LIKE WE DID WITH 

STUDENT DEBT.

IT IS THE SAME STORY OVER AND 

OVER.

WE SAW IT IN MORTGAGE WE SAW IT 

IN STUDENT LENDING WE ARE 

SEEING IT IN AUTO.

AT ON TOP OF THAT SUBPRIME AUTO 

IS DISPROPORTIONATELY AFFECTING 

PEOPLE OF COLOR.

IT IS DISPROPORTIONATELY 

AFFECTING THE ZIP CODES THAT 

ARE LOWER INCOME.

AND THOSE ARE PLACES THAT DON'T 

NECESSARILY HAVE THE POLITICAL 

POWER TO DEMAND CERTAIN TYPES 

OF CHANGE.

I THINK THAT IF WE DON'T DO 

ANYTHING ABOUT IT IF THE CFPD 

DOES NOT DO ANYTHING ABOUT IT 

WE WILL NEED THE STAMPS DOMINIC 

STATES TO WEAR ABOUT.

EVERYTHING I WORRY ABOUT.

THERE IS NOT GOING TO BE A 

CRISIS TO THE BANK ON THIS.

AUTO LENDING IS NOT GOING TO 

THREATEN THEIR ADEQUACY.

THAT THE ABILITY TO KEEP 

REPOSSESSING AND DOING IT 

CHEAPLY.

IS NOT GOING TO THREADED THAT.

IT WILL BE HOW TO BETTER 

PROTECT CONSUMERS NOT HOW WE 

PROTECT THE CAPITAL ADEQUACY OF 

FINANCIAL INSTITUTIONS.

I HOPE WE CAN MAKE BIG PROGRESS 

ON THIS.

AND AT SOME POINT IS THAT 

AUTHORITY BECAUSE AFTER USING 

THAT AUTHORITY WE ARE NOT GOING 

TO EVER FIX THIS, I THINK.

GIVEN WHAT YOU JUST SAID 

SHOULD THERE BE SOME KIND OF 

ABILITY TO REPAY RULES IN AUTO?

AND WHAT CAN THE FTC DO IF 

ANYTHING ABOUT THE LONG 

EXPERIENCE OF DISCRIMINATION 

AND AUTO LOANS?

Rohit Chopra: MANY OF YOU 

MAY KNOW OF THE FTC ALSO EQUAL 

ACCESS BUT WE HAVE NOT BROUGHT 

A CASE IN A VERY LONG TIME.

AND THERE IS OBVIOUSLY SOME 

EFFORTS AT THE CFPD TO GO AFTER 

THAT.

WE HAVE TO DEAL WITH 

DISCRIMINATION IN AUTO LENDING.

I PERSONALLY FEEL THERE NEEDS 

TO BE MORE DATA ABOUT AUTO 

LENDING OUTCOMES.

AND THE MORE DATA WE HAVE THE 

BETTER WE CAN BRING THOSE CASES 

OF THE BETTER WE CAN COMBAT IT.

WITH RESPECT TO A RULE COULD 

LOOK LIKE.

I THINK PUTTING COMMON SENSE 

RULES THAT NOT ONLY DOCUMENT 

OUR EXISTING ENFORCEMENT RECORD 

OF WHAT WE KNOW TO ALREADY BE 

UNLAWFUL.

SO WE CAN GET THAT PENALTY 

AUTHORITY.

BUT ALSO TO MAKE SURE THAT WE 

DON'T HAVE THE TYPE OF ABUSE 

THAT ALLOWS THE BUSINESS MODEL 

TO PERSIST.

I DON'T KNOW WHAT THAT WOULD 

LOOK LIKE.

BUT IT NEEDS TO BE A PEOPLE'S 

RAIDERS I THINK IT NEEDS TO BE 

ON HER RADAR BEFORE THE ECONOMY 

SOURS RATHER THAN TO LEAVE.

LET'S TURNED TO SMALL 

BUSINESS MARKETS.

THERE HAS BEEN DRAMATIC CHANGES 

IN THE SMALL BUSINESS MARKET IN 

THE LAST 10-15 YEARS.

WITH A VERY WIDE VARIETY OF 

BANK AND NON-BANK PARTICIPANTS.

THE RISE OF A DIFFERENT KIND OF 

BLENDING TECHNIQUE.SOME OF 

THOSE HAVE POSITIVELY INCREASED 

ACCESS TO CAPITAL FOR SMALL 

BUSINESSES.

WHO WERE NOT ABLE TO OBTAIN IT 

BEFORE.

BUT THERE IS ALSO BEEN A RISE 

OF BUSINESS LENDING ACTIVITIES 

THAT ARE REMINISCENT OF THE 

KIND OF SUBPRIME MORTGAGE 

LENDING THE RESULT IN THE LEAD 

UP TO THE CRISIS WITH VERY 

COMPLICATED TERMS.

VERY DIFFICULT TO COMPARE TERMS 

ACROSS QUOTE OFFERS.

MOST OF YOU KNOW THIS BUT THE 

TRUTH IN LENDING ACT FOR SMALL 

BUSINESS LENDING.

WHAT DID THE FTC OR OTHER 

REGULATORS BE DOING TO CLEAN UP 

THIS MARKETPLACE?

AND HELP THE HIGHROAD PLAYERS 

AS SHE DESCRIBED BEFORE IN THE 

AUTO CONTEXT.

BUT HOW DO WE HELP HIGHROAD 

PLAYERS THRIVE?

HOW DO WE PROTECT CONSUMERS?

IN A BIG PICTURE SENSE FROM THE 

FTC OR OTHERWISE SHOULD WE BE 

DOING?

Rohit Chopra: LET ME MAKE A 

FEW POINTS ON THIS.

FIRST, IT IS ALREADY VERY 

DIFFICULT TO SMALL BUSINESSES 

TO FORM AND COMPETE.

YOU KNOW FOR THE PAST 35 YEARS 

WE HAVE SEEN A SECULAR DECLINE 

OF NEW BUSINESS FORMATION.AND 

I THINK PART OF THAT IS DUE TO 

MASSIVE CONSOLIDATION AND 

SECTORS ACROSS THE ECONOMY.

IT IS MUCH HARDER FOR A SMALLER 

FIRM TO ENTER BECAUSE IT IS 

HARD TO COMPETE WITH THE BIG 

GUYS.

THERE'S AN ANTI- TRUST QUESTION 

WE HAVE TO CONFRONT.

BUT SMALL BUSINESS LENDING IN 

THE NON-BANK SECTOR IS THE 

EXCLUSIVE JURISDICTION OF THE 

FTC.

THE CFPD DOES NOT HAVE 

AUTHORITY.

THE CFPD HAS ABILITY TO DO DATA 

BUT NOT TO ENFORCE.

A FEW PROBLEMS I SEE.

ONE, I THINK WE'RE SEEING A 

MASSIVE INCREASE IN PAYDAY 

STYLE SMALL BUSINESS LOANS.

THE WAY OFTEN THIS WORKS JUST 

THE SMALL BUSINESS WITH A 

RESTAURANT OR RETAILER.

THEY ARE COLLECTING A LOT OF 

THE REVENUES THROUGH CREDIT 

CARD TRANSACTIONS.

AND YOU HAVE LENDERS WHO 

ESSENTIALLY OFFER VERY 

SHORT-TERM LOANS THAT ARE 

SECURED BY THIS CREDIT CARD 

RECEIVABLES.

IT IS JUST LIKE A PAYDAY LOAN 

IN SOME WAYS.

THE TERMS AND CONDITIONS YOU 

SEE.MANY OF YOU HAVE HEARD 

THE INCLUDE TERMS LIKE 

CONFESSIONS OF JUDGMENT.

THINGS THAT WERE BANNED BY THE 

FTC CREDIT PRACTICES RULES 30 

YEARS AGO BUT DO NOT COVER 

SMALL BUSINESS LOANS.

I THINK THERE ARE NOW AROUND 

$15 BILLION OF ORIGINATION IN 

THESE PAYDAY SMILE SMALL 

BUSINESS LOANS.

THIS OBVIOUSLY IS GOING TO 

TARGET SOME OF OUR MOST 

VULNERABLE:YOU KNOW, 

INDIVIDUALS.

I ALSO THINK IT IS NOT JUST A 

TYPICAL SMALL BUSINESS.

IT MIGHT BE WORKERS, OTHER 

WORKERS MIGHT BE INDEPENDENT 

CONTRACTORS OR HAVING THEIR 

PRIMARY INCOME NOT TIED TO 

TRADITIONAL EMPLOYMENT.

WE AT THE FTC WILL BE HOLDING A 

FORUM ON THIS.

BUT I HOPE IT LEAVES THE 

GROUNDWORK FOR MORE DATA AND 

MORE ENFORCEMENT.

AND AS APPROPRIATE I THINK THEY 

WILL NEED TO BE GREATER 

AWARENESS ABOUT HOW THESE TYPES 

OF LENDING MODELS ARE INFECTING 

VARIOUS PARTS OF OUR FINANCIAL 

ECONOMY.

AGAIN, I HATE TO SAY IT.

WE HAVE SEEN THIS BEFORE.

LET'S NOT PRETEND TO BE 

SURPRISED BY HIM.

IT HAS THE SAME INTERFACE WITH 

CAPITAL MARKETS.

THE SAME INTERFACE WITH THESE 

LOANS ARE BUNDLED AND SOLD AND 

TRANSACTED UPON.

IT IS NOT A BUNCH OF SMALL 

LITTLE PLAYERS.

THERE IS CONNECTIVITY TO WALL 

STREET.

AND IF WE DON'T CALL IT OUT FOR 

WHAT IT IS IT IS JUST GOING TO 

GET WORSE.

AND I DON'T WANT US TO KEEP 

REPEATING, YOU KNOW.

FRANKLY WHAT WE MISSED AND WHAT 

WE FEEL THAT BEFORE.

THE CONFESSIONS OF JUDGMENT 

APPROACH SEEMS PARTICULARLY 

EGREGIOUS.

THIS IS WHERE BUSINESSES GIVE 

UP THE RIGHTS TO CONTEST 

WHETHER OR NOT THEY ARE IN 

DEFAULT ON THEIR LOAN.

IN ADVANCE IN THE CONTRACT.

IT IS BECOMING INCREASINGLY 

DEPLOYED.

I AM WONDERING IF YOU THINK 

THERE ARE STRATEGIES WITHIN THE 

EXISTING LEGAL SYSTEM BUT 

WITHIN THE EXISTING SET OF 

RULES TO ATTACK THAT?

Rohit Chopra: OF COURSE 

THERE ARE.

THESE WERE BANNED IN CONSUMER 

CREDIT CONTRACTS FOR THE MOST 

PART TO THE CREDIT PRACTICES 

RULES THAT I BELIEVE WERE 

FINALIZED IN THE 1980S. THERE 

IS EXISTING AUTHORITY TO DO IT.

WHETHER THERE IS THE COURAGE 

AND THE WILL AND THE TENACITY 

TO GET IT DONE?

THAT IS WHAT WE HAVE TO PUSH 

FOR.

AND I THINK THAT MEANS A LOT 

FOR PEOPLE PUSHING OUR AGENCIES 

AND DON'T JUST ASSUME WE WILL 

DO NOTHING.

BUT WE HAVE TO HEAR FROM PEOPLE 

ABOUT WHERE THE PROBLEMS ARE IN 

THE MARKET OR IT WILL NOT GET 

SOLVED.

I THINK THIS RAISES A LARGER 

QUESTION ABOUT JUNK CONTRACT 

CLAUSES.

AND ONE OF THE THINGS I THINK 

WE NEED TO START THINKING ABOUT 

IS WE OFTEN ATTACK THESE 

CLAUSES ONE BY ONE.

BUT WE NEED TO START THINKING 

BIGGER PICTURE ABOUT WHAT ARE 

THE TYPE OF CONTRACT TERMS THAT 

ARE FUNDAMENTALLY UNFAIR?

AND HOW DO WE USE THE EXISTING 

AUTHORITY UNDER FEDERAL AND 

STATE LAW TO GO AFTER THAT?

BECAUSE WHEN A SELLER 'S LENDER 

IS SO MUCH MARKET POWER OR SO 

MUCH ABILITY TO OBSCURE TERMS.

THIS CAN LEAD TO CONTRACTS THAT 

ARE CORRUPTED.

BY THESE CONTRACT TERMS.

THERE HAVE BEEN BIG FIGHTS OVER 

THE YEARS OF FORCED 

ARBITRATION.BIG FIGHTS ABOUT 

OTHER TERMS BUT I THINK WE NEED 

TO LOOK AT A COMPREHENSIVE VIEW 

ABOUT HOW CONTRACTS.

WHERE THERE IS A BIG GUY ON ONE 

SIDE AND A LITTLE GUY ON THE 

OTHER.

HOW DO WE CHANGE THAT GAME?

WE CANNOT BE ON A TREADMILL OF 

GOING AFTER THESE CONTRACT 

TERMS ONE BY ONE.

NEW ONES WILL POP UP AND WE 

WILL STILL BE STAYING BEHIND.

WE NEED TO GET MORE SCHOLARSHIP 

ON HOW TO REFORM THESE 

CONTRACTS.

WE HAVE TO THINK OF IT IN A 

BIGGER PICTURE OF LAW 

ENFORCEMENT REGULATORY 

APPROACH.

BECAUSE WHEN POWERFUL FIRMS ARE 

ABLE TO COVER THE USE 

CONTRACTS.

THE USE THEIR MARKET POWER TO 

ESSENTIALLY BULLY OUT FAIR 

COMPETITION.

AND THAT IS NOT WHAT A FREE AND 

FAIR MARKET IS SUPPOSED TO LOOK 

LIKE.

I HAVE ALWAYS BEEN STRUCK 

THE BEHAVIORAL ECONOMICS 

LITERATURE HAS MADE HUGE 

PROGRESS ON THE CONSUMER SIDE.

WE NOW UNDERSTAND A LOT MORE 

ABOUT HUMAN DECISION-MAKING.

THE WAY IN WHICH HUMAN BEINGS 

ARE FALLIBLE AND HOW THE MARKET 

CAN TAKE ADVANTAGE OF THAT 

FALLIBILITY.

WE SEEM NOT TO HAVE MADE MUCH 

PROGRESS CHANGE THAT FOR 

BUSINESS OWNERS.

MOST SMALL BUSINESS OWNERS TO 

STATE THE OBVIOUS, PEOPLE.

AND MOST PEOPLE HAVE BIASES.

WITH THE INFALLIBILITY, WHETHER 

SERVING AS A BUSINESS OR 

CONSUMER.

AND MOST WILL BUSINESSES ARE 

NOT ABLE TO HIRE LAWYERS UNDER 

THE EXPERTISE THEY NEED.

THERE HAS BEEN SOME OF THE 

STATE LEVEL.

CALIFORNIA HAS A TRUTH IN 

LENDING ACT NOW FOR SMALL 

BUSINESSES.

I AND WONDERING IF YOU THINK 

THAT IS THE ROAD FORWARD AS WE 

ARE TRYING TO MAKE PROGRESS AT 

THE FEDERAL LEVEL.

SHOULD STATES BE FOLLOWING 

CALIFORNIA'S LEAD OR OTHER 

THINGS STATE COULD BE DOING TO 

BE HELPFUL IN THIS CASE?

Rohit Chopra: I FAVOR 

DISCLOSURE BUT I DON'T WANT 

ANYONE THINKING THAT DISCLOSURE 

FUNDAMENTALLY FIXES THIS.

I THINK OTHER STATES ARE 

LOOKING AT SIMILAR THINGS.

BUT YOU MENTIONED SMALL 

BUSINESSES, PEOPLE WHO RUN 

SMALL BUSINESSES ARE PEOPLE 

THEY ARE ALSO CONSUMERS.

WE ARE SEEING THE SAME THING 

WITH WORKERS.SO, EMPLOYEES 

HAVING SOME OF THESE CLAUSES 

THAT ARE FUNDAMENTALLY LEAD TO 

PROBLEMS.

WE HAVE DONE SOME CASES RELATED 

TO UBER DRIVERS.

WITH RESPECT TO FINANCING AND 

PROMISES BEING MADE TO THAT 

ABOUT HOW MUCH THEY EARN.

BUT WE HAVE TO TAKE A HARD LOOK 

AT ALL OF THESE CONTRACTS.

AND HOPE THAT IS SOMETHING THAT 

IS NOT JUST GOING TO BE SOLD BY 

DISCLOSURE.

THAT CERTAIN TYPES OF TERMS.

THOSE CONFESSIONS OF JUDGMENTS.

WILL NOT LEAD TO A COMPETITIVE 

MARKET IF SOMEONE HAS TO 

STIPULATE THAT THEY ARE GUILTY 

OF THE BEGINNING OF THE 

TRANSACTION.

THAT IS GREAT.

IT IS ILLUSTRATIVE OF THE WAY 

IN WHICH THE LINE OF BEING A 

PERSON AND BEING A BUSINESS IS 

FUZZY.

Rohit Chopra: GLORY.

LET'S SWITCH GEARS AND TALK 

ABOUT CREDIT BUREAUS.

HIS CERTIFIED REGULAR CONSUMER, 

IN A POSITIVE WAY.

AND PEOPLE HAVE PROBLEMS 

CORRECTING ERRORS.

AND WE HAVE THE AUTHORITY FOR 

THE CONSUMER FINANCIAL 

PROTECTION BUREAU TO SUPERVISE.

THE FTC HAS AUTHORITY HERE AS 

WELL.

WHAT COULD BE DONE TO REALLY 

CHANGE THE BEHAVIOR OF THE 

CREDIT BUREAUS?

Rohit Chopra: AND ONE OF THE 

THINGS THAT HAS BEEN 

UNDERREPORTED HAS BEEN HOW 

POSITIVE THE ROLE OF CFPD 

SUPERVISION HAS BEEN.

THAT HAS CHANGED THE CREDIT 

BUREAUS ARE THINKING ABOUT 

THINGS.

BUT AT THE SAME TIME THERE IS 

STILL SERIOUS PROBLEMS AND IT 

IS NOT JUST ACCURACY.

OBVIOUSLY, THE FTC HAS PUBLICLY 

ANNOUNCED IT IS INVESTIGATING 

THE MASSIVE DATA BREACH AT 

CARFAX.

AT THE IMPLICATIONS.

DATA SECURITY IS OBVIOUSLY A 

MAIN FOCUS OF THE FTC, THE CFPD 

HAS A MASS OF EARLY STRONG TEAM 

OF PEOPLE.

WHO HAVE EXPERTISE IN CREDIT 

REPORTING.

THERE IS A BIGGER QUESTION WE 

WANT TO START THINKING ABOUT.

I ALWAYS SAY THIS AND OTHER SAY 

IT, TOO.

THEY ARE NOT, IT IS THE 

PRODUCT.

IT IS THERE DATA BEING SOLD AND 

TRANSACTED.

AND THIS IS INCREASINGLY WHAT 

IS HAPPENING TO OUR DATA 

ECONOMY.

WHAT WE SEE ONLINE IS MASSIVE 

DATA COLLECTION THAT IS THROUGH 

ONLINE BEHAVIOR ADVERTISING.

HAVE DATA BROKERS.

IN THE STUDY OF DATA BROKERS.

THE DATA BROKERS, BIG 

TECHNOLOGY FIRMS.

THEY ARE MERGING IN THEIR 

BUSINESS MODEL.

THEY ARE SELLING US TO OTHERS.

IF YOU ASK HARD QUESTIONS 

ABOUT.

THEN THERE COULD BE COMPETITIVE 

PRESSURES TO LEAD TO BETTER 

PRACTICES.

AT THE WAY THE CREDIT BUREAU IS 

STRUCTURED THAT WILL EVER GET 

THAT.

OUR TRADITIONAL SPEAKING HAS 

BEEN LOOKS REGULATED.

THINK ABOUT BIGGER STRUCTURAL 

SOLUTIONS IN OTHER OECD 

COUNTRIES THERE ARE DIFFERENT 

MODELS.

SHOULD THERE BE MORE CREDIT 

BUREAUS?

THAT, I DON'T KNOW.

IF THERE IS A RACE TO THE 

BOTTOM THERE ARE MORE FOR FAIR 

TREATMENT OF CONSUMERS.

THAT WE HAVE TO THINK ABOUT.

THERE'S A LOT OF LINGERING 

ISSUES ABOUT THE 

APPROPRIATENESS AND USES OF 

CREDIT REPORTING DATA.

OBVIOUSLY, THE USE OF 

EMPLOYMENT.

THESE ALL RAISE TOUGH ISSUES.

I AM NOT SURE IF OUR CURRENT 

REGIME OF ENCOURAGING PEOPLE TO 

CHECK THE REPORTS IS REALLY 

WORKING IF YOU CAN'T EASILY 

DISPUTE AND CORRECT.

I AM REALLY SKEPTICAL.

I DON'T THINK WE SHOULD BE A 

LOT OF MEDICAL DEBT ON CREDIT 

REPORTS.

THERE IS SO MUCH GARBAGE 

MEDICAL DEBT PUT ON PEOPLE'S 

CREDIT REPORTS.

THE REALITY IS MOST CONSUMERS 

ARE JUST IN THIS PING-PONG 

MATCH.

THAT THEY ARE WATCHING BETWEEN 

THE PROVIDER AND THEIR 

INSURANCE COMPANY.

THEN ONE DAY THEY ARE CALLED 

AND SAID YOU OF THIS BILL.

AND FOR MOST PEOPLE, THEY ARE 

NOT CONSUMER ADVOCATES.FOR 

THOSE OF US WHO HAVE A LOT OF 

PATIENT EXPERIENCE.YOU FEEL 

SOME SORT OF EMBARRASSMENT FOR 

IF YOU ARE ON SOME LIST IS YOU 

ARE NOT TAKING.

THEY END UP WRITING THAT CHECK.

EVEN WHEN THEY DON'T OPEN.

THEY ARE BEING JERKED AROUND BY 

BOTH THE INSURANCE COMPANY AND 

IN SOME CASES THE CREDIT 

BUREAU.

THE CFPD STUDY ON MEDICAL DEBT 

AND CREDIT SCORES I THINK 

DEFINITELY HELPED.

BECAUSE IT IS NOT BEING 

REPORTED IMMEDIATELY.

IT IS NOT NECESSARILY IMPACTING 

THEIR SCORE.

BUT EVEN IF IT DOES GET 

REPORTED I AM NOT SURE THE 

VALUE IT GIVES THE MAY BE 

COERCING SOMEONE TO PICK UP.

I AM NOT PLEASED WITH THE STATE 

OF CREDIT REPORTING STILL.

BUT I DON'T WANT TO DISMISS THE 

MASSIVE LEAPS FORWARD THE CFPD 

HAS LED.

THERE IS MORE WORK TO DO.

I HOPE THE CREDIT BUREAUS KNOW 

WE ARE STILL TAKING A HARD LOOK 

AT THEIR BUSINESS PRACTICES.

AND LET ME JUST SAY ONE MORE 

TIME.

WE ARE SEEING THEY ARE 

INCREASINGLY LOOKING MORE LIKE 

DATA BROKERS AND MASS DATA 

AGGREGATORS.

IT IS MORE THAN JUST FAIR 

CREDIT REPORTING.

LET'S DIVE IN FOR JUST A FEW 

MINUTES ON STUDENT LOANS.

WE WILL HAVE A WHOLE DISCUSSION 

ON STUDENT LOANS.

IN A PANEL DISCUSSION.GIVEN 

YOUR OF THE DEPARTMENT OF 

EDUCATION AND CFPD AND WILLY 

PUSHED BOTH ENTITIES QUITE 

HARD.

ON THE PROBLEMS OF THE 

FOR-PROFIT MORE BROADLY.

WHAT PROGRESS HAS BEEN MADE?

WE SEE THE PITFALLS?

IN TWO MINUTES OR LESS.

TAKE YOUR TIME.

Rohit Chopra: WE STILL HAVE 

ONCE EVERY 30 SECONDS SOMEBODY 

DEFAULTED ON FEDERAL STUDENT 

LOANS.

IT IS THOUSAND THE DAY.

WE'RE NOT SEEING DELINQUENCY OR 

DEFAULT RATES SLOW DOWN EVEN AS 

THE ECONOMY GETS BETTER.

WE STILL HAVE A HUGE AMOUNT OF 

BORROWERS WERE BURDENED WITH 

THIS DEBT.

AND ARE REALLY NOT ABLE TO GET 

THE VALUE OUT OF THAT.

I REJECT THE SINGULAR FOCUS ON 

GETTING TO COMPLETE COLLEGE.

BUT WE REALLY NEED TO THINK 

ABOUT THAT 1.3 TRILLION THAT IS 

OUT THERE.

I THINK THE SCANDALS OF OPEN 

PEOPLE'S EYES OTHER THIS IS A 

FUNDAMENTALLY CORRUPT SYSTEM 

FROM BEGINNING TO END.

AND WHETHER WE NEED TO BE 

THINKING MORE BROADLY ABOUT 

CANCELLATION.NOT JUST FOR 

THOSE WHO WERE VICTIMIZED BUT 

THOSE SET UP TO FAIL FROM THE 

BEGINNING.

I THINK YOU WILL START SEEING 

OVER THE NEXT YEAR MUCH BIGGER 

DISCUSSION ON STUDENT DEBT 

CANCELLATION.

WERE WE DO IT WAS GOOD UP FROM 

THE BEGINNING.

THERE HAS TO BE A DISCUSSION 

ABOUT RETHINKING THE STUDENT 

LOAN ORIGINATION SYSTEM.

IF WE ARE GOING TO ALLOW THIS 

TO CONTINUE WILL ONLY HAVE MORE 

NEGATIVE REPERCUSSIONS FOR OUR 

ECONOMY.

AND I TELL YOU I THINK A LOT OF 

PEOPLE WHO GRADUATED OR CAME OF 

AGE AROUND THE TIME OF THE 

FINANCIAL CRISIS.

THEY WERE IN COLLEGE.

SO MANY OF US HAVE MET STUDENTS 

WHO TOLD US.

YOU KNOW, MY PARENTS WERE LAID 

OFF OR WE LOST OUR HOMES.

AND NOW IT IS ALL ON ME TO PAY 

FOR THIS.

AND SOPHOMORE YEAR OF COLLEGE 

WHAT ARE YOU GOING TO DO?

YOU WILL BORROW PICK AND HOPE 

IT ALL WORKS OUT.

BUT THE STRUCTURE OF OUR 

ECONOMY DOESN'T WORK THIS WAY.

AND LOOK AT SCHOOLS LIKE 

MICHIGAN.

EVEN HERE A STATE SCHOOL SOME 

PEOPLE HAVE TO BORROW BIG TO GO 

TO LAW SCHOOL.

TO GO TO GRADUATE SCHOOL.

AND IT SKEWS ANOTHER LOOK AT 

THE CAREER PATH.

AND THAT HAS REAL 

REPERCUSSIONS.LET'S TURN 

TO SERVICE MEMBERS, MILITARY 

MEMBERS.

YOU KNOW, THE FINANCIAL CRISIS, 

ONE OF THE ISSUES IS THE WAY IN 

WHICH SERVICE MEMBERS HAVE BEEN 

ABUSED.

ON AND AROUND MILITARY BASES OR 

DURING OVERSEAS DEPLOYMENT.

THE CFPD WAS GIVEN IMPORTANT 

AUTHORITIES IN THIS AREA.

HOW MUCH ARE SERVICEMEMBER 

STILL AT RISK?

RAISING PROBLEMS IN THE MARKET 

YOU THINK WE SHOULD BE FOCUSED 

ON?

Rohit Chopra: YOU OBVIOUSLY 

SEE A VERY DIFFERENT SET OF 

DEMOGRAPHICS ON THE FORCE 

NEEDED 10 YEARS AGO.

IT IS NOT AS MUCH OF THE 

WARTIME FORCE THAT IT WAS BUT 

YOU STILL SEE MANY YOUNG, OFTEN 

FROM LOWER INCOME BACKGROUNDS.

ESPECIALLY MEN BEING OFF ON 

THEIR OWN AND HEAVILY TARGETED.

BY A WHOLE SUITE OF 

UNSCRUPULOUS ACTORS.

I THINK THE RESULTS HAVE BEEN 

VERY POSITIVE.

ARE SEEING BIG IMPROVEMENTS 

THERE.YOU KNOW, YOU MENTIONED 

AUTO EARLIER.

WE HAVE BIG PROBLEMS IN THE 

AUTO MARKET WITH RESPECT TO 

SERVICE MEMBERS.

I THINK THAT HAS TO BE A BIG 

FOCUS FOR THE FTC AND THE 

STATES.THE SERVICEMEMBERS 

CIVIL RELIEF ACT.

WE SHOULD ALL TAKE SERIOUS 

PAUSE.

THE ILLEGAL FORECLOSURES GOT A 

LOT OF ATTENTION.

BUT YOU KNOW THEY SANTAN DER 

SOMEBODY AT BASIC TRAINING 

HAVING THEIR CAR TAKEN FROM THE 

ILLEGALLY IS JUST EGREGIOUS.

I WORRY WE HAVE NOT CALIBRATED 

CORRECTLY DIRECTIVE OF 

CONSEQUENCES FOR THAT BEHAVIOR.

AND WE NEED TO START THINKING 

ABOUT WHAT TYPES OF GOVERNMENTS 

LICENSES, FAVORS ARE WE GIVING 

THESE FIRMS.

THAT EGREGIOUSLY BREAK THE LAW.

AS A MONETARY SIGN ENOUGH?

AND HOW MANY TIMES DO YOU HAVE 

TO BREAK THE LAW?

BEFORE WE START THINKING ABOUT 

WHAT WE DO WITH YOUR LICENSE?

WHAT DO WE DO WITH SOME OF THE 

GOVERNMENT BENEFITS YOU GET?

AND I THINK THAT IS A ONE OF 

THE ONLY WAYS WE WILL DETER 

SOME OF THESE BAD ACTORS.

WE HAVE A LOT OF GREAT WORK AT 

THE FTC WITH RESPECT TO LEAD 

GENERATION.

TARGETING MILITARY SERVICE 

MEMBERS AND VETERANS.

I THINK FOCUSING HARD ON THESE 

LEAD GENERATORS WILL PAY 

DIVIDENDS.

LET ME ASK YOU A QUESTION 

ABOUT SOMETHING NOT IN THE FTC 

JURISDICTION.

BUT I AM SURE YOU HAD A CHANCE 

TO TALK ABOUT.

A PRIME EXAMPLE OF THE KIND OF 

ABUSES THAT CAN HAPPEN IN THE 

RETAIL BANKING MARKET.

HOW DO YOU THINK FEDERAL 

REGULATORS HAVE DEALT WITH 

WELLS FARGO THUS FAR?

HAS IT BEEN ENOUGH?

WHAT FURTHER STEPS MIGHT BE 

USEFUL?

Rohit Chopra: ONE OF MY 

EARLIEST PRIORITIES WAS 

SHARPENING OUR FOCUS ON REPEAT 

OFFENDERS.

AND VIOLATORS OF CONSENT 

DECREES AND OTHER ORDERS.

YOU HAVE YOU HAVE A GOOD 

EXAMPLE OF A FIRM THAT HAS 

SERIOUS MANAGERIAL DEFICIENCIES 

AND OBVIOUSLY THE CFPD AND CITY 

ATTORNEY OF LA.

THE FAKE ACCOUNT SCANDAL THAT 

WAS UNCOVERED.IT HAS 

LITERALLY BEEN OVER AND OVER 

AGAIN MORE AND MORE PROBLEMS WE 

HAVE BEEN HEARING.

AND I THINK THE BIG LESSON THAT 

ALL OF US HAVE TO TAKE FROM 

THIS IS, ARE WE FUNDAMENTALLY 

MISS CALIBRATING MONETARY 

PENALTIES?ARE MONETARY 

PENALTIES THOSE PENALTIES THAT 

BIG FOR A GOOD REGULATORS PRESS 

RELEASE?

IS IT ACTUALLY JUST A JOKE 

SOMETIMES?

OBVIOUSLY, I THINK WE HAVE SOME 

AGENCIES THAT USE THEIR 

AUTHORITIES AND SEEK AN AMOUNT 

THAT IS HIGHLY JUSTIFIABLE IN 

THE COURTS.

BUT I LOOK AT SOMEONE LIKE 

WELLS FARGO AND I HAVE 

WONDERED.

WITH ALL THESE FAKE ACCOUNTS 

SHOULD WE BE TRUSTING THEM WITH 

FTI SEE INSURANCE WAY WE ARE 

DOING.

AS I AM NOT SAYING.IT RAISES 

TOO BIG TO FAIL ISSUES.

BUT THE ACT IS QUITE CLEAR THAT 

FOR THIS REPEATED UNSAFE AND 

UNSOUND BUSINESS PRACTICES.

THIS IS NOT SOMETHING THE 

PUBLIC SHOULD NECESSARILY BE 

PROTECTING.

I THINK, THINKING MORE ABOUT 

THE OTHER LEVERS WE HAVE.

I THINK THE FED ACTION TO LEAD 

TO REAL GOVERNANCE CHANGES.

THIS STRUCTURAL REMEDY SET 

FUNDAMENTALLY RESHAPED 

EXECUTIVE COMPENSATION, 

GOVERNANCE, AND ACCESS TO 

GOVERNMENT BENEFITS.

HAS TO BE PART OF THAT POOL.

THAT IS NOT SOMETHING I'VE 

STUDIED SO CLOSELY.

BUT I THINK THE EXPERIENCE WE 

ARE HAVING AT WELLS FARGO IS 

SIGNALING TO SO MANY OF THE 

AGENCIES.

THAT THE PUBLIC IS GOING TO 

BECOME MORE SKEPTICAL JUST 

ABOUT THE BILLION DOLLAR 

NUMBERS.

THEY ARE NOT GOING TO SEE THESE 

SORT OF CHANGES UNTIL WE THINK 

ABOUT STRUCTURAL REMEDIES.

AND AGAIN, I THINK TO 

FUNDAMENTAL INCENTIVES.

THE STRUCTURE OF THOSE BUSINESS 

MODELS.

AND WELLS FARGO LIKE MANY.

IT IS A THINK WITH THE FEDERAL 

CHARTER VEGAS FEDERAL DEPOSIT 

INSURANCE.

AND BENEFITS GREATLY FROM 

THOSE.

WE SHOULD ASK QUESTIONS AGAIN.

ARE WE GIVING THOSE BENEFITS TO 

REALLY?

WHEN WE HAVE REPEATED PROBLEMS 

THAT NEED TO GET SOLVED?

QUICK FOR ME ASK ONE LAST 

QUESTION AND THEN I WILL OPEN 

IT UP TO ALL OF YOU FOR 

QUESTIONS.

AND WHAT TO COME BACK TO YOUR 

COMMENT ON THE ECONOMY AND TECH 

COMPANIES IN GENERAL.

AND TALK ABOUT THE COMPETITION 

POLICY SIDE OF THE HOUSE AT THE 

FTC.

THERE HAS BEEN ALL KINDS OF 

STORIES COMING OUT ABOUT 

ANTICOMPETITIVE BEHAVIOR.

IN ONE PARTICULAR PROBLEM THAT 

HAS RISEN TO THE TOP IS A 

NONCOMPETE AGREEMENT FOR 

WORKERS IN THE TECH ECONOMY.

I AM WONDERING WHAT EFFECT YOU 

THINK HAVING INNOTECH.

IS IT FAIR?

ARE THERE THINGS THE FTC OR 

OTHERS CAN AND SHOULD DO ABOUT 

IT?Rohit Chopra: 

NONCOMPETE AGREEMENTS THERE HAS 

BEEN MORE AND MORE DATA AND 

RESEARCH.

INCLUDING BY ALAN KRUEGER ABOUT 

HOW NONCOMPETE MAY BE 

DISTORTING A COMPETITIVE LABOR 

MARKET.

THAT MAY ACTUALLY BE 

SUPPRESSING WAGES ESPECIALLY 

FOR MANY OF OUR LOWEST INCOME 

WORKERS.

THE ILLINOIS ATTORNEY GENERAL, 

THE WASHINGTON ATTORNEY 

GENERAL.

THAT ON SOME ENFORCEMENT WORK 

AND HAVE DECLARED THE USE OF 

SOME OF THESE CLASSES.

AS A VIOLATION OF THEIR MANY 

FTC.

THEIR UNFAIR BUSINESS 

PRACTICES.I RAISED IN AN 

ARTICLE IN SEPTEMBER AS TO 

WHETHER THE FTC SHOULD CONSIDER 

USING ITS UNFAIR METHOD OF 

COMPETITION WE ARE USING TO 

DEVELOP THE LAW.

AND OFFER MORE CLARITY AS TO 

WHEN THE USE OF THESE 

NONCOMPETE CLAUSES COULD BE OF 

VIOLATION OF FEDERAL LAW.

IT IS SOMETHING THEY ARE 

PROLIFERATING.

AND IF WE DON'T DO ANYTHING 

ABOUT IT WE ARE NOT GOING TO 

SEE A COMPETITIVE LABOR MARKET.

WITH RESPECT TO CHECK.

ONE THING THAT I THINK IS 

IMPORTANT FOR YOUR CENTER AND 

FOR STUDENTS WHO ARE THINKING 

ABOUT FINANCE, LAW AND 

POLICIES.

THE LINE BETWEEN FINANCIAL 

SERVICES AND TECH IS ALSO 

FLOORING IN LOT.

THE WAY IN WHICH BIG DATA IS 

BEING USED FOR ALTERNATIVE 

UNDERWRITING.

THE WAY IN WHICH TECHNOLOGY 

FIRMS ARE INCREASINGLY ENTERING 

THE FINANCIAL SERVICES SPACE.

SOME OF IT IS GOOD.

SOME OF IT RAISES FOR QUESTION 

ON HOW THAT DATA WILL BE USED 

OR MISUSED.

EVERYONE WHO IS INTERESTED IN A 

FAIR FINANCIAL MARKET HAS GOT 

TO BE THINKING ABOUT OUR 

SURVEILLANCE ECONOMY.

FOR EVERYONE WHO CARES ABOUT A 

COMPETITIVE FINANCIAL SERVICE 

MARKET.

THEY ALSO HAVE TO WAKE UP AND 

ASK HER QUESTION.

ARE WE DOING ENOUGH WITH 

RESPECT TO ANTITRUST LAWS WITH 

FINANCIAL SERVICES FIRMS?

THE FEDERAL RESERVE OF THE 

DEPARTMENT OF JUSTICE, YOU 

KNOW.

TAKE THE LEAD ON MAKING 

MERGERS.

THERE ARE ALL SORTS OF 

FINANCIAL SERVICES MERGERS THAT 

REALLY NEED A LOT MORE 

SCRUTINY.

AND I THINK WE ARE NOW SEEING 

BIG BANK MERGERS AGAIN.

AFTER THE JUDGE FRANK BILL WE 

ARE NOW SEEING LARGER BANKS 

SEEKING TO MERGE.

I THINK THAT WILL CONTINUE.

AND I THINK WE NEED TO 

DETERMINE WHETHER WE ARE USING 

ALL THE TOOLS WE HAVE TO MAKE 

SURE THOSE MARKETS ARE 

COMPETITIVE.

A COMMUNITY BANKS AND OTHERS 

ARE ABLE TO COMPETE.

THAT IS GREAT.

LET ME OPEN IT UP TO ALL OF 

YOU.

YES.

THANK YOU, THANK YOU SO 

MUCH.

CAN YOU WAIT FOR THE MAN TO 

ARRIVE.

WE HAVE FOLKS WATCHING ONLINE.

IS THIS ON?

IT WAS ON.

GOOD, THANK YOU SO MUCH.

I JUST WANTED TO RUN BY YOU A 

COUPLE OF TOPICS.

I WOULD BE CURIOUS ON YOUR TAKE 

OF THE EFFECTIVENESS OF THE 

COAP HAS BEEN A DIFFICULT 

STATUTE TO ENFORCE AND NOW WE 

HAVE THE CONCERN THE IMPACT 

SERIES IS IN DANGER BUT THAT IS 

ONE QUESTION.

AND IF THE CFPP IS A 

REGULATORY, WHAT WOULD BE THE 

INTERACTION OF THAT CFTP WITH 

THE FTC JURISDICTION?

Rohit Chopra: THAT IS A GOOD 

QUESTION.

I THINK, FRANKLY, ALL OF OUR 

ANTIDISCRIMINATION LAWS, THEY 

REALLY NEED.

THEY WERE NOT DESIGNED FOR THIS 

MASS DATA SURVEILLANCE ECONOMY.

IF WE LOOK AT WHAT IS HAPPENING 

IT IS NOT JUST IN THE 

UNDERWRITING OF CREDIT.

WHAT ADDS:NOT FOR HOUSING, 

EMPLOYMENT, PRODUCTS.

IT IS NOT LIKE YOU ARE OPENING 

THE NEWSPAPER.

THOSE ADS ARE NOW CUSTOMIZED TO 

YOU.

AND WITH ARTIFICIAL 

INTELLIGENCE AND MACHINE 

LEARNING AND ALGORITHMS.

IT IS FUNDAMENTALLY A DIFFERENT 

WORLD FOR IT IS NOT NECESSARILY 

A HUMAN INTENTIONALLY 

DISCRIMINATING.

BUT THE ALGORITHM ITSELF MAY BE 

DISCRIMINATORY.

BUT WE HAVE NO WAY TO CHECK FOR 

THAT.

BECAUSE MAY BE RELYING ON 

ARTIFICIAL INTELLIGENCE AND 

EVOLVING ON ITS OWN.

YOU KNOW THE FRAMEWORK I 

OBVIOUSLY WANT US TO USE IT TO 

EVERY BIT WE CAN.

AND OBVIOUSLY THAT MEANS USING 

DISPARATE IMPACT THEORY.

BUT I AM NOT SURE THAT LOST 

THINGS UP WELL WITH THE DATA 

ECONOMY TODAY.

AND I HOPE WHEN THE NEXT 

FINANCIAL REFORM COMES OR WHEN 

WE START TALKING FOR REAL ABOUT 

ACCOUNTABILITY IN TECH AND BIG 

DATA THAT BECOME THE 

CENTERPIECE OF IT.

NOT JUST IN CREDIT BUT ECONOMIC 

OPPORTUNITIES.

WITH RESPECT TO THE SANDBOX.

THAT IS A REAL OPEN QUESTION.

YOU KNOW THE CFPD CERTAINLY HAS 

SPECIAL AUTHORITIES WITH 

RESPECT TO ECOA BUT I THINK 

THAT IS TO BE DETERMINED.

AND I GET THE ATTRACTION TO THE 

SANDBOXES BUT IT IS IMPORTANT 

THAT IT IS NOT BECOME THE SIDE 

DOOR TO DEREGULATING THE WHOLE 

THING.

AND THAT IS SOMETHING WE NEED 

TO PAY CLOSE ATTENTION TO.

BECAUSE THERE'S A LOT OF 

OPPORTUNITY FOR ABUSE IT.

AND THAT MEANS THAT ANYBODY 

BENEFITING FROM IT IS REALLY 

GOING TO BE HELD ACCOUNTABLE 

FOR PRODUCING A LOT OF DATA.

PRODUCING AND ADHERING TO THE 

HIGHEST STANDARDS.

YOU KNOW, I HAVE WORKED IN 

ONLINE LENDING.

AND INNOVATIVE FINANCIAL 

TECHNOLOGIES.

BUT I AM NOT SO SURE.

I SEE BOTH SIDES BUT I AM 

SKEPTICAL AS TO WHETHER THAT 

WILL LEAD TO THE BENEFITS THAT 

THEY THINK IT WILL.

Man: I HAVE A QUESTION.

I JUST LOOKED UP A STATISTICS 


THERE IS RAMPANT ALCOHOL ABUSE.

PEOPLE MAKE BAD CHOICES, BAD 

DECISIONS, BAD BEHAVIOR.

HOW DO YOU IN MAKING POLICY 

ACCOUNT FOR PEOPLE JUST DOING 

BAD STUFF.

UNTIL THEN THEY SHOULDN'T DO 

BUT THEY DO IT ANYWAY AND THEN 

YOU HAVE TO POLICY THAT 

PROTECTS THEM?

Rohit Chopra: I THINK WE 

HAVE TO START WITH THE IDEA WE 

CAN'T LET PEOPLE BE LIED TO.

WHEN IT COMES TO TOBACCO USE 

WITH A HISTORY OF PEOPLE BEING 

LIED TO.

WITH OPIOID ABUSE WE ARE NOW 

LEARNING MORE AND MORE.

CONCEALED AND EVEN LIGHT.

SO I START THERE.

BUT YOUR QUESTION ABOUT HOW TO 

NUDGE PEOPLE TO BETTER 

DECISIONS THERE IS A LOT OF 

LITERATURE ON THAT.

BUT I STILL THINK WE HAVE TO 

MAKE SURE THE REAL CONSEQUENCES 

WHEN PEOPLE ARE BEING LIED TO.

AND ONE OF THE THINGS I HAVE 

NOT BEEN THRILLED ABOUT THE 

AMOUNT OF SETTLEMENTS THEY 

ENTER THAT OUR LETTER ZERO 

DOLLARS.

THESE NEW CONSEQUENCE 

SETTLEMENTS.

THE FREE PASS.

I UNDERSTAND AND FULLY 

RECOGNIZE SOME OF THAT MAY BE 

RELATED TO LIMITED AUTHORITIES.

BUT SOME OF IT IS BACKWARDS IN 

TERMS OF HOW WE ARE TRYING TO 

HOLD ACCOUNTABLE THOSE WHO DO 

FLY.

I DON'T KNOW IF THAT IS 

RESPONSIVE BUT THAT IS OUR 

FIRST PRIORITY.

THERE ARE LOTS OF OTHER TOOLS 

OUTSIDE OF LAW ENFORCEMENT TO 

TRY TO HELP PEOPLE MAKE BETTER 

DECISIONS.

I WOULD LIKE TO TAKE THAT A 

STEP FURTHER.

WE TALK ABOUT JUSTICE IN OUR 

COUNTRY AND WE TALK ABOUT 

HUMANS.

WE COVER THIS POINT OF VIEW HOW 

FAR CAN WE PUNISH SOMEONE UNTIL 

IT IS UNACCEPTABLE TO SOCIETY?

WHEN IT IS A BUSINESS WHAT IS 

THE LEAST AMOUNT WE CAN DO TO 

GET THE CHANGE WE WANT?

WE COME FROM THESE TWO 

DIFFERENT POINTS OF VIEW.

EVEN IF HUMAN BEINGS.

IF YOU ARE TALKING OR ANYONE IS 

TALKING ABOUT FINANCIAL 

JUSTICE.

WE TALK IN A METERED LANGUAGE.

HOW DO WE CHANGE THAT PARADIGM 

OR WE CAN BE DRACONIAN WE CAN 

PLAY A HAMMER DOWN ONE OF THE 

HURDLES WE RUN INTO.

SO WE DON'T RUN INTO FOR 

HUMANS.

WITH NO PROBLEM SENDING HUMANS 

TO JEFF ARE EXTREMELY LARGE 

AMOUNTS OF TIME IN OUR COUNTRY.

BUT WE CAN'T GO AFTER BEINGS, 

WE CAN'T DEAL WITH THESE 

COMPANIES?

Rohit Chopra: IN SOME WAYS 

THE OBVIOUS POLITICAL POWER OF 

OUR MOST INFLUENTIAL AND 

WEALTHIEST CITIZENS AND FIRMS 

THAT ARE ABLE TO DISTORT THE 

JUSTICE SYSTEM IN THEIR FAVOR.

I DON'T KNOW HOW TO SOLVE THAT 

ONE?

BUT YOU ARE RIGHT.

I THINK IT GOES TO WHAT I SAID 

ABOUT THOSE REGULATOR PRESS 

RELEASES.

$1 BILLION IS A TREMENDOUS 

AMOUNT OF MONEY.

BUT IS IT A TREMENDOUS AMOUNT 

OF MONEY FOR SOME OF THE 

LARGEST FIRMS ON THE PLANET?

AND IS PICKING THAT FIND 

SOMETIMES A GAMBLE THAT IS 

WORTH TAKING?

AGAIN, WHAT I GO BACK TO ITS WE 

NEED TO KEEP THINKING ABOUT IS 

A MONETARY REMEDY GOING TO 

SOLVE IT?

AND IN SOME WAYS, ESPECIALLY 

FOR THOSE WHO REPEATEDLY BREAK 

THE LAW.

DO YOU NEED TO GO TO COURT AND 

DO YOU NEED AUTHORITY TO 

FUNDAMENTALLY FIX THE 

STRUCTURAL INCENTIVE AT LEAST 

UP TO DO THAT.

I THINK THAT GOES TO EXECUTIVE 

COMPENSATION.

IN TOWARD GOVERNMENTS.AND IT 

GOES TOWARD ESPECIALLY 

INDIVIDUAL LIABILITY.

AND WE RECENTLY HAD A 

CHILDREN'S PRIVACY CASE.

COMMISSIONER SLAUGHTER AND I 

SPOKE OUT ABOUT THE NEED FOR IN 

THESE CASES VERY SERIOUS 

MISCONDUCT.THIS IS A CASE 

INVOLVING ESSENTIALLY THE 

DISCLOSURE OF SAID DATA ABOUT 

YOUNG CHILDREN.

THAT WAS AVAILABLE TO PEOPLE.

AND THE COMPANY DECIDED TO LET 

IT GO ON.

IT IS DEFINED TO THE COMPANY OR 

DO WE NEED TO SHARPEN OUR FOCUS 

ON THE ROLE OF INDIVIDUALS?

AN INDIVIDUAL ACCOUNTABILITY 

UNTIL WE START DOING THAT.

THAT IS NOT GOING TO REALLY 

CHANGE THE STRUCTURAL 

INCENTIVES.

A COUPLE.

I WAS ON A BOARD OF DIRECTORS 

IN THE UK.

AND THE ONLY THING I LEARNED ON 

BEEN ON THE BOARD OF DIRECTORS 

WAS THE COMPANY'S, ARE FTC, 

TELLS YOU YOU ARE PRETTY 

PERMISSIVE AS TO WHAT YOU CAN 

DO EXCEPT FOR IF YOUR COMPANY 

BECOMES INSOLVENT.

THE DIRECTORS ARE PERSONALLY 

LIABLE.

AND WE HAVE TAKEN AWAY THE 

PERSONAL LIABILITY OF MANAGERS 

AND DIRECTORS THROUGH INSURANCE 

AND OTHER THINGS.

YOU TALK ABOUT WELLS FARGO.

THE CEO PAID 1 BILLION IN FINES 

LAST YEAR AND GOT A FIVE 

PERCENT RAISE.

IS MAKING $8.5 MILLION.

WHEN DO WE GET TO THE POINT 

WHEN CORPORATIONS DO BAD 

THINGS.

THE OTHER ALTERNATIVE IS WHAT I 

HEARD A LOT DURING THE 

FINANCIAL CRISIS.

WHY DIDN'T WE LOCK ANYBODY UP?

DO WE HAVE THE ABILITY TO DO 

CRIMINAL PROSECUTIONS FOR 

CRIMES.

WHETHER THEY BE AT THE CFPD OR 

FTC?Rohit Chopra: I AM NOT 

A CRIMINAL PROSECUTOR.

BUT IF WE LOOK WHAT HAPPENED AT 

THE SAVINGS AND LOAN SCANDAL.

A LOT OF PEOPLE WENT TO PRISON.

AND THAT DIDN'T HAPPEN THIS 

LAST TIME.

AND THAT IS ALSO SOMETHING THAT 

WILL THE POLICY TOOL KIT.

THERE ARE CERTAIN THINGS THAT 

ARE SUBJECT TO CRIMINAL 

PENALTIES.AS A CIVIL AGENCY 

EVEN CIVIL LAW ENFORCEMENT THAT 

TARGETS INDIVIDUALS DOES 

SOMETHING.

THAT IS AN IMPORTANT PIECE OF 

REALLY WHAT WE SHOULD BE DOING.

I TELL YOU THE FTC WE NAME 

INDIVIDUALS A LOT.

FOR SMALL SCAMMERS.

BUT I AM NOT SO SURE WE SHOULD 

ASSUME THAT A LARGE FIRM 

SHOULDN'T NECESSARILY BE THE 

SAME LEVEL OF SCRUTINY.

I DON'T KNOW THE ANSWER TO YOUR 

QUESTION.

MY GET TELLS ME WE DID NOT IS A 

CRIMINAL AS VIGOROUSLY AS WE 

SHOULD BE.

I WILL MAKE ANOTHER POINT.

IF WE LOOK AT FARANOS, EVEN 

CORINTHIAN AND ITT.THOSE MAY 

BE KNOWN TO MANY OF YOU.

THEY ARE LARGE PUBLICLY TRADED 

FIRMS THAT THE CFPD SINCE THEY 

ARE NOW DEFUNCT.

THE LEADERSHIP OF THOSE FUNDS 

ENGAGED IN BILLIONS OF DOLLARS.

WITH HARM TO SO MANY STUDENTS.

THE ONLY PERSONAL 

ACCOUNTABILITY THEY FACE IS AN 

$80,000 FINE.

WHAT KILLS ME IS YOU CAN DO -- 

YOU CAN TAKE ADVANTAGE AND LIE 

AND CHEAT CONSUMERS.

HOW DARE YOU LIE TO AN 

INVESTOR.

IF YOU'D LIKE TO AN INVESTOR 

YOU WILL BE PERSONALLY HELD 

ACCOUNTABLE FOR THAT OFFENSE.

I THINK WE SOMETIMES NEED TO 

THINK ABOUT WHETHER MASSIVE 

FRAUD AGAINST CONSUMERS.

DO WE HAVE THAT CALIBRATION 

RIGHT?

Woman: WHAT WILL IT TAKE TO 

REGULATE GOOGLE.

I WAS LISTENING TO THE HEARINGS 

ON C-SPAN AND I WAS STRUCK BY 

THE FACT THAT YOU WILL NOT GET 

DECENT LEGISLATION.IT SEEMED 

LIKE MANY OF THE MEMBERS OF 

CONGRESS NEED A TUTORIAL ON THE 

FIELDS TO BE ASKING THE RIGHT 

QUESTIONS EVEN.

JUST TO GIVE YOU A SENSE.

SIX OF THE 10 LARGEST 

CORPORATIONS BY MARKET 

CAPITALIZATION ARE EITHER 

AMERICAN OR CHINESE FIRMS.

THIS IS A DRAMATIC CHANGE.

MANY PEOPLE HERE MIGHT THINK 

ABOUT THE VALUATION OF LARGE 

FINANCIAL INSTITUTION.

THESE FIRMS EQUIPS THEM BY FAR.

I GUESS MY REACTION TO YOU IS I 

DON'T THINK YOU NEED TO BE A 

TECHNOLOGIST OR COMPUTER 

SCIENTIST TO KNOW HOW TO PUT 

INTO PLACE REGULATIONS FOR SOME 

OF THESE FIRMS.

IT HAS TO BE ROOTED IN OUR 

VALUES IS WHAT WE THINK IS FAIR 

IN TERMS OF WHAT PROFESSOR 

McCOY ASKED ABOUT 

DISCRIMINATION.

WHEN IT COMES ABOUT PRIVACY AND 

THE USE OF DATA.

OBVIOUSLY WE WANT TO BE DRIVEN 

BY EVIDENCE.BUT ON BOTH SIDES 

OF THE AISLE PEOPLE ARE 

UNCOMFORTABLE.

NOT JUST IN THEIR HEADS BUT 

THEIR HEARTS ABOUT SOME OF THE 

PRACTICES THAT THEY SEE 

ESPECIALLY WITH MASS DATA 

AGGREGATION ONLINE.AND HELP 

BLOCK THE MARKET ENTRANTS.

AND THEY MONETIZE CONSUMERS.

THAT LEADS TO REAL THREATS TO 

JOURNALISM INDUSTRY.

TO OUR NATIONAL SECURITY.

THAT DATA SECURITY ON THE DATA 

SECURITY.

MANY OF OUR LARGEST DATA 

BREACHES.

THESE ARE ASSETS THAT ARE BEING 

TARGETED BY FOREIGN STATE 

ACTORS.

THEY KNOW THIS RICH SET OF 

ACTORS COLLECTED TO US HAS REAL 

VALUE.

AND OF COURSE WE WANT 

LEGISLATORS TO BE SMART.

I DON'T WANT ANYONE THINKING 

YOU HAVE TO BE A COMPUTER 

SCIENTIST OR TECHNOLOGIST TO 

ENGAGE IN THIS DEBATE.

ALTHOUGH SHOULD BE ABLE TO 

ENGAGE IN THIS DEBATE NO MATTER 

HOW HARD WE PARTICIPATE IN THE 

ECONOMY.

WE HAVE TIME FOR ONE 

QUESTION.

A SHY GROUP THIS MORNING.

I WANTED TO ASK ABOUT THESE 

SORTS OF SERVICES THAT CAN HELP 

CONSUMERS MANAGE THEIR CREDIT 

BETTER.

CREDIT, IS A BIG EXAMPLE I CAN 

THINK ABOUT.

ARE THESE HELPING CONSUMERS 

UNDERSTAND?

I AM A USER AND THERE ARE SOME 

THINGS I HAVE LEARNED.

OR ARE THEY DOING MORE HARM 

THAN GOOD BY COLLECTING A LOT 

OF THAT INFORMATION SUCH AS 

THEY OFFER FREE FILING.

BUT THEN SAY THEY WILL USE THAT 

INFORMATION TO MARKET FINANCIAL 

SERVICES TO YOU?

WHAT ARE YOUR THOUGHTS ON 

THINGS LIKE THAT?

Rohit Chopra: I THINK IN THE 

NEXT FEW YEARS WE WILL HAVE TO 

SWITCH OUR DEFINITION OF THE 

WORD FREE.

FREE, A LOT OF THINGS ARE 

OFFERED FOR FREE.

BUT THEY ARE ACTUALLY A REAL 

EXCHANGE AND I WOULDN'T EVEN 

CALL IT A FAIR EXCHANGE.

I WOULD SOMETIMES CALLING IT 

OFFERING SOMETHING FOR FREE BUT 

PICKPOCKETING SOMEONE AND 

SELLING WHAT YOU TOOK FROM 

THEM.

BECAUSE IT IS NOT CLEAR AT ALL 

TO CONSUMERS WHAT IS BEING 

TAKEN FROM THEM.

THE ABILITY TO FOR THIS TO GET 

MORE COMPLICATED.

WE MAKE THE TRANSITION TO 5G.


COMMUNICATIONS IN WAYS WE SEE 

ONLY FOR FIX.

AND THAT WILL LEAD TO A HUGE 

BLOSSOMING OF AN INTERNET OF 

THINGS.

MORE WEARABLE DEVICES AND 

CONNECTED CARS.OF THE AMOUNT 

OF INFORMATION THAT WILL BE 

AVAILABLE ON US.

AUTOMOTIVE COMPANIES CAN 

COLLECT.

THAT RETAILERS CAN COLLECT.

IT WILL LEAD TO MORE 

PERSONALIZED PRICES WHICH 

RAISES A WHOLE OTHER SET OF 

ISSUES AND CONSUMER PROTECTION 

ISSUES.

I AM VERY WORRIED THAT WE ARE 

NOT UP TO SPEED AS STATE AND 

FEDERAL REGULATORS ON THE 

IMPLICATIONS ON THIS FOR 

OURSELVES AND OUR SOCIETY.

I DON'T KNOW WHAT THE ANSWER IS 

SPECIFICALLY TO THE SPECIFIC 

FIRMS.

BUT IF WE DON'T CHANGE OUR 

THINKING ON THE WORD THINKING 

AND THINK IT WILL LEAD TO 

DELAYED ACTION.

THAT IS A LITTLE OVERDUE.

THANK YOU.

PLEASE CHOOSE ME AND THANK NG 

ROHIT CHOPRA.