Protecting Consumers' Access to Credit Act of 2017

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I thank the gentleman for yielding me the customary 30 minutes.

Mr. Speaker, today, sadly, we find ourselves considering legislation that would actually make it easier for unscrupulous payday lenders to actually skirt State interest rate caps and another bill that guts enforcement of the Americans with Disabilities Act that puts an unfair burden on people with disabilities.

These bills hurt the American people. Instead of spending our time here debating a very important immigration bill, like the Senate is doing across the way, we are considering bills that will only harm our most vulnerable populations.

Over on the other side of the Capitol, the Senate is having an open debate about immigration in our country. This House owes the American people no less. The Senate is trying to find solutions to help the hundreds of thousands of DACA recipients, to improve border security, or to address family reunification. The Senate is debating different proposals from both sides of

the aisle. We will see what they come up with.

Again, this House is simply not doing its job. This House is doing nothing to improve border security, nothing to address the DACA recipients or family reunification. Over here, there is not even a plan to bring any immigration bill or amendment to the floor. In fact, there is no commitment at all to actually address the issues that the American people care about. We have bipartisan bills today that Speaker Ryan could bring to the floor. They would pass with probably 70 or 60 percent of the vote.

Mr. Speaker, the March 5 deadline for DACA protections is rapidly approaching. There is no plan in place to protect Dreamers like Anareli, Marcos, and Javier in my district. Instead, over 800,000 young adults are trying to see what happens next, hoping that the court system intervenes, hoping that somebody somewhere does something so they can continue to live and work legally in the only country that they know, the country that they call home, the United States of America.

I have offered the Dream Act as an amendment to every spending bill that has come through the Rules Committee. I will continue to do so until we finally get it done.

But, again, instead of bringing up a bill to help protect Dreamers before the self-Trump-imposed March 5 deadline, the House will consider legislation that undermines the civil rights of disabled Americans, and it also makes it easier for predatory lenders to evade consumer protection laws. And people wonder why the House of Representatives is as unpopular as it is.

H.R. 3299, the Protecting Consumers' Access to Credit Act is a bill that hurts consumers. It is one that makes it easier for payday lenders to evade well-thought-out State-level protection laws.

That is why over 200 national and State organizations have written in opposition to this bill, which they fear would open the floodgates for predatory lending with interest rates as high as 300 percent. Additionally, 20 State attorneys general have also written in opposition.

Mr. Speaker, I include in the Record these two letters.

November 29, 2017.

Re Oppose H.R. 3299 (McHenry) and S. 1642 (Warner),

Protecting Consumers' Access to Credit Act of 2017.

Dear Members of Congress: The undersigned 202 national and

state organizations write in strong opposition to H.R. 3299

(McHenry) and S. 1642 (Warner), the Protecting Consumers'

Access to Credit Act of 2017. The primary impact of this bill

will be enabling nonbank lenders to make high-cost loans that

exceed state interest rate limits by using a bank to

originate the loan. The bill poses a serious risk of enabling

predatory lending and unsafe lending practices. Unaffordable

loans have devastating consequences for borrowers--trapping

them in a cycle of unaffordable payments and leading to harms

such as greater delinquency on other bills.

Specifically, the bill makes it easier for payday lenders

and other nonbanks to use rent-a-bank arrangements to ignore

state interest rate caps and make high-rate loans. The bill

overrides the Second Circuit's Madden v. Midland decision,

which held that a debt buyer purchasing debts originated by a

national bank could not benefit from the National Bank Act's

preemption of state interest rate caps. The Madden decision

did not limit the interest rates that banks may charge on

credit cards and other forms of credit, but it does limit

nonbanks from evading state interest rate caps. Reversing the

Second Circuit's decision, as this bill seeks to do, would

make it easier for payday lenders, debt buyers, online

lenders, fintech companies, and other companies to use

``rent-a-bank'' arrangements to charge high rates on loans.

The bill provides that ``a loan that is valid when made as

to its maximum rate of interest . . . shall remain valid with

respect to such rate regardless of whether the loan is

subsequently sold, assigned, or otherwise transferred to a

third party, and may be enforced by such third party

notwithstanding any State law to the contrary.'' In other

words, if a bank originates a loan that exceeds state

interest rate caps, and then sells or assigns the loan to a

nonbank, that nonbank can continue to charge a usurious rate.

This bill could open the floodgates to a wide range of

predatory actors to make loans at 300% annual interest or

higher. The bill could bless arrangements such as the

partnership between the payday lender Elevate and Republic

Bank, through which Elevate is making high-cost loans that

exceed state interest rate caps. Through its Elastic brand,

Elevate offers purportedly open-end loans in 39 states and

the District of Columbia.

Elevate does not disclose an APR, but a $380 advance repaid

with monthly minimum payments would cost $480 to repay over

five months. Including all fees, the annual rate for this

extension of credit is about 100%, which is nearly three

times the 36% legal interest rate approved by voters in

Montana, one of the states where the lines of credit are

offered. Through its Rise brand, Elevate also makes closed-

end loans at rates up to 365% in states where those rates are

permitted, and it could attempt to expand to other states.

Enova, dba NetCredit, also offers high-cost installment

loans in a number of states through a rent-a-bank

partnership. Enova, like Elevate, relies on Republic Bank and

Trust to facilitate this scheme.

Other payday lenders have regularly attempted to avoid

state usury caps through rent-a-bank arrangements. For

example, CashCall has attempted to partner with banks to make

usurious loans in several states. Courts have struck down

those arrangements, finding that CashCall had to comply with

state interest rate caps. The bill could undermine these

decisions, by stating that a loan's interest rate remains

valid even if a loan is transferred or assigned to a third

party and ``may be enforced by such third party

notwithstanding any State law to the contrary.'' This could

allow high-rate lenders to use banks to originate and then

immediately transfer usurious loans.

This bill is a massive attack on state consumer protection

laws. In a letter by 20 State Attorneys General opposing

provisions in another bill that would have overturned the

Madden decision, the state law enforcement officers warned

that the bill ``would restrict states' abilities to enforce

interest rate caps. It is essential to preserve the ability

of individual states to enforce their existing usury caps and

oppose any measures to enact a federal law that would preempt

state usury caps.'' ' In fact, the Colorado Attorney General

is in the midst of challenging online lenders' use of a rent-

a-bank scheme to make loans in violation of the state's usury

limits. This bill aims to thwart actions like these that seek

to enforce state laws.

The potential costs and damage to consumers are

significant. In about 34 states, a $2,000 loan, 2-year

installment loan at an APR exceeding 36% would be illegal.

This bill risks making high-cost loans permissible across the

country. The bill also could potentially expand short-term

payday lending to the 15 states plus the District of Colombia

whose state interest rate limits currently save borrowers

over $2.2 billion annually in payday loan fees.

Fintech lenders also should not be allowed to make loans

that exceed state interest rate caps. State interest rate

caps have not impacted responsible marketplace loans. The

leading marketplace lenders do not make loans above 36% and

the vast majority of their loans are well below that rate,

comfortably within state interest rate caps. But the mere

fact that a lender uses the label ``fintech'' or

``martketplace lender'' does not ensure that it is a safe or

affordable loan. For example, OnDeck, a lender focused on

small business lending, offers term loans up to 99%.

Moreover, many marketplace lenders make very large loans of

$30,000 to $50,000 or higher, and even 36% is a very high

rate for such loans. Many states have tiered rate structures

in recognition that interest becomes more unaffordable the

larger the loan. Iowa, for example, caps interest at 21% for

loans over $10,000.

There are also signs that some online lenders may not be

appropriately underwriting their loans to ensure that the

loans are affordable, and that many borrowers may not have

the ability to repay, especially, if the economy sours.

Recent news reports and SEC filings show that delinquency and

charge-off rates at these marketplace lenders are rising. One

online lender apparently failed to verify a borrower's income

for a full two-thirds of its loans in 2016. Another lender

has had so many of its loans fail, that it has had to repay

investors for their losses in the last three securitizations

of the loans it bundled up and sold to Wall Street.

This bill would weaken lenders' incentive to underwrite

properly by making it easier to make high-rate loans. High

interest rates result in misaligned incentives that can lead

to lender profits but borrower catastrophe. Skewed incentives

are already a problem in the marketplace loan industry.

Moody's credit-rating firms liken this industry to mortgage

lending in the years leading up to the 2008 financial

crisis--``because the companies that market the loans and

approve them quickly sell them off to investors,'' relieving

themselves of the risk of the loan later going bad. This bill

could make that problem worse.

The bill is not necessary to ensure access to affordable

credit. Proponents of this bill claim that the Madden

decision has had an adverse impact on access to credit. They

point to a study that showed a drop in marketplace lending by

three lenders in the Second Circuit after the Madden decision

for subprime borrowers, especially for those with FICO scores

below 644. However, the study showed that these lenders

offered only miniscule amounts of credit in the low FICO

range even before the Madden decision. Thus, the impact on

access to credit was trivial. Moreover, it is likely that the

credit extended before the decision at the lower end of the

FICO spectrum was made to borrowers who had trouble repaying,

and that lenders were relying on high interest rates on large

loans to compensate for high default rates.

The bill wipes away the strongest available tool against

predatory lending practices. Strong state rate caps, coupled

with effective enforcement by states, remain the simplest and

most effective method to protect consumers from the predatory

lending debt trap. Contrary to what lenders often claim,

robust state loan laws do not drive people to find loans

online. In fact, illegal online lending is more prevalent in

states that do not effectively regulate predatory lending

than it is in states that enforce state interest rate caps.

Accordingly, we urge you to reject this bill. For more

information, contact Lauren Saunders at [email protected] or

Scott Astrada at [email protected].

Action NC; Albany Center for Economic Success, Inc.; Allied

Progress; Americans for Financial Reform; Arbor Farm Press;

Arizona Community Action Association; Arizona PIRG; Arkansans

Against Abusive Payday Lending; Ashe County Habitat for

Humanity; Asheville Area Habitat for Humanity; Baker

Organizing School South.; Baltimore Neighborhoods, Inc;

Billings First Congregational Church; Brazos Valley

Affordable Housing Corp.; Bucks County Women's Advocacy

Coalition; Business Outreach Center Network, Inc.; California

Reinvestment Coalition; CALPIRG; Capital Good Fund; CARECEN-

Central American Resource Center.

Carolina Behavioral Health Alliance; Carolina Jews for

Justice; CASH Campaign of Maryland; Catalyst Miami; Catholic

Charities of Southern New Mexico; CCCS of WNC, Inc. DBA

OnTrack Financial Education & Counseling; Cedar Grove

Institute for Sustainable Communities; Center for Economic

Integrity; Center for Economic Integrity--New Mexico Office;

Center for Financial Social Work; Center for Global Policy

Solutions; Center for Responsible Lending; CEO Pipe Organs/

Golden Ponds Farm; Children First/Communities In Schools of

Buncombe County; Church Women United in North Carolina;

Clarifi; CO PIRG; Coalition on Homelessness and Housing in

Ohio; College Park: An American Baptist Church; Colorado

Center on Law & Policy; Communications Workers of America

(CWA).

Community Capital New York; Community Council of

Metropolitan Atlanta; Community Economic Development

Association of MI (CEDAM); Community Loan Fund of the Capital

Region Inc.; Connecticut Association for Human Services;

Connecticut Legal Services, Inc.; ConnPIRG; Consumer Action;

Consumer Federation of America; Consumers Union; Covenant

House of WV; Credit and Homeownership Empowerment Services

Inc (CHES, Inc.); Credit Counseling Agencies of NC; Creighton

College Democrats; Davidson Housing Coalition; Demos;

Disability Rights North Carolina; Durham Regional Financial

Center; East LA Community Corporation; Ecumenical Poverty

Initiative; Empire Justice Center.

Faith in Action Alabama; Faith in Texas; Fayetteville Area

Habitat for Humanity; Federation of Democratic Women DAC;

Financial Pathways of the Piedmont; Florida Alliance for

Consumer Protection; Florida Alliance for Retired Americans;

Florida Consumer Action Network; Florida PIRG; Fons Law

Office, representing consumers; Georgia PIRG; Georgia Watch;

Gowen Consulting; Greater Ward's Corner Area Business

Association (Virginia); Habitat for Humanity of Catawba

Valley, Inc.; Habitat for Humanity of Davie County; Habitat

for Humanity of Greater Greensboro; Habitat for Humanity of

North Carolina; Heartland Alliance for Human Needs & Human

Rights; Hispanic Baptist Convention of Texas; Hispanic

Federation; HomesteadCS; Housing Consultants Group.

IDA and Asset Building Collaborative of NC; Illinois

People's Action; Illinois PIRG; Indiana Assets & Opportunity

Network; Indiana Institute for Working Families; Indiana

PIRG; Innovative Systems Group; Iowa PIRG; Jesuit Social

Research Institute at Loyola University New Orleans; Just

Harvest; Kentucky Equal Justice Center; La Casa de Don Pedro;

Legal Aid Justice Center (Virginia); Legal Aid Society of

Milwaukee; Legal Services of Southern Piedmont; Long Island

Housing Services, Inc.; Louisiana Budget Project; Lutheran

Episcopal Advocacy Ministry NJ; Lutheran Advocacy Ministry--

New Mexico; Maine Center for Economic Policy; Maryland

Consumer Rights Coalition; Maryland PIRG; MASSPIRG;

Metropolitan Milwaukee Fair Housing Council.

MICAH; Mobilization for Justice, Inc.; Montana Organizing

Project; Montebello Housing Development Corporation; MoPIRG;

Mountain State Justice; NAACP; NAOMI; National Association of

Consumer Advocates; National Association of Social Workers

West Virginia Chapter; National Consumer Law Center (on

behalf of its low-income clients); National Rural Social Work

Caucus; Native Community Finance; NCPIRG; New Economics for

Women; New Economy Project; New Jersey Appleseed Public

Interest Law Center; New Jersey Citizen Action; New Jersey

Tenants Organization; New Mexico Fair Lending Coalition;

NHPIRG; NJPIRG; North Carolina A. Philip Randolph Institute,

Inc.

North Carolina Assets Alliance; North Carolina Council of

Churches; North Carolina Housing Coalition; North Carolina

Institute of Minority Economic Development; North Carolina

Justice Center; North Carolina PIRG; North Carolina Rural

Center; North Carolina State AFL-CIO; North Carolina United

Methodist Conference; North Dakota Economic Security and

Prosperity Alliance; OhioPIRG; Oklahoma Policy Institute;

Oregon PIRG; PennPIRG; Pennsylvania Council of Churches;

Pennsylvania Military Officers Association of America;

Pennsylvania War Veterans Council; People's Action Institute;

Philadelphia Unemployment Project; Piedmont Housing Alliance

(Virginia); PIRG in Michigan; Power New Mexico.

Prince George's CASH Campaign; Prosperity Indiana;

Prosperity Works; Public Justice; Public Justice Center;

Public Law Center; Reinvestment Partners; Rural Dynamics,

Inc.; Safety MD LLC; Samaritan Ministries; Sisters of Charity

of Nazareth Congregational Leadership; Sisters of Charity of

Nazareth Western Province Leadership; Sisters of Mercy South

Central Community; Southern Poverty Law Center; Statewide

Poverty Action Network; Step Up Savannah; Tabor Community

Services; Tennessee Citizen Action; Texas Appleseed; TexPIRG;

The AMOS Project; The Bell Policy Center; The Episcopal

Diocese of North Carolina; The Midas Collaborative; The One

Less Foundation.

Tuscaloosa Citizens Against Predatory Practices; Tzedek DC;

U.S. PIRG; Unitarian Universalist Pennsylvania Legislative

Advocacy Network; UNITE HERE; United for a Fair Economy;

University of Wisconsin Law School, Consumer Law Clinic;

Virginia Citizens Consumer Council; Virginia Interfaith

Center for Public Policy; Virginia Organizing; Virginia

Poverty Law Center; Virginians Against Payday Lending; VOICE

Oklahoma City; WASHPIRG; Watauga County Habitat for Humanity;

WESST; West Virginia Center on Budget and Policy; West

Virginia Citizen Action Group; WISDOM; WISPIRG; Women

AdvaNCe; Woodstock Institute; WV Citizen Action Group.

State of New York,

Office of the Attorney General,

June 7, 2017.

Re The Financial CHOICE Act of 2017 (H.R. 10).

Hon. Paul Ryan,

Speaker, House of Representatives,

Washington, DC.

Hon. Nancy Pelosi,

Minority Leader, House of Representatives,

Washington, DC.

Hon. Kevin McCarthy,

Majority Leader, House of Representatives,

Washington, DC.

Hon. Steny Hoyer,

Minority Whip, House of Representatives,

Washington, DC.

Dear Speaker Ryan, Majority Leader McCarthy, Minority

Leader Pelosi, and Minority Whip Hoyer: On behalf of the

undersigned State Attorneys General and the Executive

Director of the Office of Consumer Protection for the State

of Hawaii (the ``States''), we write to express our strong

opposition to H.R. 10 (the ``Act''), which we understand the

full House of Representatives intends to vote on this week.

The proposed Act will eliminate many of the critical consumer

protections implemented as a result of the Dodd-Frank Wall

Street Reform and Consumer Protection Act (``Dodd-Frank'') in

the wake of, and in response to, the financial crisis. As the

chief consumer protection officers in each of our respective

States, we write to call your particular attention to those

portions of the Act that would effectively eviscerate the

role of the Consumer Financial Protection Bureau (``CFPB''),

the only independent federal agency exclusively focused on

consumer financial protection. While the Act purports to

protect consumers from over-regulation by federal agencies,

its far-reaching consequences would make consumers more

vulnerable to fraud and abuse in the marketplace. The

undersigned States support the work of the CFPB and oppose

any effort to curtail its authority. While we find numerous

provisions of the Act to be objectionable, we write to

highlight certain provisions that would significantly impact

consumer protection -- a core function of our States.

I. Background

Our States' work to protect consumers from unscrupulous

marketplace actors and practices is greatly enhanced when the

federal government serves as an effective partner. In the

years leading up to the global financial crisis, residents of

our States suffered the consequences of a federal government

that failed to fulfill its basic obligations to U.S.

consumers to prevent fraud and misconduct by mortgage

providers, servicers, and other financial firms. Families

nationwide suffered dire financial consequences as a result

of lax federal oversight and inaction.

Since its inception, the CFPB has emerged as the

independent federal consumer watchdog the nation has long

needed, and as a key partner in critically important consumer

protection work undertaken by our States and by State

Attorneys General across the country. The exceptional record

of the CFPB speaks for itself. As of January 1, 2017, the

CFPB has handled over one million consumer complaints, and

obtained $11.8 billion in relief for 29 million consumers.

The CFPB has taken enforcement actions to stem abuses by

student loan originators and servicers, for-profit schools,

debt collectors, credit reporting agencies, payday lenders,

and foreclosure ``rescue'' companies, among others. Among its

more recent, significant enforcement actions have been cases

against

mortgage servicer Ocwen Financial Corporation for widespread

mortgage servicing failures, including improperly calculating

balances, misapplying payments, and failing to investigate

consumer complaints, student loan servicer Navient for

student loan servicing abuses, including failing to notify

struggling borrowers of their eligibility for income-based

repayment plans and steering such borrowers into more costly

forbearance plans--and Wells Fargo bank for its widespread

practice of opening unauthorized bank and credit card

accounts for consumers. In addition, as part of its statutory

mandate, the CFPB has conducted thorough and nuanced studies

of complex financial issues that impact consumers and has

issued rules intended to protect consumers in a thoughtful,

consensus-driven manner.

II. The Devastating Effects of the Act on Consumer Protection

The Act would effectively cripple the CFPB from doing the

job it has been doing so effectively since its inception.

A. The Act Would Eliminate the CFPB's Rulemaking and Enforcement

Authority Over Unfair, Deceptive, and Abusive Acts and Practices

Section 736 of the Act would eliminate the CFPB's authority

to prohibit unfair, deceptive, and abusive acts and practices

(``UDAAP''). The CFPB's authority to prohibit entities it

supervises from engaging in UDAAP violations has been the

basis for many of the CFPB's most significant enforcement

actions, including the Ocwen, Navient, and Wells Fargo

matters discussed above. In addition, several of the

undersigned States have jointly filed cases with the CFPB

against businesses and individuals engaged in unfair,

deceptive, or abusive practices. UDAAP authority gives the

CFPB the flexibility to respond swiftly to new technologies

and practices that harm consumers, without the need to wait

for legislation expressly addressing a given practice.

B. The Act Would Eliminate the CFPB's Supervision and Enforcement

Authority Over Large Banks

Section 727 of the Act would similarly eliminate the CFPB's

supervision and enforcement authority over large banks and

permit financial institutions that meet certain criteria to

elect to be exempted from the CFPB's supervisory authority.

This provision is concerning in a number of ways, not the

least of which is that it is through the supervision process

that the CFPB often learns of systemic issues in the

companies and industries it regulates. The CFPB is the only

federal agency that has been conducting consumer protection

reviews as the focus of their supervisory authority (rather

than safety and soundness), which is important for the

reasons previously discussed. In addition, many of the CFPB's

enforcement actions have been against the large banks.

C. The Act Would Eliminate the CFPB's Authority to Regulate Payday and

Vehicle Title Loans

Section 733 of the Act expressly prohibits the CFPB from

engaging in any rulemaking or enforcement with respect to

payday and vehicle title loans. Payday lending, as the CFPB's

own extensive research has documented, has adversely affected

the lives of millions of financially vulnerable consumers

across the country. The CFPB has been at the forefront of

curbing abuses in the payday lending industry and has

supplemented state enforcement by taking enforcement actions

against payday and other lenders that are attempting to

collect on loans that are void under state law. The CFPB has

been similarly aggressive in uncovering and confronting

abuses in the vehicle title loan industry, where consumers,

risk the loss of their vehicle (with the corresponding loss

in mobility) if they find themselves unable to repay their

loans. The Act will strip the CFPB of all authority in these

areas, including its enforcement authority and the ability to

adopt sensible and common sense rules to prevent consumers

from falling into debt traps that are often the result of

payday and vehicle title loans.

D. The Act Would Permit Third Party Debt Collectors to Charge Usurious

Interest Rates

Section 581 of the Act would restrict states' abilities to

enforce interest rate caps. Currently, there are no federal

interest rate caps that cover financial products and services

offered by national banks. Rather, national banks are

permitted to export the interest rate of their home state and

disregard the more stringent interest rates of other states

in which they do business. Section 581 of the Act would add

language to four federal statutes to provide that, when a

national bank sells or assigns debt covered by the National

Bank Act, the buyer or assignee has the right to collect that

same interest rate, regardless of the law of the state where

the buyer or assignee is located. This would make it more

difficult to ensure that debt buyers, online lenders, fintech

companies, and rent-a-bank schemes comply with state interest

rate caps. It is essential to preserve the ability of

individual states to enforce their existing usury caps and

oppose any measures to enact a federal law that would preempt

state usury caps.

E. The Act Would Eliminate the CFPB Rulemaking Authority Regarding

Mandatory Arbitration

Section 738 of the Act would repeal the provision of Dodd-

Frank that granted the CFPB authority to study and issue

rules regarding arbitration in financial services contracts.

Dodd-Frank expressly authorized the CFPB to study arbitration

provisions in financial services contracts, and to issue

regulations prohibiting or restricting such provisions if the

CFPB concluded that doing so would be ``in the public

interest and for the protection of consumers.'' After a

thorough review, the CFPB concluded that tens of millions of

Americans use financial products or services subject to

mandatory arbitration clauses that prohibit proceeding on a

class basis and that the effect of such provisions is to

prevent consumers from seeking redress, particularly for

small dollar claims. Elimination of the CFPB's authority in

this area can only operate to the detriment of consumers.

F. The Act Would Reduce Transparency and Deprive Consumers of a

Valuable Source of Information

Finally, the Act would end the CFPB's current practice of

publicly posting information concerning individual consumer

complaints in a searchable database. This information helps

consumers make informed decisions about the companies with

which they choose to do business, and increases transparency

in the marketplace. Eliminating the release of this

information provides no benefit to consumers, but only to

companies whose practices generate repeated complaints.

III. Conclusion

For these and other reasons, the undersigned States urge

you to support robust and engaged consumer protection in the

financial services industry by voting against the Act. A

rollback of these significant post-financial crisis rules and

regulations would substantially harm consumers and the public

in general. If we can provide any further information or

assistance, please do not hesitate to contact us.

Respectfully submitted,

Eric T. Schneiderman, New York Attorney General;

Xavier Becerra, California Attorney General;

George Jepsen, Connecticut Attorney General;

Matthew Denn, Delaware Attorney General;

Karl A. Racine, Attorney General for the District of

Columbia;

Douglas S. Chin, Hawaii Attorney General;

Stephen H. Levins, Executive Director, Hawaii Office of

Consumer Protection;

Lisa Madigan, Illinois Attorney General;

Tom Miller, Iowa Attorney General;

Janet T. Mills, Maine Attorney General;

Brian E. Frosh, Maryland Attorney General;

Maura Healey Massachusetts Attorney General;

Lori Swanson, Minnesota Attorney General;

Jim Hood, Mississippi Attorney General;

Josh Stein, North Carolina Attorney General;

Ellen F. Rosenblum, Oregon Attorney General;

Josh Shapiro, Pennsylvania Attorney General;

Peter F. Kilmartin, Rhode Island Attorney General;

T.J. Donovan, Vermont Attorney General;

Mark R. Herring, Virginia Attorney General;

Bob Ferguson, Washington State Attorney General.

Mr. Speaker, States can, and do, like my own State of Colorado, put limitations on the interest rates of installment loans issued by nonbanks. Banks, on the other hand, have the preemption of State interest rate caps through the National Bank Act.

So in order to get around State interest rate caps, payday lenders often use a bank to originate a loan at a higher interest rate, but the nonbank designs the loan, provides the funding for the loan, services the loan, and guarantees any losses the bank incurs. In all but in name, it is the nonbank entity that is the loaning entity. Essentially, the payday lender is the de facto lender and the bank is simply a nominal participant to evade regulations. These are referred to as ``rent-a-charter'' schemes, and they are not new.

In the early 2000s, Federal banking regulators shut down several of these arrangements between national banks and nonbank lenders. In 2014, the OCC made it clear that banks may not rent out their charters to third parties. Right now, our Federal banking regulations are able to contain these schemes, but this legislation would undermine our ability to stop abusive and predatory practices.

States are leading the effort to stop abusive lending practices. In my home State of Colorado, there is actually a lawsuit challenging this very scheme.

And now that the new Director of the Consumer Financial Protection Bureau has delayed a final rule that would have helped protect borrowers, it is actually up to the States to help protect

consumers, and this bill would make it harder. This bill would cripple States', like Colorado's, efforts to stop predatory lending from preying on their citizens.

The Republican assault on States' rights has gone from bad to worse. This is yet another part of the big government Republican war on consumers across the country preempting States' rights for Washington, D.C., control.

It seems the Republicans want to control everything from Washington. That is why we need to make sure that our States are empowered to have the ability they need to protect consumers and protect our law.

Lately, there has been an increased focus on fintech companies and how they can help serve the unbanked or underbanked. And I agree. I am a big supporter of financial innovation and promote financial inclusion, but we can't do that at the expense of consumers or at the very high cost of putting consumers into cycles of debt, which ends badly.

Why are we considering legislation that would put all of the power in Washington, D.C., and take away State-level protections for consumers?

Instead, we should be finding ways to increase access to affordable credit, make it easier for consumers to access the financial services that meet their needs, rather than trying to force a Republican Washington solution on all of the States across our country.

We are considering this bill under a closed rule. There is only one amendment filed to this bill, and it is not even allowed to be debated about, no less voted on.

Now, I want to talk about the other bill under this rule. H.R. 3978, the TRID Improvement Act, is actually a package of several bills that came out of the House Financial Services Committee, some which are more controversial than others. Title I of the package, the TRID Improvement Act, was reported out by a 53-5 vote, and all the Republicans and Democrats supported Title V of the package, Eliminating Barriers to Jobs for Loan Originators.

I support Title II, the Protection of Source Code Act, that is being included in this package. I also support Representative Foster's amendment to that title, which would provide additional clarification to the subpoena requirement and would only apply to the source for algorithmic trading.

The problem is that it takes several bills that have broad bipartisan support and combines them with other bills that should be considered separately, which is forcing Democrats and Republicans to weigh the package as a whole. We simply can't know the ramifications of considering all these bills at the same time, especially when they haven't had hearings on the individual components.

Finally, H.R. 620, the ADA Education and Reform Act, is, in many ways, the most damaging bill that is discussed under this rule.

We are celebrating the Americans with Disabilities Act that was signed into law 28 years ago to really allow Americans with disabilities to have every kind of opportunity that everybody else does, free from discrimination in the workplace, schools, and transportation. It was a landmark bipartisan effort.

Title III of the Americans with Disabilities Act prohibits places of public accommodation from discriminating against individuals with disabilities and sets a minimum reasonable standard for accessibility, which has been the law of our land for three decades.

H.R. 620 would make it more difficult for people with disabilities to have their rights guaranteed under the Americans with Disabilities Act. Under this bill, instead of requiring the public establishment to comply with the ADA, the burden should shift to the victim of the discrimination to prove a violation has occurred. You are forcing disabled Americans to go around with clipboards and inspector goggles, rather than forcing businesses to comply. It is simply not fair.

It has been nearly three decades since the Americans with Disabilities Act was signed into law. All title III of the ADA requires is that businesses make their facilities accessible to the extent that it is readily achievable--a very reasonable burden under the law. Businesses have flourished over the last three decades and we have had continued economic growth.

I have heard from so many of my constituents about this bill, including Cari Brown, a systems advocacy specialist with the Arc of Larimer County, serving disabled residents. She said: ``The standards set forth in the ADA are designed to ensure that people with disabilities can access basic public accommodations. Requiring people with disabilities to file a complaint to enforce compliance of a 28- year-old law is a step backwards.''

I think this is a Republican plan to turn everybody with disabilities into an attorney, because that is what they are going to need to be to be able to assert the rights that they already have under the law.

There is significant, if not universal, opposition to H.R. 620 from health and disabilities advocacy groups, including, but not limited to: Disability Rights Education and Defense Fund, Epilepsy Foundation, The Bazelon Center, the National Council on Disabilities, the American Association of People with Disabilities, and the Consortium for Citizens with Disabilities.

We knew, Mr. Speaker, that this President has mocked and taken on Americans with disabilities, but I frankly thought it was above the Republicans in Congress to join President Trump in assaulting the rights of those with disabilities.

H.R. 620 will not allow people with disabilities to immediately file ADA violations, essentially denying access to buildings due to a lengthy legal process.

Who has time to wait several years to access a building that you need to be in because of your job?

It simply doesn't make sense. That means that people with disabilities will wait weeks, months, or years just to gain the access that is required under law.

For businesses, there is simply no incentive to adhere to ADA guidelines. All of this combined harms disabled Americans and weakens the legal protections that, for decades, Republicans and Democrats have been proud of in the Americans with Disabilities Act.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the gentleman from Rhode Island (Mr. Langevin).

Mr. Speaker, I yield myself such time as I may consume.

President Trump continues to, frankly, offend our sensibilities and values by insisting that somehow Democrats don't care about fixing DACA. Well, I would beg to differ. This is the 22nd time we have tried to bring the bipartisan bill, H.R. 3440, the Dream Act, to the House floor for a vote.

We have made our position clear. We want immigration policies that reflect our values, that make America safer, while realizing, of course, that we are a nation both of laws and of immigrants.

Yesterday, the U.S. Chamber of Commerce again urged Congress to pass legislation that provides permanent relief for Dreamers. Even the conservative Cato Institute estimates that deporting Dreamers would result in a $280 billion reduction in economic growth over the next decade.

Mr. Speaker, if we don't care about the families, about the young people affected, surely you care about $280 billion that will be lost if Republicans fail to act. Protecting these aspiring Americans is not only the right thing to do morally, it is the right thing to do for our country and for our economy.

If we defeat the previous question today, for the 23rd time, I will offer an amendment to the rule to bring up H.R. 3440, the Dream Act. This bipartisan, bicameral legislation would finally help hundreds of thousands of young people who are American in every way except for on paper.

Mr. Speaker, I ask unanimous consent to insert the text of my amendment in the Record, along with extraneous material, immediately prior to the vote on the previous question.

Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Correa) to discuss our proposal.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am not sure what is worse, the fact that we are taking up legislation that would make it more difficult for Americans to gain access to buildings in their community, including buildings that they work in, or that we are considering legislation that makes it easier for payday lenders to prey on vulnerable consumers by forcing in Washington, D.C., Big Government Republican values on our States' rights; or is it worse that we are not taking up legislation to protect the hundreds of thousands of Dreamers at risk of deportation in the beginning of March unless we act?

My Republican colleagues are working hard to put Washington, D.C., Big Government ahead of people, to force people with disabilities to get law degrees and wander around with notepads to document when they are unable to get into a building, and putting payday lenders ahead of hardworking Americans.

Instead, we should be focused on finding bipartisan solutions to protect aspiring Americans from being forcibly deported from the only country that they know as home.

Mr. Speaker, I urge my colleagues to vote ``no'' on the rule and ``no'' on H.R. 3299 and H.R. 620, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I demand a recorded vote.

Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, I rise in strong opposition to H.R. 3978, the TRID Improvement Act of 2017.

H.R. 3978 has been dramatically expanded without input from Democrats to include several highly problematic and damaging bills. If enacted, this amended package of bills would ease the ability of high frequency traders to manipulate the stock markets undetected, encourage a regulatory race to the bottom in our Nation's stock exchanges, and harm investors and small businesses by weakening efforts to prevent accounting fraud at smaller public companies.

Taken together, this deregulatory package could significantly undermine market stability and gut investor and consumer protections at a time when our financial markets are already rattled.

Madam Speaker, from January 26 until last Thursday, the stock markets plunged just over 10 percent, becoming what the financial services industry calls ``stock market correction,'' and for the past two trading days, markets have rebounded the most since 2016.

Although market corrections are not new, what distinguishes today's volatility is that it is driven by complex computer strategies designed to buy and sell stocks and options millions of times a day. As many of us have witnessed, the Dow Jones Industrial Average may be up 500 points and then down 600 in less than a few minutes. For the average American who was hoping to one day retire with dignity by investing her hard-earned savings in the stock market, it can be distressing to see such wild swings always wondering whether the markets are truly fair or whether she is going to be fleeced. Unfortunately, the passage of H.R. 3978 would likely make those swings more extreme and increase the likelihood of problems going forward.

I am going to walk through each of the problematic provisions in this bill. Beginning with title IV, this provision is identical to H.R. 4546, the National Securities Exchange Regulatory Parity Act, which would weaken the standards for listing public companies for trading at U.S. stock exchanges. Today, exchanges listing standards set minimum requirements for a company's shares to be sold to the public without having to comply with State law. Exchanges can only revise these standards if the Securities and Exchange Commission first finds that new standards are substantially similar to the listing standards of the New York Stock Exchange.

This bill would remove any separate analysis for changing the standards and, thus, automatically preempt State oversight. As a result, the bill would encourage a race to the bottom of listing standards as exchanges compete with each other to attract companies with less restrictions, even if the standards are beneficial to the investors.

I believe that we should be strengthening the current analysis to promote fair and rigorous listing standards and only preempt State law when companies meet high standards. This is why I worked with the cosponsors last Congress to strike a bipartisan compromise which passed the House unanimously to require the SEC to develop a core qualitative listing standard. Unfortunately, my Republican colleagues have reversed their position in favor of empowering the industry over the investing public.

Turning to title III which is identical to H.R. 1645, the so-called Fostering Innovation Act, this provision would eliminate the independent audit of a company's financial reporting controls for up to 10 years for newly public companies provided that they have $50 million or less in gross revenues and less than $700 million in outstanding shares. Passed in the wake of the Enron and WorldCom accounting scandals, the requirement that public companies conduct an independent audit of financial controls is one of the many accounting provisions required by the bipartisan Sarbanes-Oxley Act that directly benefits investors and public companies by improving the accuracy of their financial reporting.

In fact, companies that are not subject to such review by an independent auditor are more likely to issue corrections to their financial reports leading to investor losses and higher losses for the company.

Investors like these audits because they improve the veracity of the reports they rely on to make investment decisions. Today, truly small public companies--those with less than $75 million worth of shares--are already exempt from the audit requirement. But this bill would extend the exemption to large companies that are nearly ten times that size. The law already provides newly public companies with an exemption for 5 years. Extending it to a decade would harm investor confidence and all such companies, hurting the very companies the bill's supporters purport to help.

Title II of this bill is the same language as H.R. 3948, the Protection of Source Code Act. This bill bans the SEC from inspecting source code used by regulated entities to engage in algorithmic or computer-driven trading and other activities that impact the securities markets and investors without first obtaining a subpoena. This provision would severely hamper the ability of the SEC to effectively examine persons like high-frequency traders and to investigate market disruptions.

The recent stock market volatility, which has seen all of the major stock indices decline by more than 10 percent in less than 2 weeks, has been exacerbated by high-frequency traders using complex computer algorithms to determine when to buy and sell millions of trades per second by making it harder for the capital markets COP to detect and stop bad actors and rein in fraudulent trading schemes. This provision will inevitably harm everyday Americans and retirees who rely on fair capital markets to invest their hard-earned savings.

To make matters worse, Republicans added a provision to pay for the cost of the bill by taking $2 million from the Securities and Exchange Commission's reserve fund. As a result, our financial watchdog will have less resources to support its capacity to oversee the markets through investments in IT and to respond to unforeseen market events like the flash crash.

In short, this bill asks taxpayers to pay for the costs of diminished capital market oversight by taking away SEC's funding to respond to emergency market situations that threaten market stability. This provision doubles down on the irresponsible policymaking we often see by the opposite side of the aisle.

The bill before us today would also make two less significant changes which I believe the Republicans included to garner additional support for the legislation. Nevertheless, even with these provisions, the package should be soundly rejected.

Title I, which includes the version of H.R. 3978, TRID Improvement Act of 2017, that the committee previously considered, would amend a mortgage disclosure known as TRID or the know-before-you-owe disclosure that informs home buyers of the terms and conditions of their mortgage. Responding to the concerns of some in the real estate industry, this provision would amend the disclosure to account for the discounts paid to borrowers in States where simultaneous lender and buyer title insurance is issued. However, the revised form does nothing for bars in States that do not provide such special rates to home buyers, and the provision eliminates the Consumer Bureau's ability to fix this aspect of the form even if a problem arises in the future.

The final provision, title V, is identical to H.R. 2948, the SAFE Mortgage Licensing Act. This title would ease the ability of individuals employed as mortgage originators to change employers by creating a temporary 120-day licensing regime so that they can continue to work at their new employer.

This bill would effectively treat mortgage originators who work for State registered firms the same as federally registered firms and was unanimously supported by committee Democrats. Unfortunately, because this legislation has been packaged with other deeply problematic and destructive bills, sensible relief to these individuals that has broad bipartisan support is being held hostage by Republicans' efforts to roll back as many safeguards as they can this year.

Madam Speaker, H.R. 3978, as amended, threatens many of the important reforms Democrats made to restore investor confidence to our capital markets after the worst financial crisis in generations. As the stock markets continue to wobble ominously in ways that threaten the savings of hardworking Americans, Congress should be strengthening oversight of the financial system, not weakening it.

Not surprisingly, H.R. 3978 is strongly opposed by the North American Association of Securities Administrators who serve on the frontline combating securities fraud on the State level and by nonpartisan organization who speak on behalf of our Nation's consumers, investors, and unions, including Consumer Federation of America, Center for American Progress, Americans for Financial Reform, AFL-CIO, and Public Citizen, and so do I.

Madam Speaker, I urge everyone to reject this harmful package of bills and to vote ``no'' on H.R. 3978.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, given the extreme volatility in the stock markets over the past few weeks, I am particularly troubled by title II of this bill, which would make it easier for high-frequency traders to evade regulatory oversight of their potentially disruptive automated trading algorithms.

This provision is widely opposed by nonpartisan consumer and investor advocacy groups who recognize the impact automated trading has on our markets.

Let me read for you excerpts from a few letters from these groups that highlight the dangers of title 2.

Americans for Financial Reform--a coalition of more than 200 consumer, civil rights, investor, retiree community, labor, faith- based, and business groups--wrote: ``Title II would prevent regulators from inspecting not only their raw source code used in automated trading, but also any related intellectual property that `forms the basis for the design of' source code. Examination of such intellectual property would only be possible in an enforcement context pursuant to a subpoena. This implies that the SEC would have to wait until the damage was done through a `flash crash' or similar market disruption before taking any action, which would have to be retrospective.

``In light of the significance of automated trading to modern markets, and the potential risk of high-frequency trading, it makes no sense to tie the hands of regulators in examining detailed trading strategies and methods of high frequency traders.''

The Center for American Progress cautioned that: ``But in an era of fast-moving, `flash-crash'-prone markets, the SEC may have a wide range of regulatory reasons for why it may need to examine source codes, including approvals of new trading products or the supervision of trading venues. The SEC should only exercise that authority carefully and under the strictest protections for confidential information, but blocking it by law dangerously limits the SEC's ability to address the significant technology-based challenges to financial markets.''

The Consumer Federation of America, an association of nearly 300 consumer advocacy groups, similarly opposed title 2 because it ``would weaken SEC oversight of algorithmic trading and hamstring the agency from responding quickly to flash crashes or other market breakdowns.''

Further, the CFA wrote that: ``At a time when algorithmic trading is taking on increased importance in our capital markets, this bill would make it more difficult for the SEC to properly oversee such trading.

``The bill would require the SEC to first issue a subpoena before it could compel a person to produce or furnish to the SEC algorithmic trading source code or `similar intellectual property.' This would undermine the SEC's examination authority by creating a gaping hole in its ability to gain access to firm records relevant to the examination. It would also have a devastating effect on the agency's ability to respond quickly in the event of another `flash crash' or such events in the future. In order to oversee the markets effectively, the SEC needs to be able to accurately and efficiently reconstruct order entry and trading activity, including for algorithmic traders.''

Public Citizen, a consumer rights advocacy group with over 400,000 members and supporters, wrote: ``Market volatility caused not by real events such as outbreak of a war, but by computers, including computer glitches, threatens to erase savings to some innocent investors and erodes general investor confidence. The recent swings in the markets attest to the need for robust and urgent supervisory inspection. The May 6, 2010 `Flash Crash,' where markets collapsed by more than $1 trillion in less than an hour, revealed that such a robust and urgent supervision has been lacking. The SEC required nearly a half year to investigate this incident before identifying a flawed algorithmic at one major trader. SEC oversight should be streamlined, not hampered. Trading instructions and records of human traders are already subject to inspection, so it should be no different for those instructions and records generated by a machine. Hiding source code from regulatory scrutiny will leave those responsible for mistakes as well as those attempting to manipulate markets unaccountable.''

These letters demonstrate the wide opposition to title II by groups that truly understand that robust oversight of algorithmic trading is necessary for the help of our makers.

Madam Speaker, I include in the Record letters from these groups.

February 13, 2018.

Please vote NO on H.R. 3299 and H.R. 3978.

Hon. Member,

House of Representatives,

Washington, DC.

Dear Hon. Member: On behalf of more than 400,000 members

and supporters of Public Citizen, we ask you to vote NO on

H.R. 3299 and H.R. 3978, which are expected to be considered

by the full House on Wednesday, February 14, 2018. Provisions

in these bills would expose borrowers to abusive loans,

investors to dubious securities, and Americans generally to a

riskier financial system.

H.R. 3299, the Protecting Consumers' Access to Credit Act

of 2017, would allow predatory lenders to escape state limits

on high interest rates. The bill would nullify the Second

Circuit Court ruling in Madden v. Midland Funding. That

decision provided that a financial institution that buys

loans originated by a national bank could not benefit from

the National Bank Act's preemption of state interest rate

caps. While the Madden decision did not limit interest rates

that banks charge on credit, it does limit nonbanks from

evading state interest rate caps. This bill would pave the

way for payday lenders, financial technology (fintech)

companies and others to exploit that loophole and use a

``rent-a-bank'' arrangement in order to charge high interest

rates. Twenty state Attorneys General have written to oppose

this measure, noting that it undermines their efforts to

protect borrowers from abusive loan rates. We urge you to

oppose this bill.

H.R. 3978, the TRID Improvement Act of 2017, is actually a

package of bills that were considered separately in the House

Financial Services Committee. One of these is the Financial

Stability Oversight Council Improvement Act (formerly H.R.

4061). This measure would add numerous procedural

requirements for the Financial Stability Oversight Council

(FSOC) when it considers the designation or continued

designation of a nonbank firm as a systemically important

financial institution (SIFI). Current rules already make SIFI

designation a high hurdle. The case of MetLife, for example,

shows that firms enjoy more than ample methods to contest

designation. After FSOC designated MetLife as systemically

important, it contested it in court and the case is pending.

Increasing the government's burden for designation would

restrict its ability to apply enhanced supervision to major

institutions. However, the largest bailout of the 2008

financial crash went to AIG, a nonbank engaged in reckless

derivatives activity beyond the purview of banking

supervisors. We oppose this measure.

Another bill contained in H.R. 3978 is the Fostering

Innovation Act (previously H.R. 1645). This bill amends

Section 404(b) of the Sarbanes-Oxley (SOX) law by increasing

from five to 10 years the time that CEOs of firms with less

than $50 million in revenue must attest to the accuracy of

their financial reporting. Congress approved SOX in response

to the accounting scandals at the turn of the millennium. The

rules are designed to promote accounting accuracy to the

shareholders who have entrusted their savings to these firms.

A Government Accountability Office (GAO) report found that

companies with inferior financial reporting controls have a

significantly higher likelihood of issuing a restatement of

their financial accounts. Firms that are unwilling to oblige

SOX should not be trusted with the capital of savers.

Extending the CEO attestation requirement from five to 10

years exacerbates the problem. From an investor perspective,

accounting safeguards are more important for smaller

companies, since larger companies generally attract a larger

and more sophisticated base of stock and bond holders who can

perform effective oversight. We oppose this measure.

A third bill that is part of the H.R. 3978 package is the

National Securities Exchange Regulatory Parity Act (formerly

H.R. 4546). This bill would eliminate state supervision of

securities if they are listed on an exchange, even if the

exchange has reduced standards compared with those of major

exchanges such as the New York Stock Exchange. Under current

law, state supervision is pre-empted only if the security is

listed on exchanges with rules overseen by the Securities and

Exchange Commission (SEC). Rules may differ between

exchanges, but they must be approved by the SEC to ensure

that they prevent fraud, serve the public interest and

protect investors. Moreover, exchanges must adopt and enforce

rules that are ``substantially similar'' to the major

exchanges, known formally as ``Named Markets,'' under current

law. The existing system deters a race to the bottom, where

an exchange may attempt to attract companies with weaker

rules. Conversely, this bill would actually promote that race

to the bottom by removing the requirement that the exchange

adopt rules that are substantially similar to those of the

Named Markets. We oppose this measure.

A fourth measure in H.R. 3978 is the Protection of Source

Code Act, (formerly H.R. 3948). This measure would impede the

ability of the SEC to conduct effective compliance

examinations of market volatility involving computer-driven

algorithms. The bill imposes a strict subpoena requirement

before staff could inspect otherwise routine business records

that involve source code. Market volatility caused not by

real events such as the outbreak of a war, but by computers,

including computer glitches, threatens to erase savings to

some innocent investors and erodes general investor

confidence. The recent swings in the markets attest to the

need for robust and urgent supervisory inspection. The May 6,

2010 ``Flash Crash,'' where markets collapsed by more than $1

trillion in less than an hour, revealed that such robust and

urgent supervision has been lacking. The SEC required nearly

a half year to investigate this incident before identifying a

flawed algorithm at one major trader. SEC oversight should be

streamlined, not hampered. Trading instructions and records

of human traders are already subject to inspection, so it

should be no different for those instructions and records

generated by a machine. Hiding source code from regulatory

scrutiny will leave those responsible for mistakes as well as

those attempting to manipulate markets unaccountable. We

oppose this measure.

Because of our opposition to these elements in H.R. 3978

and to H.R. 3299 we urge you to vote NO on these bills. As we

are marking the 10th anniversary of the Wall Street Crash,

it's clear that American consumers and investors deserve

stronger financial reforms, not weakened protections that

will make our economy more susceptible to another collapse.

Thank you for your consideration. For questions, please

contact Bartlett Naylor.

Sincerely,

Public Citizen.

Madam Speaker, I continue to reserve the balance of my time.

Madam Speaker, may I inquire as to whether or not the chairman has more speakers?

Madam Speaker, I yield myself the balance of my time.

Madam Speaker, it has become par for the course for the majority to recklessly advance harmful deregulatory packages like H.R. 3978. My friends on the other side of the aisle are moving forward with regulatory roadblocks at a furious pace, pushing dangerous bills through the House nearly every week.

It appears that they may have already completely forgotten a way that lacks financial regulation and allowed the crisis in 2008 to occur. That crisis badly damaged the whole economy and harmed all of our constituents. The impact was enormous: $13 trillion in household wealth was lost; 11 million people lost their homes to foreclosure; and the unemployment rate reached 10 percent.

Democrats responded by enacting Wall Street reform to ensure that consumers, investors, and our economy are protected from reckless actors and bad practices, but now Republicans cannot wait to take us back to the bad old days. It makes no sense.

As we have discussed, the package of bills now before us guts important financial protections at a time when markets are already experiencing turmoil. It would allow high-frequency traders to manipulate the stock markets undetected, encourage a regulatory race to the bottom at our Nation's stock exchanges, and harm investors by weakening efforts to detect accounting fraud at smaller public companies. This package of bills threatens important progress we have made to reduce risk in the financial system and return investor confidence.

In recent weeks, we have seen volatile markets that threaten the savings of hardworking American families. These circumstances should serve as a clear reminder that Congress should be strengthening oversight of the financial system, not weakening it by undermining or removing important protections.

H.R. 3978 is strongly opposed by our State's security cops, who are at the front line of combating fraud, and it is opposed by groups representing consumers, investors, and unions.

Madam Speaker, for all of these reasons, I urge Members to oppose H.R. 3978, and I yield back the balance of my time.

Mr. Speaker, I include in the Record the following letters of opposition.

Center for American Progress,

Washington, DC, February 13, 2018.

Hon. Paul Ryan,

Speaker, House of Representatives,

Washington, DC.

Hon. Nancy Pelosi,

Democratic Leader, House of Representatives,

Washington, DC.

Dear Speaker Ryan and Leader Pelosi: The Center for

American Progress (``CAP'') is writing today to express

opposition to H.R. 4061, the Financial Stability Oversight

Council Improvement Act of 2017, which is included as Title

VI of the revised H.R. 3978 package. It is our understanding

that the revised H.R. 3978 package will be considered on the

floor of the House of Representatives this week, so we

welcome the chance to share our concerns regarding this

legislation with you and your Members.

In short, this bill erodes a vital new financial regulatory

tool implemented following the devastating 2007-2008

financial crisis. If enacted, the U.S. financial regulatory

structure will be less equipped to handle risks that build up

outside of the traditional banking sector--making the

financial sector as a whole more vulnerable to another shock

and economic downturn. Americans paid for the last crisis

with their jobs, homes, and savings, while banks and other

financial institutions were bailed out. This bill

inexplicably makes a repeat of that economic calamity more

likely.

The 2007-2008 financial crisis demonstrated that excessive

risk could build up outside of the traditional banking

sector. Nonbank financial institutions like Lehman Brothers,

Bear Stearns, and AIG did not face the type of oversight and

regulatory standards warranted by their systemic importance.

The failure or near-failure of these institutions threatened

the stability of the U.S. financial sector. AIG and Bear

Stearns were bailed out accordingly, while the failure of

Lehman Brothers brought the global financial system to the

brink of collapse. The crisis also revealed that no one

financial regulator had a system-wide mandate, meaning

individual regulators were only focused on their respective

segments of the financial sector. This left financial

regulators in the dark regarding risks that built up across

different parts of the sector or that emerged in

underregulated parts of the sector.

In the wake of the financial crisis, President Obama worked

with Congress to pass the Dodd-Frank Wall Street Reform and

Consumer Protection Act--the most significant financial

regulatory reforms enacted since the Great Depression. One

important pillar of Dodd-Frank was the creation of the

Financial Stability Oversight Council (``FSOC''), a new

systemic risk regulatory body. The FSOC was created to bring

the disparate financial regulators together to identify and

mitigate threats to financial stability. The most important

tool given to the FSOC to fulfill this mission is the

authority to subject a nonbank financial company to enhanced

oversight and regulation by the Federal Reserve Board if

material distress at the company, or the company's

activities, could threaten financial stability. The FSOC has

used this designation authority sparingly and only after a

thorough, multi-stage review process in which the FSOC

communicates extensively with the company and the company's

primary regulators.

H.R. 4061 would add multiple additional hurdles to the

FSOC's already-rigorous designation process. The proposed

changes would add an estimated two years to the designation

process, meaning it would take roughly four years for the

FSOC to designate a nonbank financial company that could

threaten U.S. financial stability. The four-year estimate

does not even factor in the time it will take for the legal

proceedings to play out when a company challenges the

designation in court. The legal challenge by MetLife took

years, and likely would have taken longer if the Trump

administration didn't agree to stop pursuing the case. If

anything, this bill increases the procedural issues a

designated company could raise in court. H.R. 4061

practically invites a legal filibuster of the designation. It

renders the designation authority nearly useless. Hollowing

out this crucial post-crisis authority makes it far more

likely that an underregulated systemically important nonbank

will cause or aggravate the next financial crisis.

Contrary to critics of the FSOC, it is not a rigid body and

has in the past responded to legitimate process and

transparency suggestions. In 2015, after soliciting public

comment, the FSOC adopted 17 changes to its designation

process and transparency policies The current designation

process in place is rigorous and appropriately thorough. H.R.

4061 would add no less than nine new bureaucratic steps.

These proposed changes are excessive, and the intent is

clear: To prevent the FSOC from using this vital tool.

This legislation is even more concerning given the actions

Treasury Secretary Steven Mnuchin, Chairman of the FSOC, has

taken since the start of the Trump administration. The FSOC,

under Mnuchin's leadership, has: (i) rescinded the

designation of AIG, the company that received a $182 billion

bailout during the crisis; (ii) slashed the FSOC's budget and

staff; (iii) dropped the legal proceedings regarding

MetLife's designation; (iv) signaled that Prudential's

designation may be rescinded this year; and (v) recommended

some deeply concerning additional changes to the FSOC's

designation process in a report published in late 2017.

Further restricting the FSOC's authority at a time when it is

being dismantled from within would be a grave mistake.

For these reasons, CAP recommends that Members vote ``NO''

when the revised H.R. 3978 package of bills, which includes

H.R. 4061, is considered on the floor.

If you have any questions about this letter or would like

to discuss these issues further, please contact Gregg

Gelzinis.

Sincerely,

Gregg Gelzinis,

Research Assistant, Economic

Policy, Center for American Progress.

Mr. Speaker, I rise in opposition to the amendment.

Mr. Speaker, the current language of title II of H.R. 3978 would require SEC examination staff to obtain a subpoena before it could inspect any source code whatsoever, including, for example, computer code reflecting a firm's adherence to the SEC's cybersecurity regulations.

The amendment offered by Mr. Foster would narrow the requirement in title II to only apply to proprietary source code related to algorithmic trading. While I applaud Mr. Foster and the amendment's cosponsor, Mr. Scott, for narrowing the overbroad language of title II, the amendment cannot fix this untimely and ill-advised legislation. Even as amended, title II would undermine effective oversight of the high-frequency traders that simultaneously create and stand to benefit from the kind of extreme market volatility that we have seen in the past few weeks.

Let's not forget that, on May 6, 2010, in an event referred to as the ``flash crash,'' major U.S. stock indices inexplicably plummeted nearly $1 trillion in less than an hour before mostly rebounding. Alarmingly, market regulators took nearly 5 months to determine that the flash crash was caused by a combination of a flawed execution algorithm of one institutional investor and aggressive algorithmic trading by HFTs.

While it is too early to tell exactly what created the recent volatility in the U.S. stock market, market analysts have suggested that algorithmic trading has played a central role. In fact, just last Tuesday, the day after the Dow Jones Industrial Average saw its biggest one-day point drop in history, Treasury Secretary Steve Mnuchin testified before the House Financial Services Committee that algorithmic trading ``definitely had an impact on market moves.''

Given the importance of algorithmic trading in our stock market, it makes no sense to obstruct the SEC's access to the information that enables such activity merely because it exists in an electronic format. Americans who have trillions of their dollars in 401(k) and other retirement and savings plans deserve the SEC's best efforts in investigating and mitigating computer-driven market disruptions. For this reason and for all of these reasons, and given my broader concerns that the bill would significantly harm investor confidence in our markets even if the amendment is adopted, I am urging a ``no'' vote on

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, H.R. 2201 would create an unnecessary and potentially dangerous loophole in Federal and State securities laws by allowing companies to sell unregistered securities without important safeguards that normally apply to such transactions. Specifically, the bill would allow a company to raise up to $500,000 from 35 or fewer investors, subject only to the requirement that each of these investors has a substantive preexisting relationship with the company.

Currently, before a company can offer or sell its securities, it must either register the offering with the Securities and Exchange Commission--that is the SEC--or qualify for at least one of several existing exemptions from registration. These exemptions provide reduced regulatory requirements for businesses conducting the offerings, but are limited to investors who have the financial sophistication to understand the risks, or enough assets to bear losses without the full protections of the securities laws.

Additionally, unlike H.R. 2201, these existing exemptions include several critical investor protections, such as notice to regulators, limitations on advertising, and restrictions on resale. For example, securities offered pursuant to rule 506 of regulation D are restricted, meaning they cannot be resold for at least a year without registering them; that is, re-registering them.

Additionally, the re-registration exemptions available under the crowdfunding rules and regulation A impose limitations on the amounts an individual can invest in a year, thereby placing a cap on potential losses.

H.R. 2201's lack of basic safeguards would leave investors vulnerable to an array of investment scams. For example, a purchaser of securities offered pursuant to H.R. 2201 would be able to immediately resell the securities in secondary transactions. In the past, the failure to restrict the resale of unregistered securities has exposed secondary investors to ``pump and dump'' schemes, a form of fraud that involves hyping up cheap junk stock in order to resell it at a higher price to unwitting investors.

Additionally, investor and consumer advocates, like Americans for Financial Reform, Center for American Progress, and Public Citizen, oppose H.R. 2201 because it would enable a particularly deceptive scam known as ``affinity fraud.'' Bad actors perpetrating affinity fraud could use H.R. 2201 to prey upon religious communities, ethnic groups, and the elderly.

Just a few years ago, the SEC shut down a scheme targeting the Hispanic community in southern California. The perpetrators raised more than $800,000 by representing to close friends and family members that their investment would be used to develop a financial services firm serving the Hispanic community.

The SEC found that, instead of developing the purported business, the scammers ``used a large part of the investors' money to engage unsuccessfully in high risk `day-trading' of stocks; pay personal living, travel, and entertainment expenses; or make other unexplained expenditures with no connection to the purported startup business activities.''

H.R. 2201 would provide a roadmap for bad actors to similarly rip off investors. The bill's $500,000 cap on offerings does not eliminate the need for robust safeguards against fraud and abuse. In fact, these protections are even more important for offerings of this size, given the proliferation of investment schemes in the smaller offering space.

The SEC has found that ``fraud in the micro cap stock markets is of increasing concern to regulators, as such markets have proven to be fertile grounds for fraud and abuse.''

While $500,000 may not seem like a lot on Wall Street, for Main Street Americans, losing even a fraction of that amount would destroy the hope of one day retiring with dignity. Existing exemptions such as those available under the SEC's regulation D, regulation A, and crowdfunding rules provide ample opportunities for companies to raise capital while also protecting investors.

H.R. 2201 would only expose hardworking Americans to a new and wholly unnecessary risk. For these reasons, I urge my colleagues to vote ``no'' on H.R. 2201, and I reserve the balance of my time.

General Leave

Mr. Speaker, I yield such time as he may consume to the gentleman from Rhode Island (Mr. Cicilline).

Mr. Speaker, may I inquire as to how much time I have remaining.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we have laid out this morning exactly how vulnerable groups and individuals can be taken advantage of with legislation like this. I don't know exactly where this legislation originated, but I can almost guarantee you that we are creating opportunities for individuals who don't have the best interest of our constituents at heart to literally get small groups together, 35, I guess, or less, and sell them on ideas where they are raising funds that probably will not result in profits as expected by those who are investing in these schemes.

No, there are no protections. There is no notice. The SEC will not know when and where these schemes are arising. So I would say to my colleagues on the opposite side of the aisle: When are we going to act as if we have the best interests of our constituents at heart? When are we going to be about protecting consumers rather than opening up opportunities for them to be the victims of fraud?

We have fraudulent schemes that are directed at the most vulnerable people. I know where those people who are organizing these schemes will go. They will go to our churches where well-meaning ministers and parishioners will be taken advantage of.

In these vulnerable communities that are always taken advantage of, we have people who are the victims of payday loans where they are paying 400 percent for moneys that they are borrowing when they are desperate in between paychecks. We have rent-to-own schemes. We have all kinds of schemes where these convenience stores, in places where we have food deserts, are charging extremely high prices for food that is basically being sold for regular, ordinary, good prices in other communities.

In some communities, even in California, the gas taxes are rising. We have the rental market that is going off the scale all over this country with people not being able to afford a decent lease or a decent rental space, and so here we are just opening up another opportunity for folks to be ripped off.

It is going to happen; I can guarantee you that. When you have something like this that is passed by the Congress of the United States, it is going to be taken advantage of, and the way that this is constructed, it almost begs to be taken advantage of.

So do you know what happens when this kind of thing takes place and Members of Congress put their reputations on passing this kind of legislation? When the rip-offs start and people are harmed a few years later, then they are going to come back with legislation talking about how they are correcting the fraud and the rip-offs that we caused in the first place.

When is this going to stop? We have a Consumer Financial Protection Bureau that is struggling every day to protect our consumers. Prior to Dodd-Frank, we had our oversight agencies with the responsibility of protecting consumers, but they didn't have any real protection. So Dodd-Frank reforms helped to create opportunities for Members of Congress to be able to protect their consumers and not to be involved in these kinds of schemes.

But the opposite side of the aisle has spent an inordinate amount of time trying to kill off the Consumer Financial Protection Bureau, and they have done it in so many ways. Not only do they come up with amendments time and time again to try and shut down the Consumer Financial Protection Bureau, they treat the Director of the Consumer Financial Protection Bureau so badly that they almost deny him the opportunity to come before our committee and to be heard.

So I don't know whose side legislators are on who create this kind of crap. I don't understand why it is deemed to be important to open up the opportunity for schemes and to not give the SEC the ability to know when they are getting started, to have the

kind of disclosures, and to have the kind of oversight that would protect the most vulnerable people in our society.

Mr. Speaker, yes, this legislation will probably pass today. The Republicans have the majority votes in this Congress, and I suppose they are going to get all of their people to vote for this bill that is going to rip off some of their constituents, and, again, we won't be able to stop it because, again, they have the majority votes.

But I want the people of this country to know and understand what is happening, who is doing it to them, and why they are having a difficult time. At a time when the rental market is going off the scale and they can't afford to pay the first and the last month's rent to get into a place, I want them to know who is creating the difficulties in their lives when their jobs have not increased their pay, they are still trying to have a decent quality of life for their families, despite the fact that the pay does not match the job that they are doing, and they haven't had the pay increases.

When are we going to show that we stand up for the least of these? When your churches get ripped off--and we are working on some of those schemes now where, even with the responsibilities that the SEC has, we have people who are getting ripped off, and here we come with another piece of legislation. Then what we do is we shade it in terms of this is for small business development. Then we hear from the opposite side about all the other companies who started as little-bitty companies in their garage. Well, they all started without this bill. They didn't need this bill to start.

So why are you doing this? Yeah, you are right; there are a lot of companies, and you have named them, particularly in the high tech industries that started, and they had some of their own money to get started with, and maybe the family helped them, I don't know, but they didn't have this legislation. They didn't need this legislation. Nobody needs this legislation.

This legislation is harmful, and I would ask my colleagues to vote against the bill. If there are any Members on the opposite side of the aisle who really are concerned about their constituents, I would ask them to defy their leadership and vote against this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, by allowing entities to sell unregistered securities based solely on a preexisting relationship with the investor, H.R. 2201 would create a road map for affinity fraud.

Affinity fraud is a type of investment scam where swindlers prey upon members of identifiable groups such as ethnic or religious communities or the elderly. Often, affinity fraudsters take advantage of preexisting relationships to engender trust and convince victims that a dubious investment is legitimate.

The Securities and Exchange Commission has found that such frauds pose heightened risks to investors because they can be difficult for regulators or law enforcement officials to detect, particularly where the fraudsters have used respected community or religious leaders to convince others to join the investment.

The following cases represent a sampling of recent affinity fraud actions from around the United States.

In August, 2013, the SEC halted an offering fraud scheme where Steven Bruce Heinz, a Utah resident purporting to be an investment adviser, sold phony investment contracts to more than 15 of his former clients, family members, and friends. According to the SEC's complaint, Heinz raised $4 million in investor funds he used to engage in high-risk trading of future contracts and to pay his own personal expenses such as family vacations to Mexico and a $600,000 loan.

Among the investors taken in by Heinz scam was ``the recent widow of a church associate of Heinz who invested with Heinz after he volunteered to assist her with her finances and investments after her spouse died.''

In 2012, the SEC stopped a $7.5 million fraud operation targeting the Persian-Jewish community in Los Angeles. The SEC's assistant regional director stated that Shervin Neman ``deceived members of his own community to raise money in this fraudulent Ponzi scheme. By exploiting investors' trust in him, Neman was continually able to raise more money to pay back existing investors and finance an extravagant lifestyle.''

According to the SEC's complaint, among other things, Neman spent investor funds to pay for his wedding and honeymoon, his wife's engagement ring, luxury cars, and VIP tickets to entertainment venues.

In 2015, the SEC permanently barred John Allan Russell from the securities industry after Russell pled guilty to securities fraud in Colorado State court. The SEC's administrative law judge found that Russell obtained almost $300,000 by selling debt securities to an elderly victim who suffered from dementia and Alzheimer's disease. The ALJ also determined that ``Russell's scheme may have involved affinity fraud because the misconduct began a few years after the victim acted as Russell's godfather at his baptism.''

These cases demonstrate that H.R. 2201's preexisting relationship requirement would not provide any meaningful deterrent against abuse. On the contrary, it would encourage opportunistic conduct targeting communities.

Mr. Speaker, I urge my colleagues to join me in voting ``no'' for this bill.

Given all that the SEC is able to do, they can't keep up with these schemes, and now you are going to open up the door for them to have to wrestle with trying to help people who are victims of these kinds of schemes.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the North American Securities Administrators Association sent this letter of concern. They said that H.R. 2201 would result in an overly broad Federal exemption that would allow public solicitation and sales to any investor, regardless of sophistication or financial wherewithal, subject only to the requirement that there be a previously existing relationship, a standard that is not difficult to establish.

In practical terms, this means that Main Street investors could be solicited and sold up to $500,000 in private security by bad actors, including persons having been convicted of crimes or subject to one or more previous State enforcement actions, without any disclosure to the investor and without any notice to State or Federal regulators.

There is no valid basis for Congress to prevent State officials charged with protecting their constituents from making decisions about purely local or regional issues that would rely on the exemption established by H.R. 2201.

Further, preemption of State review or even notification for the type of small, localized offerings contemplated by H.R. 2201 would effectively handcuff the regulators best positioned to oversee such offerings.

Public Citizen said this bill ``would permit small offerings with no investor protections, such as notice of the offerings. It will enable a type of affinity fraud, where the seller can unload dubious securities, provided there is some relationship between seller and purchaser. This bill assumes that a preexisting relationship will deter abuse, which is a tenuous foundation, at best. Further, the relationship can begin with the offer.''

They don't have to have a previous relationship. It would start when the offer takes place.

Public Citizen further stated that ``the bill says the relationship must only exist before the purchase.''

Mr. Speaker, I include in the Record letters from these groups, as well as a letter from Americans for Financial Reform.

North American Securities

Administrators Association, Inc.,

Washington, DC, November 7, 2017.

Re H.R. 2201--The Micro-Offering Safe Harbor Act.

Hon. Paul Ryan,

Speaker, House of Representatives,

Washington, DC.

Hon. Nancy Pelosi,

Democratic Leader, House of Representatives,

Washington, DC.

Dear Speaker Ryan and Leader Pelosi: On behalf of the North

American Securities Administrators Association (``NASAA''), I

write to express concern and raise specific objections to

certain provisions of H.R. 2201, The Micro-Offering Safe

Harbor Act, which is scheduled to be considered by the House

of Representatives this week. The legislation would amend

securities laws in ways that could be profoundly detrimental

to investors, and detract from the viability of the

marketplace for offerings from new or smaller issuers that

are compliant with securities law.

The Micro-Offering Safe Harbor Act amends Section 4 of the

Securities Act of 1933 to create a new exemption from

registration. To qualify for the exemption, an offering would

have to meet certain criteria regarding the number of

purchasers, their relationship to the issuer, and the amount

of capital raised. However, as more fully discussed below,

the legislation fails to include critical investor protection

measures and would preempt state regulatory authority.

State securities regulators understand the need of small

businesses to efficiently raise capital and the role strong

investor protection plays in facilitating this goal.

Unfortunately, the changes embodied in H.R. 2201, while well

intended, are ill-advised and potentially quite dangerous.

For example, unregistered securities purchased under the

exemption established by H.R. 2201 would not be

``restricted,'' and could thus be sold immediately, exposing

investors to classic ``pump and dump'' schemes. Furthermore,

NASAA is aware of no evidence to support the proposition that

Congress should create a ``safe harbor'' to permit

unregistered securities offerings to be offered and sold,

including through general solicitation, regardless of

investor sophistication or financial wherewithal. Even as the

bill stands to introduce new and totally unnecessary risk

into securities markets--failing to even disqualify ``bad

actors'' from these markets--the goal of the legislation

remains unclear and its necessity is, at best, not well-

established. It is clear, however, from the terms of the

exemption, and its failure to impose even the modicum of

regulatory oversight that exists for similar ``private''

offerings under SEC Regulation D Rule 506, that offerings

made under the new exemption are likely to be

disproportionately risky and illiquid. This fact alone should

be cause for concern by Congress.

Beyond stark new risks to investors, this legislation

threatens to jeopardize the continued viability of

established markets geared to smaller issuers, many of which

operate lawfully within existing federal and state securities

laws. Such markets include securities sold pursuant to SEC

Rule 506, new federal exemptions established by the JOBS Act,

and exemptions adopted in many states to permit intrastate

crowdfunding. Without effective investor protection measures

a potential effect of H.R. 2201 could be to cause investors

to abandon the markets for smaller issues.

In closing, NASAA reiterates strong opposition to the

preemption of state registration and notice filing authority

in H.R. 2201. There is no valid basis for Congress to prevent

states from making decisions about the local or regional

issues that H.R. 2201 seeks to encourage. Failure to register

or at the very least, to notice file with state regulators

results in unknown sales, by unknown actors of unknown

enterprises and result in no gatekeeper function to protect

retail investors whose only source of recourse for fraudulent

sales are the state securities regulators. At a minimum H.R.

2201 should:

1) Include bad actor disqualifications;

2) Establish a holding period to reduce the likelihood of

``pump and dump'' schemes;

3) Provide at least a notice filing with state regulators

so that in the event of a fraudulent offering, state

regulators can begin an investigation to try and protect

retail investors;

4) Limit the sale amount to retail investors so that

investors are not ``encouraged'' to place all their eggs in

one basket; and

5) Prohibit or restrict general solicitation of what are

clearly high risk securities.

Thank you for your consideration of NASAA's views.

Sincerely,

Joseph P. Borg,

NASAA President and Alabama

Securities Director.

Mr. Speaker, I don't understand why Members of Congress would disregard what the State regulators are saying. State regulators are saying: Don't do this. Don't preempt us. Don't pass legislation that would undermine our ability to protect your constituents.

Yet they are ignoring this altogether. I know that they received this information. I know that they know that the association had cautioned against this legislation. Let me just make sure that everybody knows. It is the North American Securities Administrators Association. They represent all of the States in cautioning against this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

For my colleagues on the opposite side of the aisle who are bemoaning the fact that small businesses don't have access to capital, they have these relationships with all of these big banks.

Why don't they get to the big banks and tell them they ought to be making loans to small businesses?

I don't hear them, as a part of, you know, their rhetoric, talking about how many of the big banks are not being responsible. And so my colleague on the opposite side of the aisle and my friend talk about what is common sense. I tell you what is common sense. Common sense is not to place vulnerable people in a position where they are going to get ripped off.

Mr. Speaker, H.R. 2201 is a harmful bill that would simply serve as an invitation for investment scams. The bill fails to take into account the numerous other exemptions we have for small-dollar offerings, including under regulation D, regulation A, and crowdfunding rules. These exemptions already permit small businesses to raise capital while also protecting against fraud.

In light of these exemptions, there seems to be no reasonable explanation for the amount of legislative effort that has been wasted on this bill. Instead of H.R. 2201, which is unwarranted and may actually harm investors and the integrity of our markets, the House should be focused on passing legislation that can actually improve the lives of the Americans whom we serve.

Mr. Speaker, I urge my colleagues to vote ``no'' on H.R. 2201. Don't be a part of enacting one more scheme that is going to rip off our constituents, and then, you know, a few years later, come back here and talk about what a terrible thing it is that people are being ripped off by these investors, some of them who are criminals, but nobody knows it. The disclosure does not have to take place. They don't know that they have people who have already been involved in crimes who are coming to them talking about: let me help you earn some profits on this investment.

We know better. Common sense tells us better. If, in fact, we are committed to the proposition that we have a responsibility to protect our constituents from rip-offs, from fraud, from being taken advantage of, we will not support this bill. And I would hope that my friends on the opposite side of the aisle, despite how far they have gone in trying to represent that this bill is something that it is not, would at least change their minds today and support their constituents and vote ``no'' on this bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I claim the time in opposition to the amendment, even though I am not opposed.

Mr. Speaker, under the current language of H.R. 2201, investors could be sold private securities by persons who have committed fraud or have violated security laws. Representative Emmer's amendment purports to add a layer of investor protections by adding a provision to so-called disqualify certain bad actors from utilizing the exemption.

While I applaud Mr. Emmer's attempt to add this most basic guardrail to a bill that otherwise creates an unmitigated safe harbor for fraudsters, I wonder why this provision was dropped from a similar bill that Mr. Emmer introduced last Congress.

Unfortunately, this amendment is woefully inadequate to address the otherwise dangerous new exemption created by H.R. 2201. Because the underlying bill requires no disclosure to investors and imposes no obligation to notify regulators of the offering, even if amended, H.R. 2201 would lead convicted fraudsters and lawbreakers to police themselves.

Moreover, the bill ties the hands of State securities regulators, who are the primary watchdogs over small, local securities offerings. If enacted, H.R. 2201 would leave a gaping hole in oversight of the very offerings it permits.

H.R. 2201 is a misguided attempt to support small businesses that is not meaningfully improved by the meager protections of this amendment. For these reasons, I continue to oppose this bill, and I urge all of my colleagues to vote ``no'' on H.R. 2201.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I would like to warn the Members of this House not to take the compliments seriously that are being given by the gentleman who would have you believe that somehow I have totally embraced this amendment because I think it is going to change the fact that there is no disclosure to those who would be investing and no notice to the SEC.

So don't take him seriously when he talks about thanking me for encouraging and embracing. I have not done that. I am going to tolerate this amendment. It is late. It doesn't do what he says it is going to do. The bill is still a bad bill. It is a bill that is going to harm people. It is a bill that targets the most vulnerable people in our society. It is a bill where fraudsters are going to go into churches and convince ministers and parishioners that they are out to help them.

Members of Congress, do the right thing. Today, stand up against another attempt by misguided folks who would have you believe that they are helping people when, in fact, they are opening up opportunities for them to be ripped off one more time, ripped off in ways that could have been avoided.

Mr. Speaker, I oppose this bill. I ask everybody to vote against this bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today to speak in opposition to H.R. 2396, the Privacy Notification Technical Clarification Act.

Contrary to the bill's title, this bill is far from a technical clarification. So I want to be very clear about what this bill would actually do.

H.R. 2396 would reduce the meaningful and clear disclosures that financial institutions must currently provide to their customers every year, even if those companies share their customers' nonpublic personal information broadly with nonaffiliated third-party companies.

Unlike other privacy bills Congress has considered, this bill comes with no guardrails whatsoever to discourage the company from broadly sharing consumer-sensitive personal information.

While the bill provides several alternative mechanisms to deliver privacy reminders, one option would result in the customer receiving no written disclosure at all.

The current annual privacy notices serve as a reminder describing a customer's right to restrict the sharing of their nonpublic, personal information to nonaffiliated third parties and information about how to exercise this right if they so choose.

This privacy right was created in the Gramm-Leach-Bliley Act, which was signed into law in 1999. I served on the conference committee, so I know firsthand that the initial and annual privacy notices in the Gramm-Leach-Bliley Act were enacted partly in response to public concerns about the sale of personal data for marketing purposes that were highlighted in a number of legal actions brought by State attorneys general at the time.

In 1999, for example, there was a settlement between the Minnesota attorney general and U.S. Bank resolving allegations that the bank misrepresented its practice of selling highly personal and confidential information about its customers to telemarketers.

These concerns are just as relevant today. In fact, I find the timing of the consideration of this bill very troubling, as it is being brought to the floor just months after the massive Equifax data breach.

In the Equifax breach, 145.5 million Americans had their Social Security numbers, dates of birth, and other sensitive financial and personally identifiable information exposed to thieves.

Equifax is not the only major credit bureau to experience a large data breach. About 2 years ago, Experian, one of the other three major credit bureaus in this country, had a breach that exposed millions of T-Mobile customers' information.

These breaches are on top of a long list of other breaches we have seen at other companies where sensitive customer information was compromised. Consumers have called on their Representatives in Congress to enact tougher laws that would strengthen their control over their personal information, not weaken it.

Consumers are increasingly wary about the unfettered sharing of their personal information by financial firms to nonaffiliated third parties that can result in consumer profiling, fraud, aggressive target marketing, and identity theft.

Unfortunately, this bill goes in the opposite direction. Instead of working to strengthen consumers' privacy protections, H.R. 2396 would ease obligations on financial institutions to provide notices to their customers describing their privacy practices and policies, and importantly, fully explaining to these customers their right to restrict the sharing of their information to nonaffiliated third parties.

This is commonly referred to as a consumer's right to opt out of having a financial institution share their information to companies that are outside of their common corporate structure or organization. These nonaffiliated third-party companies are generally not ones that the consumers have an existing relationship with, meaning that they have not received a product or service from the company in the past.

The proponents of H.R. 2396 may say the bill has nothing to do with Equifax, or that Equifax would not be covered, if the amendment being offered later today is agreed to. But the bill would roll back privacy notice requirements for many financial institutions that engage in vehicle financing, including megabanks like Wells Fargo, even if they broadly share their customers' nonpublic, personal information with other companies.

Let's discuss Wells Fargo and their auto lending practices and their work with nonaffiliated third parties. Earlier this year, the Democratic staff of the Financial Services Committee produced a report on Wells Fargo's egregious misconduct, which has consulted in extensive consumer harm.

For example, Wells Fargo charged over 570,000 consumers for automobile insurance policies they did not need, which resulted in at least 20,000 customers, including Active Duty servicemembers, having their vehicles inappropriately repossessed. These auto insurance policies were provided through a nonaffiliated third-party company called National General Insurance.

The bank has also demonstrated a clear pattern of misusing millions of their customers' information to open accounts in their name without their permission.

So why should Congress consider relaxing the privacy requirements for a recidivist bank like Wells Fargo?

Let me also address arguments that suggest customers don't read these notices anyway. That is a quote that we hear oftentimes.

As I have discussed, I think consumers are paying closer attention now after the Equifax incident. Proponents say that a company posting a link on their website isn't so bad, and the Consumer Financial Protection Bureau allowed for it.

But the Consumer Financial Protection Bureau provided an alternative to the annual privacy notices for companies that do not share data in ways that trigger consumers' opt-out rights under the law. Over the last decade, Congress has heard repeatedly from banks and credit unions that if a company does not share personal information with an unaffiliated third party that allows consumers to opt out from having it shared, and if they do not change their privacy policies, they should be exempt from the annual notice requirements. In those instances, the customer does not have the ability to opt out of having the information shared.

After several years of research and debate, we made that targeted change in the last Congress. Since then, other companies, specifically captive auto finance companies, have made the case they should have more flexibility satisfying the annual notice requirement because they have a unique and close relationship with automobile dealers they work with that still requires them to send the annual notice.

This unaffiliated third-party relationship triggers a consumer's right under the law to opt out and not have their information shared. I offered an amendment in committee that would have granted this targeted relief, but it was rejected.

So, while I appreciate that H.R. 2396 provides flexibility to captive auto finance companies, the bill is not limited to them and goes much, much further. Mr. Speaker, over 30 consumer, community, privacy, and civil rights groups have publicly opposed this bill, including U.S. PIRG, and so do I. This is an area where more study is needed before policymakers craft sweeping changes.

The bottom line is that I believe we should not open the door too widely at this time to give this same degree of flexibility to all and every financial institution, including recidivist banks like Wells Fargo.

Furthermore, there needs to be more, not less, privacy protections and consumer control relating to personal information following the massive data breach at Equifax this year.

Mr. Speaker, for all of these reasons, I urge opposition to H.R. 2396, and I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentlewoman from New York (Ms. Velazquez), a senior member of the Financial Services Committee and the ranking member of the Small Business Committee.

Mr. Speaker, I yield myself such time as I may consume.

I have heard, more than once, Members speaking for consumers, saying: These privacy notices are not that important. Nobody reads them. They throw them in the wastebasket.

Well, I don't know how Members would know that, and I don't think that we should be satisfied that consumers are being represented that way with indications that they don't really care about these notices and the opportunity to opt out so that their information won't be shared.

But let me tell you what consumers are saying to us. I have, here, letters that have been sent by consumer organizations that really do care about what is happening with this bill today, and I would like to share that information with you.

Let me just tell you who these consumer organizations are and whom they represent:

There is Americans for Financial Reform. Americans for Financial Reform is a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, civic, and community groups formed in the wake of the 2008 crisis, working to lay the foundation for a strong, stable, and ethical financial system, one that serves the economy and the Nation as a whole.

Then there is Allied Progress. Allied Progress is a consumer watchdog organization that uses hard-hitting research to stand up to Wall Street and powerful special interests and hold their allies in Congress and the White House accountable.

Then there is Center for Digital Democracy. The Center for Digital Democracy is recognized as one of the leading consumer protection and privacy organizations in the United States; and since its founding in 2001 and, prior to that, through its predecessor organization, the Center for Media Education, CDD has been at the forefront of research, public education, and advocacy, protecting consumers in the digital age.

Then there is Consumer Action. Through multilingual financial education materials, community outreach, and issue-focused advocacy, Consumer Action empowers underrepresented consumers, nationwide, to assert their rights in the marketplace and to financially prosper.

There is the Consumer Federation of America. The Consumer Federation of America is an association of nonprofit consumer organizations that was established way back in 1968 to advance consumer interests through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's board of directors. CFA is a research, advocacy, education, and service organization.

Then there is Consumer Watchdog. Consumer Watchdog is a nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government, and politics, and they describe themselves as deploying an in-house team of public interest lawyers, policy experts, strategists, and grassroots activists to expose, confront, and change corporate and political injustice in every way, every day, saving Americans billions of dollars and improving countless lives. For decades, Consumer Watchdog has been the Nation's most aggressive consumer advocate, taking on politicians of both parties and the special interests that fund them.

Then there is the National Association of Consumer Advocates. The National Association of Consumer Advocates is a nonprofit association of more than 1,500 attorneys and consumer advocates committed to representing consumers' interests. Our members, they say, are private and public sector attorneys, legal services attorneys, law professors, and law students whose primary focus is the protection and representation of consumers. They have represented hundreds of thousands of consumers victimized by fraudulent, abusive, and predatory business practices.

As a national organization fully committed to promoting justice for consumers, NACA's members and their clients are actively engaged in promoting a fair and open marketplace that forcefully protects the rights of consumers, particularly those of modest means. NACA also has a charitable and educational fund incorporated under 501(c)(3).

There is another very prominent consumer organization, the National Consumer Law Center, working on behalf of low-income clients. Since 1969, the nonprofit National Consumer Law Center has used its expertise in consumer law and energy policy to work for consumer justice and economic security for low-income and other disadvantaged people, including older adults in the United States. This organization's expertise includes policy analysis and advocacy, consumer law and energy publications, litigation, expert witness services, and training and advice for advocates.

This organization works with nonprofit and legal services organizations, private attorneys, policymakers, and Federal and State government and courts across the Nation to stop exploitative practices, help financially stressed families build and retain wealth, and advance economic fairness.

Then there is Privacy Times. Privacy Times is the leading subscription-only newsletter covering privacy and freedom of information law and policy. It is read largely by attorneys and professionals who must stay abreast of the legislation, litigation, and executive branch activities, as well as consumer news, technology trends, and business developments. Since 1981, Privacy Times has provided its readers with accurate reporting, objective analysis, and thoughtful insight into the events that shape the ongoing debate over privacy and freedom of information.

Then there is the Privacy Rights Clearinghouse. Privacy Rights Clearinghouse, a nonprofit consumer education and advocacy organization located in San Diego, California, their mission is to engage, educate, and empower consumers to protect their privacy. They engage in outreach, provide educational materials and services to individuals nationwide, and have an active media presence. The PRC uses the information we learn directly, they say, from consumers to form the basis of their advocacy work.

Then there is Public Citizen. Public Citizen has a team of researchers. They uncover the facts. Their staff brings their findings to the public through the media as well as one-on-one interactions. Their advocates bring the voice of the public to the halls of power on behalf of consumers.

Then there is Public Knowledge. Public Knowledge promotes freedom of expression and open internet and access to affordable communication tools and

creative works. They work to shape policy on behalf of the public interest.

Then there is Reinvestment Partners. Reinvestment Partners' mission is to advocate for economic justice and opportunity. They do this by providing direct services to people, revitalizing places, and advocating for just policies. Founded as a project of Legal Services in 1986 as the Community Reinvestment Association of North Carolina, the agency has worked to ensure fair lending to underserved communities in order to build and protect wealth. In 2012, they changed their name to recognize the expanded diversity of their programs and their local and State and national outreach.

And then there is U.S. PIRG. U.S. PIRG is an advocate for the public interest, working to win concrete results on real problems that affect millions of lives and standing up for the public against powerful interests when they push the other way. They say: ``The problems we face don't care if you are liberal or conservative, if you live in a red or blue State. They affect each and every one of us.'' That is why, for decades, they have taken a nonpartisan, facts-driven, results- oriented approach to their work.

Mr. Speaker, I do not like hearing that our consumers don't care, that they don't need a yearly notification about their privacy rights, that they simply throw this information that describes their rights into the wastebasket; and I am so pleased that, over the years and through the history of this Nation when too many consumers have been ignored, taken advantage of, didn't know what their rights were, all of these organizations that I have taken time to share with you today work on behalf of consumers. They work not only in organizing and educating, but they send this information to their Members of Congress. All of these organizations have sent in this information not only about their backgrounds, but about this bill.

Mr. Speaker, I reserve the balance of my time

Mr. Speaker, I yield myself such time as I may consume.

Again, it is interesting how my colleagues on the opposite side of the aisle describe their consumers. These are people, they say, who don't want to be inundated with useless information. They are saying that the privacy information is of no use.

It is interesting that Mr. Loudermilk said he read his privacy notice, unlike most other Americans who don't read their privacy notice. I think that is very interesting to describe himself as someone who read his privacy notice, but able to speak for all other Americans who don't read their privacy notice.

What is very interesting also about his comments is he refers to the consumer groups as special interests, while he is representing the banks and the financial institutions, the real special interests.

Why is it Representatives who come to this Congress to represent people who vote for them somehow see their responsibility to protect the real special interests, such as the financial institutions who have lobbyists running up and down these Halls every day, who make contributions to Members of Congress, rather than the consumers who are represented by the kinds of groups that I have taken time to describe here this morning, because these individuals and the average citizen do not have paid lobbyists from financial institutions and banks representing them here.

So it is also interesting that Mr. Loudermilk talked about how many of these consumers are going to be buying automobiles because of the tax fraud bill that he is referring to that is being advanced by the opposite side of the aisle. The only thing that bill is going to do for consumers, which will hurt our economy, is create a $1.5 trillion debt.

Well, he said that consumers were going to be buying more cars. Yeah, the wealthy will be, the ones who are given the breaks in this tax bill. The wealthy may be buying more automobiles, but the very people who are represented by these consumers that I have shared the information on this morning, they won't be able to buy automobiles because they are going to be harmed. It is only the wealthy, only those who are making extraordinary amounts of money, and corporations, that are going to benefit from the tax bill.

I don't even know how and why he talked about it in the same breath that we are talking about our consumers being able to be respected with privacy information that they would get because we have laws that give them the right to have this information.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I have no other Members, so I yield myself the balance of my time to close.

It is very simple. The consumer groups that I took time to help people to understand who they are and what they do, representing the consumers, are the folks who are concerned about people knowing their rights. This is what they work at doing.

Those of us who align ourselves with consumer groups care about the average citizen. We care that the average citizen gets the kind of information that is going to make their lives much easier.

The people on the opposite side of the aisle represent banks and financial institutions. We are not opposed to business, and we work with businesses in various ways.

We are opposed to rip-offs. We are opposed to fraud. We are opposed to denying consumers the opportunity to know their rights.

But those Members of Congress who come here and basically mimic and mock the consumers by talking about those consumers who wait by their mailboxes for privacy information certainly are not representing the citizens of their district.

I can tell you this: When you take a look at who the real special interests are, who is representing the interests of the special interests, who in this House stands up for banks, financial institutions, and Wall Street and hedge funds, you look at the opposite side of the aisle, time and time again, and you will find them putting all of their time and their effort into representing those special interests.

For those of us who stand on the side of the average citizen, yes, we align

ourselves with consumer groups. No, we don't dismiss them as unnecessary people just messing around in the business of big business.

These are the representatives, again, of people who don't have fancy lobbyists walking these Halls and following the Members of Congress, getting into their area and influencing them.

Mr. Speaker, I stand today with our consumers. I applaud all of our consumer groups and I stand on the side of our consumers being able to know their rights and all of the work that went into providing this opportunity in law. I stand with them and I resist any effort by the opposite side of the aisle to deny the right of our citizens to be notified about their rights and their ability to opt out if they do not want their information shared with these unaffiliated groups.

Mr. Speaker, I am very proud. I know that we are doing what our citizens want us to do, why they sent us to this Congress.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I claim time in opposition to the amendment.

Mr. Speaker, I appreciate Mr. Clay's effort to make the bill better. He is absolutely correct, we have been attempting to work together to see if there was a way that we could deal with the issue at hand and absolutely ensure that our consumers not only have a right to information that explains to them what their rights are and how they can opt out when their information is being sold, really, to unaffiliated organizations.

Mr. Speaker, just in case people are not following exactly what we are talking about when we talk about opt-out rights, let me draw your attention to the fact that you oftentimes are receiving loads of mail in your mailbox, everything from somebody who is selling pet food to clothing, to services, to all kinds of products, and you don't know why they are sending you all this junk. Well, they are sending you this junk because somebody sold your information to all of these organizations because you didn't know that you had not opted out. You maybe didn't know what your rights are. But citizens have a right to have that information, and they have a right to be respected and not thought to be simply throwing it into the wastebasket.

It doesn't matter whether it is for all businesses in the United States or just for automobile dealers. It is about every citizen having the right to have their privacy protected and not having people sell their information to unaffiliated organizations that will cause them to be pressured or solicited over and over again and their mailboxes filled with information because their privacy information has been sold to one of those unaffiliated organizations.

Mr. Speaker, I think that Mr. Clay is attempting to streamline the bill. I appreciate the efforts that he has put into attempting to do this, but this does not correct the problem. This undermines the efforts of all of these consumer groups that worked for years to get these notices sent to our consumers.

Mr. Speaker, despite the fact that we have tried and we have worked and we have listened to each other, I would ask for a ``no'' vote on the amendment.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I have a motion to recommit at the desk.

Mr. Speaker, I am opposed to the bill.

Mr. Speaker, this is the final amendment to the bill, which will not kill the bill or send it back to committee. If adopted, the bill will immediately proceed to final passage, as amended.

My motion would prevent institutions that have engaged in a pattern or practice of unsafe or unsound banking practices and other violations related to consumer harm from being able to evade important consumer protections.

When companies repeatedly exhibit indifference to consumer protection and demonstrate that they are incapable of complying or are unwilling to comply with U.S. laws and regulations, they should not be allowed to benefit from those bad actions.

As I have already mentioned, under this bill, as amended, companies like Wells Fargo would be free to share or sell customer information with any company, with minimal reminders to their customers.

We all know that Wells Fargo has engaged in illegal student loan servicing practices, inappropriate checking accounts, overdraft fees, unlawful mortgage lending practices, overcharging veterans for refinanced loans, enrolled customers in life insurance policies without their consent, delayed mortgage closing dates until after the expiration of the borrower's interest rate lock to levy additional fees, and charged over 570,000 customers with auto insurance policies they did not need, which resulted in at least 20,000 customers, including Active-Duty servicemembers, having their vehicles inappropriately repossessed.

Companies like Wells Fargo are why I introduced H.R. 3937, the Megabank Accountability and Consequences Act, to make sure that lenders that have engaged in abusive practices face real consequences for their wrongdoing. It is time we truly hold companies that demonstrate a pattern of harming consumers accountable. These institutions must no longer be allowed to abuse hardworking Americans.

Mr. Speaker, I urge adoption of my motion, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in opposition to H.R. 3299, or the so- called Protecting Consumers' Access to Credit Act of 2017. There is a good reason over 200 civil rights, consumer, faith-based, housing, labor, and veterans advocacy organizations oppose this bill. The type of credit that this bill helps consumers access is the kind that makes it easier for vulnerable consumers to sink into insurmountable debt like payday and other high-cost loans.

H.R. 3299 expands the ability of nonbanks to preempt State-level consumer protections by stating that the interest rate on any loan originated by a national bank that is subsequently transferred to a third party, no matter how quickly after it is originated, is enforceable, which incentivizes riskier and predatory lending. H.R. 3299 advances a dangerous precedent by allowing third parties that purchase loans from national banks to collect on interest rates that would otherwise be illegal because they exceed State caps.

Now, this bill is an attempt to overturn a court decision related to the legal concept of ``valid when made'' from the Second Circuit Court of Appeals in Madden v. Midland Funding, LLC. In that case, the court held that, when loans are transferred from banks to nonbank third parties, they must maintain the same terms, rates, and conditions as required by the State where the originating bank is chartered.

Despite claims by proponents of the bill, legal experts have explained in testimony that ``the valid-when-made doctrine is a modern invention, not a cornerstone of U.S. banking law.''

The Madden decision is only the rule of law in the States under the Second Circuit, which are Connecticut, New York, and Vermont. Some industry advocates, particularly marketplace lender fintechs, have argued the ruling and confusion about valid when made caused such great market ambiguity that it has resulted in reduced lending to needy borrowers in those States, but those claims have not been substantiated.

The only purported evidence we have on the effect of the Madden rule is a single, unpublished study that cannot even be peer-reviewed because it relies on private data from a single, unidentified marketplace lender, and the authors of that study have not endorsed this bill. In addition, 20 State attorneys general, including the attorneys general for all three States under the Second Circuit, oppose this legislative change.

But do you know what? Predatory lenders are worried about the Madden case for a different reason.

Elevate, an online payday lender, is afraid that they won't be able to continue making predatory loans if the Madden decision stays in place. In their public filings with the SEC, Elevate said:

To the extent that the holdings in Madden were broadened to

cover circumstances applicable to Elevate's business or if

other litigation on related theories were brought against us

and were successful, we could become subject to State usury

limits and State licensing laws in addition to the State

consumer protection laws to which we are already subject. In

a greater number of States, loans in such States could be

deemed void and unenforceable, and we would be subject to

substantial penalties in connection with such loans.

Mr. Speaker, I do not doubt the sincerity of the good actors that may be trying to navigate a difficulty the Madden ruling potentially caused, but this is not just about those businesses, because H.R. 3299 would go much further to allow other third parties, including payday lenders, to evade or outright disregard State-level laws and collect debt from borrowers at unreasonably high rates of interest if they purchase loans from a national bank. These arrangements are called rent-a-bank or rent-a-charter agreements, and they allow payday lenders to use banks as a front for predatory behavior and the evasion of State interest rate caps.

Payday loans drain wealth from low-income consumers, particularly those in communities of color, and payday loans trap their borrowers into a cycle of debt that it takes years to climb out of with high interest rates that are often in excess of 300 percent.

So let's be clear. Instead of simply overturning the Madden decision, H.R. 3299 would go far beyond that and codify an expanded preemption power without any proof that it will benefit consumers. In fact, all we do know is that the bill will make it easier for bad actors to evade safeguards that States have put in place to protect borrowers.

We cannot advance a bill that will allow nonbanks like payday lenders to ignore State interest rate caps and make high-rate loans. While Congress has preempted some State laws for national banks, it did not authorize national banks to extend the privilege to whatever entities they so choose.

I urge my colleagues to oppose this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. Khanna), vice chair of the Congressional Progressive Caucus.

I yield an additional 1 minute to the gentleman from California.

Mr. Speaker, I yield myself such time as I may consume.

Both of the gentlemen, Mr. McHenry and Mr. Rothfus, who are advancing this legislation come from States that don't support it.

Mr. McHenry, North Carolina has banned payday lending. Mr. Rothfus, Pennsylvania has banned payday lending. And here you have a bill that would allow payday lenders to buy up debt from national banks and, basically, charge consumers whatever they would like to charge them. They would get around the ban of your own States. Do you really want to do this?

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I would like to remind Mr. Pittenger that his State, North Carolina, again, along with Mr. McHenry, attorneys general have opposed this bill. They do not like this bill, and I just want to remind them that they don't have the support of their States in doing so.

Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Mrs. Carolyn B. Maloney), the ranking member of the Capital Markets, Securities, and Investments Subcommittee on the Financial Services Committee.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, you have heard those of us who are opposed to this legislation repeat over and over again that this is all about predatory lending; that this bill would open the gates wide to the kind of abuses that we have been fighting so hard against.

Mrs. MALONEY asked the questions: Why do you want to do this to your constituents? Why do you want to do this to the very consumers that we are supposed to be protecting?

I have raised a question to those who come from States where the attorneys general oppose this legislation. The gentlemen from North Carolina and Pennsylvania, who are here in support of this bill, they are ignoring the fact that their State attorneys general are saying that this bill is a bad bill.

Of course, if H.R. 3299 was really about expanding access to underserved populations, as the proponents claim, then they may be surprised to learn that the Nation's leading civil and consumer groups are all opposed to this legislation because it will harm consumers, not help them.

According to a news article from last November, there is a reason the NAACP, the Southern Poverty Law Center, the National Consumer Law Center, the Consumer Federation of America, and dozens of churches, women's groups, and antipoverty organizations from around the country have denounced the bill.

In September, those groups wrote a joint letter to Congress warning that H.R. 3299 ``wipes away the strongest available tool against predatory lending practices'' and ``will open the floodgates to a wide range of predatory actors to make loans at 300 percent annual interest or higher.''

The article goes on to say: ``But you don't have to take the NAACP's word for it, just take a look at the companies who are lobbying in favor of H.R. 3299.''

Well, they aren't many, as it is a complicated and obscure issue. But one of them, according to a Federal lobbying disclosure form, is a firm called CNU Online Holdings, LLC. Most customers of CNU Online Holdings don't even realize they use it. They are more familiar with CNU's parent company, payday lending giant Enova Financial; or its flagship brand, CashNetUSA.

The bottom line is that this bill is not helping our consumers, but, rather, lining the pockets of predatory lenders who are looking for any way around State interest rate caps and consumer protections.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, this is odd. Here, we have another Member of Congress, whose State attorney general opposes the bill, and who has banned payday lending.

So, here, Mr. Emmer is joining with Mr. McHenry and Mr. Pittenger, whose State opposes the bill, North Carolina. Again, the two of them are in opposition to their own State's attorney general. And now we have Mr. Rothfus from Pennsylvania and all of these speakers on the opposite side of the aisle who are coming here to support a bill that will open up the opportunity for payday lenders to basically rent a bank and put these payday loans out there at exorbitant amounts.

Mr. Speaker, again, this is rather odd to see so many Members representing, supposedly, their constituents who come from States where payday lending has been banned and their attorneys general oppose this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I think my friend on the opposite side of the aisle, the chairman, is right. I must make sure that I am correct in the way that I identify my colleagues, who they are and what States they come from.

So I would like to repeat: Mr. McHenry is from North Carolina. Mr. Pittenger is from North Carolina. The attorney general from that State opposes this bill, and this State has banned payday lending.

Also let me just mention that Mr. Rothfus from Pennsylvania is another one who is opposed by his attorney general. His attorney general is opposed to this bill, is opposed to his representation, and Pennsylvania has banned payday lending.

Of course, we were joined by Mr. Emmer, who is from Minnesota. Minnesota is in the same position as North Carolina and Pennsylvania. The attorney general of Minnesota opposes this bill, and Minnesota bans payday lending.

So let's be clear. We want to make sure that everybody understands who these Members are who are coming here in opposition to their attorneys general, in opposition to their State. These are Representatives from States that oppose this bill. These are Representatives from States who have banned payday lending.

So I want to be sure that I agree with my chairman. We should let everyone know who they are. We should pronounce their names correctly. We should be sure that all of their constituents understand who their Representatives are and what they are doing here today on this bill that will help to explode predatory lending.

This is the rent-a-bank bill that would allow payday lenders to buy up debt from national banks and be able to charge whatever they would like, 300 percent and more, to the unsuspecting consumers.

So I thank the chairman for helping me to make that clear.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, Chairman Hensarling has named the Members on my side of the aisle, the Democrats who support this bill. None of them are on the floor at this time. None of them came here to defend the position that they took. Some of them are reconsidering the vote that they took, and so I don't want him to try and wrap this bill around the fact that there were some Democrats who supported it.

This is a Republican bill. This is a bill by the opposite side of the aisle that supports payday lending and the ability for payday lenders to continue to exploit their consumers in a new and different way. They simply allow them to buy up this debt from the national banks to be able to basically overcome usury laws.

So while he would like everyone to believe there is all of this great Democratic support and he keeps saying over and over again how bipartisan this bill is, none of them are on the floor at this time. None of them came here to defend their position. None of them have said, ``I know that I am absolutely correct.'' As a matter of fact, some of them are raising questions about whether or not they should have voted for the bill, understanding it in one particular way, and some now understanding what it really does.

So I thank the gentleman for his position, and I thank him for being a strong advocate for his position. I thank him for at least stepping up to the plate to say, in essence, he believes that he is doing the right thing, despite the fact that he has got Members on that side of the aisle who are going against their own States' attorneys general.

But let us not believe that this is some great Democratic bill. It is not.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

There was a reference to Senator Warner, and he said that the Madden fix bill must address the payday lender loophole. I alluded to some of this kind of thinking about those who may have supported the bill without really giving a lot of thought to this loophole, but I just want you to know that even the author of the bill, Senator Warner, is saying that the Madden fix bill must address payday lender loopholes.

Mr. Speaker, H.R. 3299 is ultimately a bill that would make it easier for bad actors to get around interest rate caps that States have put into place to protect borrowers from predator payday pit traps. Let's be clear: the availability of affordable credit is very important in every community, and we should work together in ways to make sure that underserved communities have fair access to credit and banking services.

But measures like H.R. 3299 do not productively advance that goal. In fact, the bill would do the opposite. It would open the door for nonbanks to ignore States' strong protections and make loans with high interest rates. The bill would usher in a wave of harmful, high-cost payday loans in States where such loans were previously disallowed.

Let's not forget that last month Mick Mulvaney, who President Trump illegally appointed to serve as Acting Director of the Consumer Financial Protection Bureau, directed the Consumer Bureau to reconsider its sensible and much-needed rule on payday vehicle title and certain high-cost installment loans. That rule, put in place under the leadership of Richard Cordray, would require payday lenders to ensure that consumers can actually afford to pay off their loans.

Essentially, Donald Trump and Mick Mulvaney are helping out payday lenders by undermining the Consumer Bureau's rule as well as rolling back and undermining many of the other critical protections put in place by Democrats in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

On top of his pull to reconsider the payday rule, Mulvaney has also drawn a Consumer Bureau lawsuit against a group of payday lenders who allegedly failed to disclose the true cost of loans which had interest rates as high as 950 percent a year.

Mr. Speaker, Congress should be standing up for and enhancing protections for consumers, not legislating to make it easier for hardworking Americans to be drawn into payday debt traps.

H.R. 3299 is widely opposed by over 200 consumer and civil rights groups, including the Leadership Conference on Civil and Human Rights, the NAACP, the National Consumer Law Center, the Southern Poverty Law Center, and many others.

And so I think it is clear what we are advocating on this side of the aisle. We are simply saying that we should not create this loophole, that we should understand the struggle that many of us have been in to try and keep payday lenders from going into the most vulnerable neighborhoods, targeting the most vulnerable people, taking advantage of folks who have no place to turn and who need a few dollars until payday, taking advantage of them and trapping them into these loans and creating all of this debt for them.

This would just go a long way to continue that kind of madness, and so I would urge Members to vote ``no'' on the bill.

Mr. Speaker, I yield back the balance of my time.