Consumer Protection in an Age of Uncertainty – Day 2


I AM DELIGHTED TO WILL GIVE YOU BACK TO THE FORCEFUL OF POLICY AND THE CONFERENCE ON CONSUMER PROTECTION IN AN AGE OF UNCERTAINTY. WELCOME BACK TO THOSE IN THE ROOM THANK YOU TO THOSE WATCHING ONLINE. IT IS A REAL PLEASURE THIS MORNING TO BE ABLE TO BE IN CONVERSATION WITH ROHIT CHOPRAHE WAS A ASSISTANT DIRECTOR AT THE MANAGEMENT BUREAU UNCERTAINTY AGENCIES FOR STUDENT LOAN. HE PLAYED AN INSTRUMENTAL ROLE IN THE AGENDA IN THE STUDENT LOAN FOR-PROFIT COLLEGE MARKET. HE ALSO SERVED AS SPECIAL ADVISOR TO THE SECRETARY OF EDUCATION TO RETHINK THE DEPARTMENT’S OVERSIGHT OF INSTITUTIONS. AND FOR CONTRACTORS. I AM DELIGHTED TO WELCOME YOU BACK TO FORT SCHOOL OF IN OCTOBER 2017 TO SERVE OF THE FEDERAL TRADE COMMISSION. AT UNANIMOUSLY CONFIRMED BY THE SENATE APRIL 2018. HE HAS PLACED A STRONG EMPHASIS ON INCREASING MILITARY REMEDIES AND CONFRONTING THE CHALLENGES. AND RATHER THAN A FORMER KEYNOTE ADDRESS ROHIT HAS AGREED. LET ME START BY ASKING AFTER THE FINANCIAL CRISIS. APPARENTLY I HAVE A AND BAKING REGULATORS WHO ARE OUTSPOKEN ABOUT NOT LETTING WHAT HAPPENED HAPPEN AGAIN. THEY DO NOT WANT TO BE PREEMPTED. THEY DO NOT WANT TO SIT ON THE SIDELINES WHILE THINGS GO AWRY. THAT IS A MAJOR STRENGTH. OBVIOUSLY WE ARE BOTH A LITTLE BIASED ON THIS BUT A MAJOR STRENGTH. AT LEAST WE HAVE A CFPD AND THAT IS SOMETHING THAT IS NOT EVER GOING TO GO AWAY. AND WE WILL MAKE SURE OF THAT. BUT THERE ARE MIXED EVIDENCE A SOME OF OUR OTHER BANKING REGULATORS ARE DOING. IF WE LOOK AT THE MACRO PICTURE OF LOW UNEMPLOYMENT. LIKE WE ARE SEEING NOW. WHY ARE WE SEEING THIS TYPE OF DELINQUENCY? WHY ARE WE SEEING SUCH ONGOING PROBLEMS IN STUDENT LENDING? WHEN WE PEEL BACK ONE LAYER OF THE ONION THERE ARE A LOT OF TROUBLES THAT I AM NOT SURE ALL OF OUR REGULATORS ARE ON THE GAME ON THAT. AND THAT WORRIES ME. THAT WORRIES ME THAT WE ARE NOT PREPARED AS WELL AS WE COULD BE FOR THE NEXT RECESSION. WHICH I DON’T KNOW WHEN WILL COME BUT WILL COME.>>MAYBE I WILL PUT YOU ON THE REGULATORY QUESTIONS. YOU NOTED THE RISE OF ACTIONS BY STATE AG AND STATE REGULATORS. AND THE DENUTION OF ENFORCEMENT OF THE ARE THEY UP TO THE TASK OF FILLING IN? WHAT IS THE ROLE OF OCC AND FTIC AND THE FED. OTHER BEING AGGRESSIVE ENOUGH? ARE YOU SEEING THE FEDERAL LEVELS REACTION AMONG THE REGULATORS?>>Rohit Chopra: THE FTC CANNOT FIT THE GAP. WE ARE NOT RESOURCED TO DO SO. WE DO NOT HAVE NEARLY THE EXPERTISE IN TERMS OF THE RANGE OF RESOURCES AND AUTHORITIES AS THE CFPD. I’M HAPPY TO TALK ABOUT THIS MORE. THERE ARE AREAS WHERE THE FTC HAS A UNIQUE ROLE TO PLAY BUT IT SHOULD NOT BE SEEN AS THE BACKSTOP FOR A WEAKENING ENFORCEMENT AGENDA OF THE CFPD. OBVIOUSLY WILL RECEIVE THIS FEDERAL LEVEL IS OF GREAT CONCERN TO ME. BECAUSE IT IS A SIGNAL TO THE MARKETPLACE THAT YOU CAN GO CLOSER TO THE LINE. EVEN CROSS THE LINE AND YOU CAN MAKE A BUSINESS DECISION TO CROSS THE LINE. EVEN IF YOU ARE CAUGHT MAYBE THERE WILL BE MUCH CONSEQUENCES AT ALL. WHAT I WANT TO UNDERSCORE ON THAT IS THIS IS DEEPLY UNFAIR TO LAW ABIDING FINANCIAL FIRMS. SEE A LOT OF FINANCIAL FIRMS THAT ARE WANTING TO FOLLOW THE LAW. AND GUESS WHO WAS MOST HARMED BY THEIR PEERS AND COMPETITORS BREAKING THE LAW? THAT IS FUNDAMENTALLY UNFAIR THIS IS NOT JUST ABOUT PROTECTING CONSUMERS. BUT FOR EVERY LAW ABIDING BUSINESS THEY SHOULD BE ANGRY ABOUT WHAT IS WEAKENING ENFORCEMENT AT LARGE.>>ROHIT CHOPRA LET ME IN A COUPLE AND LET ME START IN THE AUTO MODE LOAN MARKET.. AS MANY OF OF YOU KNOW THERE E IS A TUSSLE THE LEGISLATIVE PROCESS AND THE CONSUMER PROTECTION BUREAU WAS STRIPPED OF ITS AUTHORITY BACK IN THE DEBATE OVER DODD FRANK. TO WRITE RULES OVER AUTO DEALERS WITH RESPECT TO LENDING PRACTICES. BUT IN A STRANGE TWIST OF FATE IN THE LEGISLATIVE PROCESS. DUE TO THE UNDERHANDED LEGISLATIVE SCHEMES OF ERIC STONE AND OTHERS. MAGICALLY THAT SAME AUTHORITY APPEARED OVER AT THE FTC. AND I WONDER WHETHER, ROHIT CHOPRA:YOU COULD COMMENT ON THIS. IT IS A FUNNY SITUATION. THE FTC WHICH GENERALLY DOES IT HAVE ROLE WRITING AUTHORITY IN MOST AREAS. BUT IN THIS ONE AREA THEY HAVE REALLY CLEAR AUTHORITY. IT IS THE ONLY THING FOR YOU HAVE EASY WAYS TO WRITE RULES. I’M WONDERING IF YOU COULD COMMENT ON WHY HASN’T THE FTC FRONT WITH THIS AUTHORITY TO REGULATE LENDING IN THE AUTO DOING?>>Rohit Chopra: LET ME GIVE CONTEXT TO ONE THING. THE FTC CANNOT GET CIVIL PENALTIES UNLESS THERE IS A VIOLATION OF AN EXISTING ORDER OR RULES. SO, WHAT BUGS ME. EVEN WHEN WE FIND MISCONDUCT TODAY. BECAUSE WE HAVE A RULE ON THE BOOK WE CANNOT SEEK CIVIL PENALTIES. EVEN IF WE WERE TO SIMPLY RESTATE OUR EXISTING POLICY COULD TURN THIS ON.T REALLY CHANGE THE MARKETS. IT IS PRETTY DISAPPOINTING IT HAS BEEN 90 YEARS. IT HAS BEEN DISAPPOINTING TO ME. IT IS SOMETHING I WANT TO PUSH FOR. LET ME GET BIG PICTURE ON AUTO. WE ARE SEEING SOMETHING WEIRD GOING ON. SINCE 2010 WE’VE SEEN A DRAMATIC RUN-UP OF OUTSTANDING AUTO LOANS. I THINK WE HAD A BLOCKBUSTER YEAR OF AUTO LENDING. IN 2018. AND SOMETHING THAT IS IMPORTANT IS TECHNOLOGY IS REALLY CHANGING THIS. MANY OF YOU MAY KNOW GPS TRACKERS, KILL SWITCHES, OTHER REPO TECH IS MAKING IT EASIER TO SNATCH A CAR FROM THE BORROWER DOESN’T PAY. AND THE NET RESULT IS THERE ARE LENDERS OUT THERE ABLE TO GIVE A LOAN EVEN IF THEY KNOW IT WILL NOT BE REPAID. THEY KNOW THEY CAN TAKE THAT CAR BACK. I HOPE EVERYONE HAS SEEN THE JOHN OLIVER SEGMENT ABOUT A CAR THAT WAS SOLD AND REPOSSESSED SO MANY TIMES. THAT IS WHEN A LENDER KNOWS IT DOESN’T EVEN MATTER THAT BORROWER CRASHES AND BURNS. AND THE SHOULD BE OF REAL WORRY FOR US. BECAUSE AN AUTOMOBILE IS LITERALLY THE VEHICLE IN WHICH YOU CAN GET TO EMPLOYMENT. IN WHICH YOU CAN ACCESS HEALTHCARE. IN WHICH YOU CAN PARTICIPATE IN SOCIETY FOR THE VAST MAJORITY OF AMERICANS. IF WE ARE SEEING REPOSSESSIONS. IF WE ARE SEEING AUTO LOAN DELINQUENCIES AT RATES WE SHOULD BE UNHARMED. AND WE SHOULD NOT SIT AROUND DOING NOTHING LIKE WE DID WITH STUDENT DEBT. IT IS THE SAME STORY OVER AND OVER. WE SAW IT IN MORTGAGE WE SAW IT IN STUDENT LENDING WE ARE SEEING IT IN AUTO. AT ON TOP OF THAT SUBPRIME AUTO IS DISPROPORTIONATELY AFFECTING PEOPLE OF COLOR. IT IS DISPROPORTIONATELY AFFECTING THE ZIP CODES THAT ARE LOWER INCOME. AND THOSE ARE PLACES THAT DON’T NECESSARILY HAVE THE POLITICAL POWER TO DEMAND CERTAIN TYPES OF CHANGE. I THINK THAT IF WE DON’T DO ANYTHING ABOUT IT IF THE CFPD DOES NOT DO ANYTHING ABOUT IT WE WILL NEED THE STAMPS DOMINIC STATES TO WEAR ABOUT. EVERYTHING I WORRY ABOUT. THERE IS NOT GOING TO BE A CRISIS TO THE BANK ON THIS. AUTO LENDING IS NOT GOING TO THREATEN THEIR ADEQUACY. THAT THE ABILITY TO KEEP REPOSSESSING AND DOING IT CHEAPLY. IS NOT GOING TO THREADED THAT. IT WILL BE HOW TO BETTER PROTECT CONSUMERS NOT HOW WE PROTECT THE CAPITAL ADEQUACY OF FINANCIAL INSTITUTIONS. I HOPE WE CAN MAKE BIG PROGRESS ON THIS. AND AT SOME POINT IS THAT AUTHORITY BECAUSE AFTER USING THAT AUTHORITY WE ARE NOT GOING TO EVER FIX THIS, I THINK.>>GIVEN WHAT YOU JUST SAID SHOULD THERE BE SOME KIND OF ABILITY TO REPAY RULES IN AUTO? AND WHAT CAN THE FTC DO IF ANYTHING ABOUT THE LONG EXPERIENCE OF DISCRIMINATION AND AUTO LOANS?>>Rohit Chopra: MANY OF YOU MAY KNOW OF THE FTC ALSO EQUAL ACCESS BUT WE HAVE NOT BROUGHT A CASE IN A VERY LONG TIME. AND THERE IS OBVIOUSLY SOME EFFORTS AT THE CFPD TO GO AFTER THAT. WE HAVE TO DEAL WITH DISCRIMINATION IN AUTO LENDING. I PERSONALLY FEEL THERE NEEDS TO BE MORE DATA ABOUT AUTO LENDING OUTCOMES. AND THE MORE DATA WE HAVE THE BETTER WE CAN BRING THOSE CASES OF THE BETTER WE CAN COMBAT IT. WITH RESPECT TO A RULE COULD LOOK LIKE. I THINK PUTTING COMMON SENSE RULES THAT NOT ONLY DOCUMENT OUR EXISTING ENFORCEMENT RECORD OF WHAT WE KNOW TO ALREADY BE UNLAWFUL. SO WE CAN GET THAT PENALTY AUTHORITY. BUT ALSO TO MAKE SURE THAT WE DON’T HAVE THE TYPE OF ABUSE THAT ALLOWS THE BUSINESS MODEL TO PERSIST. I DON’T KNOW WHAT THAT WOULD LOOK LIKE. BUT IT NEEDS TO BE A PEOPLE’S RAIDERS I THINK IT NEEDS TO BE ON HER RADAR BEFORE THE ECONOMY SOURS RATHER THAN TO LEAVE.>>LET’S TURNED TO SMALL BUSINESS MARKETS. THERE HAS BEEN DRAMATIC CHANGES IN THE SMALL BUSINESS MARKET IN THE LAST 10-15 YEARS. WITH A VERY WIDE VARIETY OF BANK AND NON-BANK PARTICIPANTS. THE RISE OF A DIFFERENT KIND OF BLENDING TECHNIQUE.OME OF THOSE HAVE POSITIVELY INCREASED ACCESS TO CAPITAL FOR SMALL BUSINESSES. WHO WERE NOT ABLE TO OBTAIN IT BEFORE. BUT THERE IS ALSO BEEN A RISE OF BUSINESS LENDING ACTIVITIES THAT ARE REMINISCENT OF THE KIND OF SUBPRIME MORTGAGE LENDING THE RESULT IN THE LEAD UP TO THE CRISIS WITH VERY COMPLICATED TERMS. VERY DIFFICULT TO COMPARE TERMS ACROSS QUOTE OFFERS. MOST OF YOU KNOW THIS BUT THE TRUTH IN LENDING ACT FOR SMALL BUSINESS LENDING. WHAT DID THE FTC OR OTHER REGULATORS BE DOING TO CLEAN UP THIS MARKETPLACE? AND HELP THE HIGHROAD PLAYERS AS SHE DESCRIBED BEFORE IN THE AUTO CONTEXT. BUT HOW DO WE HELP HIGHROAD PLAYERS THRIVE? HOW DO WE PROTECT CONSUMERS? IN A BIG PICTURE SENSE FROM THE FTC OR OTHERWISE SHOULD WE BE DOING?>>Rohit Chopra: LET ME MAKE A FEW POINTS ON THIS. FIRST, IT IS ALREADY VERY DIFFICULT TO SMALL BUSINESSES TO FORM AND COMPETE. YOU KNOW FOR THE PAST 35 YEARS WE HAVE SEEN A SECULAR DECLINE OF NEW BUSINESS FORMATION.ND I THINK PART OF THAT IS DUE TO MASSIVE CONSOLIDATION AND SECTORS ACROSS THE ECONOMY. IT IS MUCH HARDER FOR A SMALLER FIRM TO ENTER BECAUSE IT IS HARD TO COMPETE WITH THE BIG GUYS. THERE’S AN ANTI- TRUST QUESTION WE HAVE TO CONFRONT. BUT SMALL BUSINESS LENDING IN THE NON-BANK SECTOR IS THE EXCLUSIVE JURISDICTION OF THE FTC. THE CFPD DOES NOT HAVE AUTHORITY. THE CFPD HAS ABILITY TO DO DATA BUT NOT TO ENFORCE. A FEW PROBLEMS I SEE. ONE, I THINK WE’RE SEEING A MASSIVE INCREASE IN PAYDAY STYLE SMALL BUSINESS LOANS. THE WAY OFTEN THIS WORKS JUST THE SMALL BUSINESS WITH A RESTAURANT OR RETAILER. THEY ARE COLLECTING A LOT OF THE REVENUES THROUGH CREDIT CARD TRANSACTIONS. AND YOU HAVE LENDERS WHO ESSENTIALLY OFFER VERY SHORT-TERM LOANS THAT ARE SECURED BY THIS CREDIT CARD RECEIVABLES. IT IS JUST LIKE A PAYDAY LOAN IN SOME WAYS. THE TERMS AND CONDITIONS YOU SEE.MANY OF YOU HAVE HEARD THE INCLUDE TERMS LIKE CONFESSIONS OF JUDGMENT. THINGS THAT WERE BANNED BY THE FTC CREDIT PRACTICES RULES 30 YEARS AGO BUT DO NOT COVER SMALL BUSINESS LOANS. I THINK THERE ARE NOW AROUND $15 BILLION OF ORIGINATION IN THESE PAYDAY SMILE SMALL BUSINESS LOANS. THIS OBVIOUSLY IS GOING TO TARGET SOME OF OUR MOST VULNERABLE:YOU KNOW, INDIVIDUALS. I ALSO THINK IT IS NOT JUST A TYPICAL SMALL BUSINESS. IT MIGHT BE WORKERS, OTHER WORKERS MIGHT BE INDEPENDENT CONTRACTORS OR HAVING THEIR PRIMARY INCOME NOT TIED TO TRADITIONAL EMPLOYMENT. WE AT THE FTC WILL BE HOLDING A FORUM ON THIS. BUT I HOPE IT LEAVES THE GROUNDWORK FOR MORE DATA AND MORE ENFORCEMENT. AND AS APPROPRIATE I THINK THEY WILL NEED TO BE GREATER AWARENESS ABOUT HOW THESE TYPES OF LENDING MODELS ARE INFECTING VARIOUS PARTS OF OUR FINANCIAL ECONOMY. AGAIN, I HATE TO SAY IT. WE HAVE SEEN THIS BEFORE. LET’S NOT PRETEND TO BE SURPRISED BY HIM. IT HAS THE SAME INTERFACE WITH CAPITAL MARKETS. THE SAME INTERFACE WITH THESE LOANS ARE BUNDLED AND SOLD AND TRANSACTED UPON. IT IS NOT A BUNCH OF SMALL LITTLE PLAYERS. THERE IS CONNECTIVITY TO WALL STREET. AND IF WE DON’T CALL IT OUT FOR WHAT IT IS IT IS JUST GOING TO GET WORSE. AND I DON’T WANT US TO KEEP REPEATING, YOU KNOW. FRANKLY WHAT WE MISSED AND WHAT WE FEEL THAT BEFORE.>>THE CONFESSIONS OF JUDGMENT APPROACH SEEMS PARTICULARLY EGREGIOUS. THIS IS WHERE BUSINESSES GIVE UP THE RIGHTS TO CONTEST WHETHER OR NOT THEY ARE IN DEFAULT ON THEIR LOAN. IN ADVANCE IN THE CONTRACT. IT IS BECOMING INCREASINGLY DEPLOYED. I AM WONDERING IF YOU THINK THERE ARE STRATEGIES WITHIN THE EXISTING LEGAL SYSTEM BUT WITHIN THE EXISTING SET OF RULES TO ATTACK THAT?>>Rohit Chopra: OF COURSE THERE ARE. THESE WERE BANNED IN CONSUMER CREDIT CONTRACTS FOR THE MOST PART TO THE CREDIT PRACTICES RULES THAT I BELIEVE WERE FINALIZED IN THE 1980S. THERE IS EXISTING AUTHORITY TO DO IT. WHETHER THERE IS THE COURAGE AND THE WILL AND THE TENACITY TO GET IT DONE? THAT IS WHAT WE HAVE TO PUSH FOR. AND I THINK THAT MEANS A LOT FOR PEOPLE PUSHING OUR AGENCIES AND DON’T JUST ASSUME WE WILL DO NOTHING. BUT WE HAVE TO HEAR FROM PEOPLE ABOUT WHERE THE PROBLEMS ARE IN THE MARKET OR IT WILL NOT GET SOLVED. I THINK THIS RAISES A LARGER QUESTION ABOUT JUNK CONTRACT CLAUSES. AND ONE OF THE THINGS I THINK WE NEED TO START THINKING ABOUT IS WE OFTEN ATTACK THESE CLAUSES ONE BY ONE. BUT WE NEED TO START THINKING BIGGER PICTURE ABOUT WHAT ARE THE TYPE OF CONTRACT TERMS THAT ARE FUNDAMENTALLY UNFAIR? AND HOW DO WE USE THE EXISTING AUTHORITY UNDER FEDERAL AND STATE LAW TO GO AFTER THAT? BECAUSE WHEN A SELLER ‘S LENDER IS SO MUCH MARKET POWER OR SO MUCH ABILITY TO OBSCURE TERMS. THIS CAN LEAD TO CONTRACTS THAT ARE CORRUPTED. BY THESE CONTRACT TERMS. THERE HAVE BEEN BIG FIGHTS OVER THE YEARS OF FORCED ARBITRATION.BIG FIGHTS ABOUT OTHER TERMS BUT I THINK WE NEED TO LOOK AT A COMPREHENSIVE VIEW ABOUT HOW CONTRACTS. WHERE THERE IS A BIG GUY ON ONE SIDE AND A LITTLE GUY ON THE OTHER. HOW DO WE CHANGE THAT GAME? WE CANNOT BE ON A TREADMILL OF GOING AFTER THESE CONTRACT TERMS ONE BY ONE. NEW ONES WILL POP UP AND WE WILL STILL BE STAYING BEHIND. WE NEED TO GET MORE SCHOLARSHIP ON HOW TO REFORM THESE CONTRACTS. WE HAVE TO THINK OF IT IN A BIGGER PICTURE OF LAW ENFORCEMENT REGULATORY APPROACH. BECAUSE WHEN POWERFUL FIRMS ARE ABLE TO COVER THE USE CONTRACTS. THE USE THEIR MARKET POWER TO ESSENTIALLY BULLY OUT FAIR COMPETITION. AND THAT IS NOT WHAT A FREE AND FAIR MARKET IS SUPPOSED TO LOOK LIKE.>>I HAVE ALWAYS BEEN STRUCK THE BEHAVIORAL ECONOMICS LITERATURE HAS MADE HUGE PROGRESS ON THE CONSUMER SIDE. WE NOW UNDERSTAND A LOT MORE ABOUT HUMAN DECISION-MAKING. THE WAY IN WHICH HUMAN BEINGS ARE FALLIBLE AND HOW THE MARKET CAN TAKE ADVANTAGE OF THAT FALLIBILITY. WE SEEM NOT TO HAVE MADE MUCH PROGRESS CHANGE THAT FOR BUSINESS OWNERS. MOST SMALL BUSINESS OWNERS TO STATE THE OBVIOUS, PEOPLE. AND MOST PEOPLE HAVE BIASES. WITH THE INFALLIBILITY, WHETHER SERVING AS A BUSINESS OR CONSUMER. AND MOST WILL BUSINESSES ARE NOT ABLE TO HIRE LAWYERS UNDER THE EXPERTISE THEY NEED. THERE HAS BEEN SOME OF THE STATE LEVEL. CALIFORNIA HAS A TRUTH IN LENDING ACT NOW FOR SMALL BUSINESSES. I AND WONDERING IF YOU THINK THAT IS THE ROAD FORWARD AS WE ARE TRYING TO MAKE PROGRESS AT THE FEDERAL LEVEL. SHOULD STATES BE FOLLOWING CALIFORNIA’S LEAD OR OTHER THINGS STATE COULD BE DOING TO BE HELPFUL IN THIS CASE?>>Rohit Chopra: I FAVOR DISCLOSURE BUT I DON’T WANT ANYONE THINKING THAT DISCLOSURE FUNDAMENTALLY FIXES THIS. I THINK OTHER STATES ARE LOOKING AT SIMILAR THINGS. BUT YOU MENTIONED SMALL BUSINESSES, PEOPLE WHO RUN SMALL BUSINESSES ARE PEOPLE THEY ARE ALSO CONSUMERS. WE ARE SEEING THE SAME THING WITH WORKERS.SO, EMPLOYEES HAVING SOME OF THESE CLAUSES THAT ARE FUNDAMENTALLY LEAD TO PROBLEMS. WE HAVE DONE SOME CASES RELATED TO UBER DRIVERS. WITH RESPECT TO FINANCING AND PROMISES BEING MADE TO THAT ABOUT HOW MUCH THEY EARN. BUT WE HAVE TO TAKE A HARD LOOK AT ALL OF THESE CONTRACTS. AND HOPE THAT IS SOMETHING THAT IS NOT JUST GOING TO BE SOLD BY DISCLOSURE. THAT CERTAIN TYPES OF TERMS. THOSE CONFESSIONS OF JUDGMENTS. WILL NOT LEAD TO A COMPETITIVE MARKET IF SOMEONE HAS TO STIPULATE THAT THEY ARE GUILTY OF THE BEGINNING OF THE TRANSACTION.>>THAT IS GREAT. IT IS ILLUSTRATIVE OF THE WAY IN WHICH THE LINE OF BEING A PERSON AND BEING A BUSINESS IS FUZZY.>>Rohit Chopra: GLORY.>>LET’S SWITCH GEARS AND TALK ABOUT CREDIT BUREAUS. HIS CERTIFIED REGULAR CONSUMER, IN A POSITIVE WAY. AND PEOPLE HAVE PROBLEMS CORRECTING ERRORS. AND WE HAVE THE AUTHORITY FOR THE CONSUMER FINANCIAL PROTECTION BUREAU TO SUPERVISE. THE FTC HAS AUTHORITY HERE AS WELL. WHAT COULD BE DONE TO REALLY CHANGE THE BEHAVIOR OF THE CREDIT BUREAUS?>>Rohit Chopra: AND ONE OF THE THINGS THAT HAS BEEN UNDERREPORTED HAS BEEN HOW POSITIVE THE ROLE OF CFPD SUPERVISION HAS BEEN. THAT HAS CHANGED THE CREDIT BUREAUS ARE THINKING ABOUT THINGS. BUT AT THE SAME TIME THERE IS STILL SERIOUS PROBLEMS AND IT IS NOT JUST ACCURACY. OBVIOUSLY, THE FTC HAS PUBLICLY ANNOUNCED IT IS INVESTIGATING THE MASSIVE DATA BREACH AT CARFAX. AT THE IMPLICATIONS. DATA SECURITY IS OBVIOUSLY A MAIN FOCUS OF THE FTC, THE CFPD HAS A MASS OF EARLY STRONG TEAM OF PEOPLE. WHO HAVE EXPERTISE IN CREDIT REPORTING. THERE IS A BIGGER QUESTION WE WANT TO START THINKING ABOUT. I ALWAYS SAY THIS AND OTHER SAY IT, TOO. THEY ARE NOT, IT IS THE PRODUCT. IT IS THERE DATA BEING SOLD AND TRANSACTED. AND THIS IS INCREASINGLY WHAT IS HAPPENING TO OUR DATA ECONOMY. WHAT WE SEE ONLINE IS MASSIVE DATA COLLECTION THAT IS THROUGH ONLINE BEHAVIOR ADVERTISING. HAVE DATA BROKERS. IN THE STUDY OF DATA BROKERS. THE DATA BROKERS, BIG TECHNOLOGY FIRMS. THEY ARE MERGING IN THEIR BUSINESS MODEL. THEY ARE SELLING US TO OTHERS. IF YOU ASK HARD QUESTIONS ABOUT. THEN THERE COULD BE COMPETITIVE PRESSURES TO LEAD TO BETTER PRACTICES. AT THE WAY THE CREDIT BUREAU IS STRUCTURED THAT WILL EVER GET THAT. OUR TRADITIONAL SPEAKING HAS BEEN LOOKS REGULATED. THINK ABOUT BIGGER STRUCTURAL SOLUTIONS IN OTHER OECD COUNTRIES THERE ARE DIFFERENT MODELS. SHOULD THERE BE MORE CREDIT BUREAUS? THAT, I DON’T KNOW. IF THERE IS A RACE TO THE BOTTOM THERE ARE MORE FOR FAIR TREATMENT OF CONSUMERS. THAT WE HAVE TO THINK ABOUT. THERE’S A LOT OF LINGERING ISSUES ABOUT THE APPROPRIATENESS AND USES OF CREDIT REPORTING DATA. OBVIOUSLY, THE USE OF EMPLOYMENT. THESE ALL RAISE TOUGH ISSUES. I AM NOT SURE IF OUR CURRENT REGIME OF ENCOURAGING PEOPLE TO CHECK THE REPORTS IS REALLY WORKING IF YOU CAN’T EASILY DISPUTE AND CORRECT. I AM REALLY SKEPTICAL. I DON’T THINK WE SHOULD BE A LOT OF MEDICAL DEBT ON CREDIT REPORTS. THERE IS SO MUCH GARBAGE MEDICAL DEBT PUT ON PEOPLE’S CREDIT REPORTS. THE REALITY IS MOST CONSUMERS ARE JUST IN THIS PING-PONG MATCH. THAT THEY ARE WATCHING BETWEEN THE PROVIDER AND THEIR INSURANCE COMPANY. THEN ONE DAY THEY ARE CALLED AND SAID YOU OF THIS BILL. AND FOR MOST PEOPLE, THEY ARE NOT CONSUMER ADVOCATES.OR THOSE OF US WHO HAVE A LOT OF PATIENT EXPERIENCE.OU FEEL SOME SORT OF EMBARRASSMENT FOR IF YOU ARE ON SOME LIST IS YOU ARE NOT TAKING. THEY END UP WRITING THAT CHECK. EVEN WHEN THEY DON’T OPEN. THEY ARE BEING JERKED AROUND BY BOTH THE INSURANCE COMPANY AND IN SOME CASES THE CREDIT BUREAU. THE CFPD STUDY ON MEDICAL DEBT AND CREDIT SCORES I THINK DEFINITELY HELPED. BECAUSE IT IS NOT BEING REPORTED IMMEDIATELY. IT IS NOT NECESSARILY IMPACTING THEIR SCORE. BUT EVEN IF IT DOES GET REPORTED I AM NOT SURE THE VALUE IT GIVES THE MAY BE COERCING SOMEONE TO PICK UP. I AM NOT PLEASED WITH THE STATE OF CREDIT REPORTING STILL. BUT I DON’T WANT TO DISMISS THE MASSIVE LEAPS FORWARD THE CFPD HAS LED. THERE IS MORE WORK TO DO. I HOPE THE CREDIT BUREAUS KNOW WE ARE STILL TAKING A HARD LOOK AT THEIR BUSINESS PRACTICES. ND LET ME JUST SAY ONE MORE TIME. WE ARE SEEING THEY ARE INCREASINGLY LOOKING MORE LIKE DATA BROKERS AND MASS DATA AGGREGATORS. IT IS MORE THAN JUST FAIR CREDIT REPORTING.>>LET’S DIVE IN FOR JUST A FEW MINUTES ON STUDENT LOANS. WE WILL HAVE A WHOLE DISCUSSION ON STUDENT LOANS. IN A PANEL DISCUSSION.GIVEN YOUR OF THE DEPARTMENT OF EDUCATION AND CFPD AND WILLY PUSHED BOTH ENTITIES QUITE HARD. ON THE PROBLEMS OF THE FOR-PROFIT MORE BROADLY. WHAT PROGRESS HAS BEEN MADE? WE SEE THE PITFALLS? IN TWO MINUTES OR LESS. TAKE YOUR TIME.>>Rohit Chopra: WE STILL HAVE ONCE EVERY 30 SECONDS SOMEBODY DEFAULTED ON FEDERAL STUDENT LOANS. IT IS THOUSAND THE DAY. WE’RE NOT SEEING DELINQUENCY OR DEFAULT RATES SLOW DOWN EVEN AS THE ECONOMY GETS BETTER. WE STILL HAVE A HUGE AMOUNT OF BORROWERS WERE BURDENED WITH THIS DEBT. AND ARE REALLY NOT ABLE TO GET THE VALUE OUT OF THAT. I REJECT THE SINGULAR FOCUS ON GETTING TO COMPLETE COLLEGE. BUT WE REALLY NEED TO THINK ABOUT THAT 1.3 TRILLION THAT IS OUT THERE. I THINK THE SCANDALS OF OPEN PEOPLE’S EYES OTHER THIS IS A FUNDAMENTALLY CORRUPT SYSTEM FROM BEGINNING TO END. AND WHETHER WE NEED TO BE THINKING MORE BROADLY ABOUT CANCELLATION.OT JUST FOR THOSE WHO WERE VICTIMIZED BUT THOSE SET UP TO FAIL FROM THE BEGINNING. I THINK YOU WILL START SEEING OVER THE NEXT YEAR MUCH BIGGER DISCUSSION ON STUDENT DEBT CANCELLATION. WERE WE DO IT WAS GOOD UP FROM THE BEGINNING. THERE HAS TO BE A DISCUSSION ABOUT RETHINKING THE STUDENT LOAN ORIGINATION SYSTEM. IF WE ARE GOING TO ALLOW THIS TO CONTINUE WILL ONLY HAVE MORE NEGATIVE REPERCUSSIONS FOR OUR ECONOMY. AND I TELL YOU I THINK A LOT OF PEOPLE WHO GRADUATED OR CAME OF AGE AROUND THE TIME OF THE FINANCIAL CRISIS. THEY WERE IN COLLEGE. SO MANY OF US HAVE MET STUDENTS WHO TOLD US. YOU KNOW, MY PARENTS WERE LAID OFF OR WE LOST OUR HOMES. AND NOW IT IS ALL ON ME TO PAY FOR THIS. AND SOPHOMORE YEAR OF COLLEGE WHAT ARE YOU GOING TO DO? YOU WILL BORROW PICK AND HOPE IT ALL WORKS OUT. BUT THE STRUCTURE OF OUR ECONOMY DOESN’T WORK THIS WAY. AND LOOK AT SCHOOLS LIKE MICHIGAN. EVEN HERE A STATE SCHOOL SOME PEOPLE HAVE TO BORROW BIG TO GO TO LAW SCHOOL. TO GO TO GRADUATE SCHOOL. AND IT SKEWS ANOTHER LOOK AT THE CAREER PATH. AND THAT HAS REAL REPERCUSSIONS.>>LET’S TURN TO SERVICE MEMBERS, MILITARY MEMBERS. YOU KNOW, THE FINANCIAL CRISIS, ONE OF THE ISSUES IS THE WAY IN WHICH SERVICE MEMBERS HAVE BEEN ABUSED. ON AND AROUND MILITARY BASES OR DURING OVERSEAS DEPLOYMENT. THE CFPD WAS GIVEN IMPORTANT AUTHORITIES IN THIS AREA. HOW MUCH ARE SERVICEMEMBER STILL AT RISK? RAISING PROBLEMS IN THE MARKET YOU THINK WE SHOULD BE FOCUSED ON?>>Rohit Chopra: YOU OBVIOUSLY SEE A VERY DIFFERENT SET OF DEMOGRAPHICS ON THE FORCE NEEDED 10 YEARS AGO. IT IS NOT AS MUCH OF THE WARTIME FORCE THAT IT WAS BUT YOU STILL SEE MANY YOUNG, OFTEN FROM LOWER INCOME BACKGROUNDS. ESPECIALLY MEN BEING OFF ON THEIR OWN AND HEAVILY TARGETED. BY A WHOLE SUITE OF UNSCRUPULOUS ACTORS. I THINK THE RESULTS HAVE BEEN VERY POSITIVE. ARE SEEING BIG IMPROVEMENTS THERE.YOU KNOW, YOU MENTIONED AUTO EARLIER. WE HAVE BIG PROBLEMS IN THE AUTO MARKET WITH RESPECT TO SERVICE MEMBERS. I THINK THAT HAS TO BE A BIG FOCUS FOR THE FTC AND THE STATES.HE SERVICEMEMBERS CIVIL RELIEF ACT. WE SHOULD ALL TAKE SERIOUS PAUSE. THE ILLEGAL FORECLOSURES GOT A LOT OF ATTENTION. BUT YOU KNOW THEY SANTAN DER SOMEBODY AT BASIC TRAINING HAVING THEIR CAR TAKEN FROM THE ILLEGALLY IS JUST EGREGIOUS. I WORRY WE HAVE NOT CALIBRATED CORRECTLY DIRECTIVE OF CONSEQUENCES FOR THAT BEHAVIOR. AND WE NEED TO START THINKING ABOUT WHAT TYPES OF GOVERNMENTS LICENSES, FAVORS ARE WE GIVING THESE FIRMS. THAT EGREGIOUSLY BREAK THE LAW. AS A MONETARY SIGN ENOUGH? AND HOW MANY TIMES DO YOU HAVE TO BREAK THE LAW? BEFORE WE START THINKING ABOUT WHAT WE DO WITH YOUR LICENSE? WHAT DO WE DO WITH SOME OF THE GOVERNMENT BENEFITS YOU GET? AND I THINK THAT IS A ONE OF THE ONLY WAYS WE WILL DETER SOME OF THESE BAD ACTORS. WE HAVE A LOT OF GREAT WORK AT THE FTC WITH RESPECT TO LEAD GENERATION. TARGETING MILITARY SERVICE MEMBERS AND VETERANS. I THINK FOCUSING HARD ON THESE LEAD GENERATORS WILL PAY DIVIDENDS.>>LET ME ASK YOU A QUESTION ABOUT SOMETHING NOT IN THE FTC JURISDICTION. BUT I AM SURE YOU HAD A CHANCE TO TALK ABOUT. A PRIME EXAMPLE OF THE KIND OF ABUSES THAT CAN HAPPEN IN THE RETAIL BANKING MARKET. HOW DO YOU THINK FEDERAL REGULATORS HAVE DEALT WITH WELLS FARGO THUS FAR? HAS IT BEEN ENOUGH? WHAT FURTHER STEPS MIGHT BE USEFUL?>>Rohit Chopra: ONE OF MY EARLIEST PRIORITIES WAS SHARPENING OUR FOCUS ON REPEAT OFFENDERS. AND VIOLATORS OF CONSENT DECREES AND OTHER ORDERS. YOU HAVE YOU HAVE A GOOD EXAMPLE OF A FIRM THAT HAS SERIOUS MANAGERIAL DEFICIENCIES AND OBVIOUSLY THE CFPD AND CITY ATTORNEY OF LA. THE FAKE ACCOUNT SCANDAL THAT WAS UNCOVERED.IT HAS LITERALLY BEEN OVER AND OVER AGAIN MORE AND MORE PROBLEMS WE HAVE BEEN HEARING. AND I THINK THE BIG LESSON THAT ALL OF US HAVE TO TAKE FROM THIS IS, ARE WE FUNDAMENTALLY MISS CALIBRATING MONETARY PENALTIES?ARE MONETARY PENALTIES THOSE PENALTIES THAT BIG FOR A GOOD REGULATORS PRESS RELEASE? IS IT ACTUALLY JUST A JOKE SOMETIMES? OBVIOUSLY, I THINK WE HAVE SOME AGENCIES THAT USE THEIR AUTHORITIES AND SEEK AN AMOUNT THAT IS HIGHLY JUSTIFIABLE IN THE COURTS. BUT I LOOK AT SOMEONE LIKE WELLS FARGO AND I HAVE WONDERED. WITH ALL THESE FAKE ACCOUNTS SHOULD WE BE TRUSTING THEM WITH FTI SEE INSURANCE WAY WE ARE DOING. AS I AM NOT SAYING.T RAISES TOO BIG TO FAIL ISSUES. BUT THE ACT IS QUITE CLEAR THAT FOR THIS REPEATED UNSAFE AND UNSOUND BUSINESS PRACTICES. HIS IS NOT SOMETHING THE PUBLIC SHOULD NECESSARILY BE PROTECTING. I THINK, THINKING MORE ABOUT THE OTHER LEVERS WE HAVE. I THINK THE FED ACTION TO LEAD TO REAL GOVERNANCE CHANGES. HIS STRUCTURAL REMEDY SET FUNDAMENTALLY RESHAPED EXECUTIVE COMPENSATION, GOVERNANCE, AND ACCESS TO GOVERNMENT BENEFITS. HAS TO BE PART OF THAT POOL. THAT IS NOT SOMETHING I’VE STUDIED SO CLOSELY. BUT I THINK THE EXPERIENCE WE ARE HAVING AT WELLS FARGO IS SIGNALING TO SO MANY OF THE AGENCIES. THAT THE PUBLIC IS GOING TO BECOME MORE SKEPTICAL JUST ABOUT THE BILLION DOLLAR NUMBERS. THEY ARE NOT GOING TO SEE THESE SORT OF CHANGES UNTIL WE THINK ABOUT STRUCTURAL REMEDIES. AND AGAIN, I THINK TO FUNDAMENTAL INCENTIVES. THE STRUCTURE OF THOSE BUSINESS MODELS. AND WELLS FARGO LIKE MANY. IT IS A THINK WITH THE FEDERAL CHARTER VEGAS FEDERAL DEPOSIT INSURANCE. AND BENEFITS GREATLY FROM THOSE. WE SHOULD ASK QUESTIONS AGAIN. ARE WE GIVING THOSE BENEFITS TO REALLY? WHEN WE HAVE REPEATED PROBLEMS THAT NEED TO GET SOLVED? QUICK FOR ME ASK ONE LAST QUESTION AND THEN I WILL OPEN IT UP TO ALL OF YOU FOR QUESTIONS. AND WHAT TO COME BACK TO YOUR COMMENT ON THE ECONOMY AND TECH COMPANIES IN GENERAL. AND TALK ABOUT THE COMPETITION POLICY SIDE OF THE HOUSE AT THE FTC. THERE HAS BEEN ALL KINDS OF STORIES COMING OUT ABOUT ANTICOMPETITIVE BEHAVIOR. IN ONE PARTICULAR PROBLEM THAT HAS RISEN TO THE TOP IS A NONCOMPETE AGREEMENT FOR WORKERS IN THE TECH ECONOMY. I AM WONDERING WHAT EFFECT YOU THINK HAVING INNOTECH. IS IT FAIR? ARE THERE THINGS THE FTC OR OTHERS CAN AND SHOULD DO ABOUT IT?>Rohit Chopra: NONCOMPETE AGREEMENTS THERE HAS BEEN MORE AND MORE DATA AND RESEARCH. INCLUDING BY ALAN KRUEGER ABOUT HOW NONCOMPETE MAY BE DISTORTING A COMPETITIVE LABOR MARKET. THAT MAY ACTUALLY BE SUPPRESSING WAGES ESPECIALLY FOR MANY OF OUR LOWEST INCOME WORKERS. THE ILLINOIS ATTORNEY GENERAL, THE WASHINGTON ATTORNEY GENERAL. THAT ON SOME ENFORCEMENT WORK AND HAVE DECLARED THE USE OF SOME OF THESE CLASSES. AS A VIOLATION OF THEIR MANY FTC. THEIR UNFAIR BUSINESS PRACTICES.I RAISED IN AN ARTICLE IN SEPTEMBER AS TO WHETHER THE FTC SHOULD CONSIDER USING ITS UNFAIR METHOD OF COMPETITION WE ARE USING TO DEVELOP THE LAW. AND OFFER MORE CLARITY AS TO WHEN THE USE OF THESE NONCOMPETE CLAUSES COULD BE OF VIOLATION OF FEDERAL LAW. IT IS SOMETHING THEY ARE PROLIFERATING. AND IF WE DON’T DO ANYTHING ABOUT IT WE ARE NOT GOING TO SEE A COMPETITIVE LABOR MARKET. WITH RESPECT TO CHECK. ONE THING THAT I THINK IS IMPORTANT FOR YOUR CENTER AND FOR STUDENTS WHO ARE THINKING ABOUT FINANCE, LAW AND POLICIES. THE LINE BETWEEN FINANCIAL SERVICES AND TECH IS ALSO FLOORING IN LOT. THE WAY IN WHICH BIG DATA IS BEING USED FOR ALTERNATIVE UNDERWRITING. THE WAY IN WHICH TECHNOLOGY FIRMS ARE INCREASINGLY ENTERING THE FINANCIAL SERVICES SPACE. SOME OF IT IS GOOD. SOME OF IT RAISES FOR QUESTION ON HOW THAT DATA WILL BE USED OR MISUSED. EVERYONE WHO IS INTERESTED IN A FAIR FINANCIAL MARKET HAS GOT TO BE THINKING ABOUT OUR SURVEILLANCE ECONOMY. FOR EVERYONE WHO CARES ABOUT A COMPETITIVE FINANCIAL SERVICE MARKET. THEY ALSO HAVE TO WAKE UP AND ASK HER QUESTION. ARE WE DOING ENOUGH WITH RESPECT TO ANTITRUST LAWS WITH FINANCIAL SERVICES FIRMS? THE FEDERAL RESERVE OF THE DEPARTMENT OF JUSTICE, YOU KNOW. TAKE THE LEAD ON MAKING MERGERS. THERE ARE ALL SORTS OF FINANCIAL SERVICES MERGERS THAT REALLY NEED A LOT MORE SCRUTINY. AND I THINK WE ARE NOW SEEING BIG BANK MERGERS AGAIN. AFTER THE JUDGE FRANK BILL WE ARE NOW SEEING LARGER BANKS SEEKING TO MERGE. I THINK THAT WILL CONTINUE. AND I THINK WE NEED TO DETERMINE WHETHER WE ARE USING ALL THE TOOLS WE HAVE TO MAKE SURE THOSE MARKETS ARE COMPETITIVE. A COMMUNITY BANKS AND OTHERS ARE ABLE TO COMPETE.>>THAT IS GREAT. LET ME OPEN IT UP TO ALL OF YOU. YES.>>THANK YOU, THANK YOU SO MUCH.>>CAN YOU WAIT FOR THE MAN TO ARRIVE. WE HAVE FOLKS WATCHING ONLINE.>>IS THIS ON?>>IT WAS ON.>>GOOD, THANK YOU SO MUCH. I JUST WANTED TO RUN BY YOU A COUPLE OF TOPICS. I WOULD BE CURIOUS ON YOUR TAKE OF THE EFFECTIVENESS OF THE COAP HAS BEEN A DIFFICULT STATUTE TO ENFORCE AND NOW WE HAVE THE CONCERN THE IMPACT SERIES IS IN DANGER BUT THAT IS ONE QUESTION. AND IF THE CFPP IS A REGULATORY, WHAT WOULD BE THE INTERACTION OF THAT CFTP WITH THE FTC JURISDICTION?>>Rohit Chopra: THAT IS A GOOD QUESTION. I THINK, FRANKLY, ALL OF OUR ANTIDISCRIMINATION LAWS, THEY REALLY NEED. THEY WERE NOT DESIGNED FOR THIS MASS DATA SURVEILLANCE ECONOMY. IF WE LOOK AT WHAT IS HAPPENING IT IS NOT JUST IN THE UNDERWRITING OF CREDIT. WHAT ADDS:NOT FOR HOUSING, EMPLOYMENT, PRODUCTS. IT IS NOT LIKE YOU ARE OPENING THE NEWSPAPER. THOSE ADS ARE NOW CUSTOMIZED TO YOU. AND WITH ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING AND ALGORITHMS. IT IS FUNDAMENTALLY A DIFFERENT WORLD FOR IT IS NOT NECESSARILY A HUMAN INTENTIONALLY DISCRIMINATING. BUT THE ALGORITHM ITSELF MAY BE DISCRIMINATORY. BUT WE HAVE NO WAY TO CHECK FOR THAT. BECAUSE MAY BE RELYING ON ARTIFICIAL INTELLIGENCE AND EVOLVING ON ITS OWN. YOU KNOW THE FRAMEWORK I OBVIOUSLY WANT US TO USE IT TO EVERY BIT WE CAN. AND OBVIOUSLY THAT MEANS USING DISPARATE IMPACT THEORY. BUT I AM NOT SURE THAT LOST THINGS UP WELL WITH THE DATA ECONOMY TODAY. AND I HOPE WHEN THE NEXT FINANCIAL REFORM COMES OR WHEN WE START TALKING FOR REAL ABOUT ACCOUNTABILITY IN TECH AND BIG DATA THAT BECOME THE CENTERPIECE OF IT. NOT JUST IN CREDIT BUT ECONOMIC OPPORTUNITIES. WITH RESPECT TO THE SANDBOX. THAT IS A REAL OPEN QUESTION. YOU KNOW THE CFPD CERTAINLY HAS SPECIAL AUTHORITIES WITH RESPECT TO ECOA BUT I THINK THAT IS TO BE DETERMINED. AND I GET THE ATTRACTION TO THE SANDBOXES BUT IT IS IMPORTANT THAT IT IS NOT BECOME THE SIDE DOOR TO DEREGULATING THE WHOLE THING. AND THAT IS SOMETHING WE NEED TO PAY CLOSE ATTENTION TO. BECAUSE THERE’S A LOT OF OPPORTUNITY FOR ABUSE IT. AND THAT MEANS THAT ANYBODY BENEFITING FROM IT IS REALLY GOING TO BE HELD ACCOUNTABLE FOR PRODUCING A LOT OF DATA. PRODUCING AND ADHERING TO THE HIGHEST STANDARDS. YOU KNOW, I HAVE WORKED IN ONLINE LENDING. AND INNOVATIVE FINANCIAL TECHNOLOGIES. BUT I AM NOT SO SURE. I SEE BOTH SIDES BUT I AM SKEPTICAL AS TO WHETHER THAT WILL LEAD TO THE BENEFITS THAT THEY THINK IT WILL.>>Man: I HAVE A QUESTION. I JUST LOOKED UP A STATISTICS 15 PERCENT OF AMERICANS SMOKE. THERE IS RAMPANT ALCOHOL ABUSE. PEOPLE MAKE BAD CHOICES, BAD DECISIONS, BAD BEHAVIOR. HOW DO YOU IN MAKING POLICY ACCOUNT FOR PEOPLE JUST DOING BAD STUFF. UNTIL THEN THEY SHOULDN’T DO BUT THEY DO IT ANYWAY AND THEN YOU HAVE TO POLICY THAT PROTECTS THEM?>>Rohit Chopra: I THINK WE HAVE TO START WITH THE IDEA WE CAN’T LET PEOPLE BE LIED TO. WHEN IT COMES TO TOBACCO USE WITH A HISTORY OF PEOPLE BEING LIED TO. WITH OPIOID ABUSE WE ARE NOW LEARNING MORE AND MORE. CONCEALED AND EVEN LIGHT. SO I START THERE. BUT YOUR QUESTION ABOUT HOW TO NUDGE PEOPLE TO BETTER DECISIONS THERE IS A LOT OF LITERATURE ON THAT. BUT I STILL THINK WE HAVE TO MAKE SURE THE REAL CONSEQUENCES WHEN PEOPLE ARE BEING LIED TO. AND ONE OF THE THINGS I HAVE NOT BEEN THRILLED ABOUT THE AMOUNT OF SETTLEMENTS THEY ENTER THAT OUR LETTER ZERO DOLLARS. THESE NEW CONSEQUENCE SETTLEMENTS. THE FREE PASS. I UNDERSTAND AND FULLY RECOGNIZE SOME OF THAT MAY BE RELATED TO LIMITED AUTHORITIES. BUT SOME OF IT IS BACKWARDS IN TERMS OF HOW WE ARE TRYING TO HOLD ACCOUNTABLE THOSE WHO DO FLY. I DON’T KNOW IF THAT IS RESPONSIVE BUT THAT IS OUR FIRST PRIORITY. THERE ARE LOTS OF OTHER TOOLS OUTSIDE OF LAW ENFORCEMENT TO TRY TO HELP PEOPLE MAKE BETTER DECISIONS.>>I WOULD LIKE TO TAKE THAT A STEP FURTHER. WE TALK ABOUT JUSTICE IN OUR COUNTRY AND WE TALK ABOUT HUMANS. WE COVER THIS POINT OF VIEW HOW FAR CAN WE PUNISH SOMEONE UNTIL IT IS UNACCEPTABLE TO SOCIETY? WHEN IT IS A BUSINESS WHAT IS THE LEAST AMOUNT WE CAN DO TO GET THE CHANGE WE WANT? WE COME FROM THESE TWO DIFFERENT POINTS OF VIEW. EVEN IF HUMAN BEINGS. IF YOU ARE TALKING OR ANYONE IS TALKING ABOUT FINANCIAL JUSTICE. WE TALK IN A METERED LANGUAGE. HOW DO WE CHANGE THAT PARADIGM OR WE CAN BE DRACONIAN WE CAN PLAY A HAMMER DOWN ONE OF THE HURDLES WE RUN INTO. SO WE DON’T RUN INTO FOR HUMANS. WITH NO PROBLEM SENDING HUMANS TO JEFF ARE EXTREMELY LARGE AMOUNTS OF TIME IN OUR COUNTRY. BUT WE CAN’T GO AFTER BEINGS, WE CAN’T DEAL WITH THESE COMPANIES?>>Rohit Chopra: IN SOME WAYS THE OBVIOUS POLITICAL POWER OF OUR MOST INFLUENTIAL AND WEALTHIEST CITIZENS AND FIRMS THAT ARE ABLE TO DISTORT THE JUSTICE SYSTEM IN THEIR FAVOR. I DON’T KNOW HOW TO SOLVE THAT ONE? BUT YOU ARE RIGHT. I THINK IT GOES TO WHAT I SAID ABOUT THOSE REGULATOR PRESS RELEASES. $1 BILLION IS A TREMENDOUS AMOUNT OF MONEY. BUT IS IT A TREMENDOUS AMOUNT OF MONEY FOR SOME OF THE LARGEST FIRMS ON THE PLANET? AND IS PICKING THAT FIND SOMETIMES A GAMBLE THAT IS WORTH TAKING? AGAIN, WHAT I GO BACK TO ITS WE NEED TO KEEP THINKING ABOUT IS A MONETARY REMEDY GOING TO SOLVE IT? AND IN SOME WAYS, ESPECIALLY FOR THOSE WHO REPEATEDLY BREAK THE LAW. DO YOU NEED TO GO TO COURT AND DO YOU NEED AUTHORITY TO FUNDAMENTALLY FIX THE STRUCTURAL INCENTIVE AT LEAST UP TO DO THAT. I THINK THAT GOES TO EXECUTIVE COMPENSATION. IN TOWARD GOVERNMENTS.ND IT GOES TOWARD ESPECIALLY INDIVIDUAL LIABILITY. AND WE RECENTLY HAD A CHILDREN’S PRIVACY CASE. COMMISSIONER SLAUGHTER AND I SPOKE OUT ABOUT THE NEED FOR IN THESE CASES VERY SERIOUS MISCONDUCT.HIS IS A CASE INVOLVING ESSENTIALLY THE DISCLOSURE OF SAID DATA ABOUT YOUNG CHILDREN. THAT WAS AVAILABLE TO PEOPLE. AND THE COMPANY DECIDED TO LET IT GO ON. IT IS DEFINED TO THE COMPANY OR DO WE NEED TO SHARPEN OUR FOCUS ON THE ROLE OF INDIVIDUALS? AN INDIVIDUAL ACCOUNTABILITY UNTIL WE START DOING THAT. THAT IS NOT GOING TO REALLY CHANGE THE STRUCTURAL INCENTIVES.>>A COUPLE. I WAS ON A BOARD OF DIRECTORS IN THE UK. AND THE ONLY THING I LEARNED ON BEEN ON THE BOARD OF DIRECTORS WAS THE COMPANY’S, ARE FTC, TELLS YOU YOU ARE PRETTY PERMISSIVE AS TO WHAT YOU CAN DO EXCEPT FOR IF YOUR COMPANY BECOMES INSOLVENT. THE DIRECTORS ARE PERSONALLY LIABLE. AND WE HAVE TAKEN AWAY THE PERSONAL LIABILITY OF MANAGERS AND DIRECTORS THROUGH INSURANCE AND OTHER THINGS. YOU TALK ABOUT WELLS FARGO. THE CEO PAID 1 BILLION IN FINES LAST YEAR AND GOT A FIVE PERCENT RAISE. IS MAKING $8.5 MILLION. WHEN DO WE GET TO THE POINT WHEN CORPORATIONS DO BAD THINGS. THE OTHER ALTERNATIVE IS WHAT I HEARD A LOT DURING THE FINANCIAL CRISIS. WHY DIDN’T WE LOCK ANYBODY UP? DO WE HAVE THE ABILITY TO DO CRIMINAL PROSECUTIONS FOR CRIMES. WHETHER THEY BE AT THE CFPD OR FTC?>>Rohit Chopra: I AM NOT A CRIMINAL PROSECUTOR. BUT IF WE LOOK WHAT HAPPENED AT THE SAVINGS AND LOAN SCANDAL. A LOT OF PEOPLE WENT TO PRISON. AND THAT DIDN’T HAPPEN THIS LAST TIME. AND THAT IS ALSO SOMETHING THAT WILL THE POLICY TOOL KIT. THERE ARE CERTAIN THINGS THAT ARE SUBJECT TO CRIMINAL PENALTIES.S A CIVIL AGENCY EVEN CIVIL LAW ENFORCEMENT THAT TARGETS INDIVIDUALS DOES SOMETHING. THAT IS AN IMPORTANT PIECE OF REALLY WHAT WE SHOULD BE DOING. I TELL YOU THE FTC WE NAME INDIVIDUALS A LOT. FOR SMALL SCAMMERS. BUT I AM NOT SO SURE WE SHOULD ASSUME THAT A LARGE FIRM SHOULDN’T NECESSARILY BE THE SAME LEVEL OF SCRUTINY. I DON’T KNOW THE ANSWER TO YOUR QUESTION. MY GET TELLS ME WE DID NOT IS A CRIMINAL AS VIGOROUSLY AS WE SHOULD BE. I WILL MAKE ANOTHER POINT. IF WE LOOK AT FARANOS, EVEN CORINTHIAN AND ITT.HOSE MAY BE KNOWN TO MANY OF YOU. THEY ARE LARGE PUBLICLY TRADED FIRMS THAT THE CFPD SINCE THEY ARE NOW DEFUNCT. THE LEADERSHIP OF THOSE FUNDS ENGAGED IN BILLIONS OF DOLLARS. WITH HARM TO SO MANY STUDENTS. THE ONLY PERSONAL ACCOUNTABILITY THEY FACE IS AN $80,000 FINE. WHAT KILLS ME IS YOU CAN DO — YOU CAN TAKE ADVANTAGE AND LIE AND CHEAT CONSUMERS. HOW DARE YOU LIE TO AN INVESTOR. IF YOU’D LIKE TO AN INVESTOR YOU WILL BE PERSONALLY HELD ACCOUNTABLE FOR THAT OFFENSE. I THINK WE SOMETIMES NEED TO THINK ABOUT WHETHER MASSIVE FRAUD AGAINST CONSUMERS. DO WE HAVE THAT CALIBRATION RIGHT?>>Woman: WHAT WILL IT TAKE TO REGULATE GOOGLE. I WAS LISTENING TO THE HEARINGS ON C-SPAN AND I WAS STRUCK BY THE FACT THAT YOU WILL NOT GET DECENT LEGISLATION.T SEEMED LIKE MANY OF THE MEMBERS OF CONGRESS NEED A TUTORIAL ON THE FIELDS TO BE ASKING THE RIGHT QUESTIONS EVEN.>>JUST TO GIVE YOU A SENSE. SIX OF THE 10 LARGEST CORPORATIONS BY MARKET CAPITALIZATION ARE EITHER AMERICAN OR CHINESE FIRMS. THIS IS A DRAMATIC CHANGE. MANY PEOPLE HERE MIGHT THINK ABOUT THE VALUATION OF LARGE FINANCIAL INSTITUTION. THESE FIRMS EQUIPS THEM BY FAR. I GUESS MY REACTION TO YOU IS I DON’T THINK YOU NEED TO BE A TECHNOLOGIST OR COMPUTER SCIENTIST TO KNOW HOW TO PUT INTO PLACE REGULATIONS FOR SOME OF THESE FIRMS. IT HAS TO BE ROOTED IN OUR VALUES IS WHAT WE THINK IS FAIR IN TERMS OF WHAT PROFESSOR McCOY ASKED ABOUT DISCRIMINATION. WHEN IT COMES ABOUT PRIVACY AND THE USE OF DATA. OBVIOUSLY WE WANT TO BE DRIVEN BY EVIDENCE.BUT ON BOTH SIDES OF THE AISLE PEOPLE ARE UNCOMFORTABLE. NOT JUST IN THEIR HEADS BUT THEIR HEARTS ABOUT SOME OF THE PRACTICES THAT THEY SEE ESPECIALLY WITH MASS DATA AGGREGATION ONLINE.ND HELP BLOCK THE MARKET ENTRANTS. AND THEY MONETIZE CONSUMERS. THAT LEADS TO REAL THREATS TO JOURNALISM INDUSTRY. TO OUR NATIONAL SECURITY. THAT DATA SECURITY ON THE DATA SECURITY. MANY OF OUR LARGEST DATA BREACHES. THESE ARE ASSETS THAT ARE BEING TARGETED BY FOREIGN STATE ACTORS. THEY KNOW THIS RICH SET OF ACTORS COLLECTED TO US HAS REAL VALUE. AND OF COURSE WE WANT LEGISLATORS TO BE SMART. I DON’T WANT ANYONE THINKING YOU HAVE TO BE A COMPUTER SCIENTIST OR TECHNOLOGIST TO ENGAGE IN THIS DEBATE. ALTHOUGH SHOULD BE ABLE TO ENGAGE IN THIS DEBATE NO MATTER HOW HARD WE PARTICIPATE IN THE ECONOMY.>>WE HAVE TIME FOR ONE QUESTION.>>A SHY GROUP THIS MORNING.>>I WANTED TO ASK ABOUT THESE SORTS OF SERVICES THAT CAN HELP CONSUMERS MANAGE THEIR CREDIT BETTER. CREDIT, IS A BIG EXAMPLE I CAN THINK ABOUT. ARE THESE HELPING CONSUMERS UNDERSTAND? I AM A USER AND THERE ARE SOME THINGS I HAVE LEARNED. OR ARE THEY DOING MORE HARM THAN GOOD BY COLLECTING A LOT OF THAT INFORMATION SUCH AS THEY OFFER FREE FILING. BUT THEN SAY THEY WILL USE THAT INFORMATION TO MARKET FINANCIAL SERVICES TO YOU? WHAT ARE YOUR THOUGHTS ON THINGS LIKE THAT?>>Rohit Chopra: I THINK IN THE NEXT FEW YEARS WE WILL HAVE TO SWITCH OUR DEFINITION OF THE WORD FREE. FREE, A LOT OF THINGS ARE OFFERED FOR FREE. BUT THEY ARE ACTUALLY A REAL EXCHANGE AND I WOULDN’T EVEN CALL IT A FAIR EXCHANGE. I WOULD SOMETIMES CALLING IT OFFERING SOMETHING FOR FREE BUT PICKPOCKETING SOMEONE AND SELLING WHAT YOU TOOK FROM THEM. BECAUSE IT IS NOT CLEAR AT ALL TO CONSUMERS WHAT IS BEING TAKEN FROM THEM. THE ABILITY TO FOR THIS TO GET MORE COMPLICATED. WE MAKE THE TRANSITION TO 5G. 5G WILL HAVE SPEEDS FOR MOBILE COMMUNICATIONS IN WAYS WE SEE ONLY FOR FIX. AND THAT WILL LEAD TO A HUGE BLOSSOMING OF AN INTERNET OF THINGS. MORE WEARABLE DEVICES AND CONNECTED CARS.F THE AMOUNT OF INFORMATION THAT WILL BE AVAILABLE ON US. AUTOMOTIVE COMPANIES CAN COLLECT. THAT RETAILERS CAN COLLECT. IT WILL LEAD TO MORE PERSONALIZED PRICES WHICH RAISES A WHOLE OTHER SET OF ISSUES AND CONSUMER PROTECTION ISSUES. I AM VERY WORRIED THAT WE ARE NOT UP TO SPEED AS STATE AND FEDERAL REGULATORS ON THE IMPLICATIONS ON THIS FOR OURSELVES AND OUR SOCIETY. I DON’T KNOW WHAT THE ANSWER IS SPECIFICALLY TO THE SPECIFIC FIRMS. BUT IF WE DON’T CHANGE OUR THINKING ON THE WORD THINKING AND THINK IT WILL LEAD TO DELAYED ACTION. THAT IS A LITTLE OVERDUE.>>THANK YOU. PLEASE CHOOSE ME AND THANK NG ROHIT CHOPRA. WE WILL TAKE A SHORT BREAK WE WILL RECONVENE PROBABLY AT 10:30 FOUR OUR NEXT PANEL. WE WILL GET STARTED EVERYBODY. THE PANELIST CAN COME TO THE FRONT. WE WILL GET STARTED JUST AS SOON AS THE PANELIST AND BE SEATED. WE WILL GET STARTED EVERYBODY AT THE PANELISTS CAN COME TO THE FRONT. WE WILL GET STARTED JUST AS SOON AS THE PANELISTS.>>LET’S GET STARTED WITH NINE MINUTES WHICH IS A BIT OF A HODGEPODGE OF EVERYTHING WHICH IS GREAT. AND CONSUMERS MAY BE SMALL BUSINESS DISCUSSION. I AM HERE AT THE UNIVERSITY OF MICHIGAN MY NAME IS JOHN. I’M LAW FACULTY ALL THE WAY ACROSS THE PARKING LOT FROM THE FORD SCHOOL BUT HAPPY TO BE INVOLVED AND THE SUNNIER SIDE OF THE BLOCK. [LAUGHTER] I WILL MODERATE THE PANEL OF MY OWN, BUT I WILL PUT THEM AT THE END. WE WILL RESERVE SOME TIME FOR GROUP DISCUSSION. I APOLOGIZE IN ADVANCE I HAVE TO DISAPPEAR SHORTLY AFTER THIS BATTLE IS OVER. WILL INTRODUCE THE PANELIST AS THEY COME UP ONE BY ONE.I WILL START WITH MITCHELL McCOY WHO IS THE HORRIBLE WORLD OF ACADEMIC. AND AS BE THE UNFORTUNATE OF DOING PRACTICE. OF THIS AREA TO IMPART KNOWLEDGE ON TO OLIVIA. SHE IS CURRENTLY, AS LIGHTS ARE WELL PRINTED, AT BOSTON COLLEGE. IF YOU CAN INTRODUCE YOUR OWN TOPIC.>>CAN YOU HEAR ME, EVERYBODY? I WOULD LIKE TO THANK YOU FIRST OF ALL JOHN. THANK YOU. MICHAEL FOR ORGANIZING THIS INCREDIBLE EVENT. TRACY, KRISTI AND ALL OF YOUR COLLEAGUES HERE AT THE CENTER FOR ORGANIZING THIS REALLY TERRIFIC CONFERENCE. OUR THEME OF THIS PANEL IS EMERGING ISSUES IN FINANCIAL PROTECTION. I THOUGHT I WOULD FOCUS ON MORTGAGES.ND WHAT I WILL FOCUS. IF YOU WILL BEAR WITH ME. IT’S A HUGE LOOMING ISSUE IN MORTGAGE REGULATION THAT IS FLYING UNDER THE RADAR FOR THE MOST PART. IT IS GETTING ALMOST NO PRESS ATTENDANCE. IT IS TECHNICAL. I WILL TRY TO RUN THROUGH THE TECHNICALITIES IN ALL OF SEVEN MINUTES. AS WE KNOW, RECKLESS MORTGAGES THAT THE 2000 FINANCIAL CRISIS IN MOTION. NEXT TO MILLIONS, FORESIGHT, AND THE PERSISTENCE OF MICHAEL BARR AND ERIC STEIN. AT A NUMBER OF OTHER PEOPLE IN THIS ROOM. THE UNITED STATES MADE MAJOR REFORMS TO MAJOR LENDING AFTER THE CRISIS. THERE WERE A LOT OF REFORMS BUT I THINK THE THREE BIGGEST REFORMS WERE BETTER MORTGAGE DISCLOSURES. BETTER MORTGAGE SERVICING ALTHOUGH THAT IS A WORK IN PROGRESS. THE ABILITY TO REPAY. I THINK OF THESE THE ABILITY TO REPAY RULE WAS THE MOST IMPORTANT. THE RULE, IT IS WHAT I CALL A DUH RULE. IT IS SIMPLE. A MORTGAGE CANNOT EXTEND LENDING UNLESS IT MAKES REASONABLE THE BORROWER HAS THE ABILITY TO REPAY THE LOAN AT THE INCEPTION OF THE LOAN. APPARENTLY THAT WASN’T BEING DONE BEFORE 2008. THE CFPB ADMINISTERS THIS RULE. UNDER THE DODD FRANK PATH LENDERS WHO VIOLATE THIS RULE CAN BE SUED BY INJURED BORROWERS. BORROWERS CAN READ CITY VIOLATIONS IF THEY ARE FORECLOSED UPON AS A DEFENSE. IN REALITY THE LIKELIHOOD OF THIS LIABILITY IS REALLY, REALLY SMALL. NEVERTHELESS VENDORS AND TEND TO BE. IN THE DODD FRANK ACT CONGRESS PROVIDED AN INCENTIVE TO LENDERS TO MAKE EVEN SAFER MORTGAGES THAN ONES THAT COMPLY WITH THE ABILITY TO REPAY THE LOAN. AND IF THEY MAKE SAFER MORTGAGES THE MORTGAGES ARE KNOWN AS QUALIFIED MORTGAGES. OR QM. THE QUID PRO QUO IS THAT THE LENDERS TAKE A QUALIFIED MORTGAGE WITH FAVORABLE TERMS IT WILL GET A MODICUM OF PERHAPS GREAT PROTECTION FROM LIABILITY. THE ABILITY TO REPAY. THEY WILL GET SOME PROTECTION FROM LEGAL EXPOSURE. AND I HAVE LISTED THE FAVORABLE TERMS OF THE MOST IMPORTANT ONES HERE. NOW IT TURNS OUT THERE ARE SEVERAL WAYS TO ATTAIN THE STATUS OF A QUALIFIED MORTGAGE. THE BIGGEST WAY OF DOING SO IS KNOWN AS THE GOVERNMENT-SPONSORED ENTERED SPIES PATCH. THIS APPLIES TO ANY LOANS SOLD TO FANNIE MAE OR FREDDIE MAC. AND FOR LOANS THAT ARE SOLD TO EITHER ONE OF THESE ENTITIES TO QUALIFY FOR THIS REJECTION FROM LEGAL LIABILITY. THEY HAVE TO MEET A NUMBER OF CONDITIONS. THE THREE PIGS ARE THEY HAVE TO BE FULLY AMORTIZING. IN OTHER WORDS EVERY TIME YOU MAKE A MORTGAGE PAYMENT IS BASED ON THE PRINCIPLE. IT CAN’T BE FOR NO MORE THAN 30 YEARS IN TOTAL POINTS AND FEES ARE CAPPED AT THREE PERCENT. NOW WE HAVE A LITTLE PROBLEM. THIS PATCH ACCOUNTS FOR ALMOST HALF OF MORTGAGES MADE IN THE UNITED STATES TODAY. BUT THE PATCH IS TEMPORARY AND IS EXPIRING NO LATER THAN JANUARY 2021. THAT RAISES THE SPECTER OF ENORMOUS POTENTIAL DISLOCATION IN THE MORTGAGE MARKET. WE DON’T REALLY GRAPPLE WITH HOW TO PROCEED. THIS DECISION IS IN THE CFPD CORNER. IT HAS THREE MAJOR OPTIONS AND OBVIOUSLY THERE ARE VARIATIONS ON THE THREE THEMES. ONE IS REPEALED THE PATCH. ONE IS RENEW IT. AND THE THIRD WOULD BE TO EXPAND THE PATCH TO ALL MORTGAGES. MOST IMPORTANTLY TO MORTGAGES SOLD WHICH IS NOT TRUE TODAY. SO, IT TURNS OUT THAT THIS IS AN EVEN MORE COMPLICATED DECISION THAN IT SEEMS TO BE. BECAUSE MANY AND FREDDIE ALMOST FAILED IN 2008. CONSERVATORSHIP AND THAT IS WHERE THEY REMAIN. HIS PARTISAN DEBATE OF WHAT TO DO WITH FANNIE MAE AND FREDDIE MAC. THERE HAVE BEEN SERIOUS MOVES AND CONTINUE TO BE SERIOUS MOVES IN THIS CONGRESS. PRIVATIZE FANNIE MAE AND FREDDIE MAC AND SHIFT MORE OF THE FINANCING OF HOME MORTGAGES TO WALL STREET. IN THE MORTGAGE INDUSTRY RIGHT NOW FANNIE MAE AND FREDDIE MAC ARE PURPLISH. THEY RECEIVE A COMPETITIVE ADVANTAGE OVER WALL STREET AND FINANCING HOME MORTGAGES. WHAT WILL HAPPEN TO PRIVATIZATION IS ANYBODY’S GUESS. AND A LONG CONVERSATION WITH PEOPLE RIGHT IN THE MIDDLE OF THIS. AT THE ACTUALLY DON’T THINK PRIVATIZATION WILL HELP IT. ANYTIME SOON. WE WILL SEE ABOUT THAT. WHAT IS CLEAR IS CFPD AS A DECISION OVER THE PRIVATIZATION. CFPD WHATEVER IT HAS TO DO WITH THE QM PATCH CAREFULLY AFFECT THIS LARGER ONGOING DEBATE ABOUT WHAT TO DO ABOUT FANNIE AND FREDDIE. SO, WHAT MIGHT THE CFP DO? ONE IS SHOULDN’T STICK AND SHOULD STICK WITH THE PATH OF LEAST RESISTANCE? JUST REMOVE THE GSE PATCH? THERE WILL BE A LOT OF PUSHBACK FROM INDUSTRY. WITH THE ARGUMENT, FOR THE GSE PATCH GIVE FANNIE AND FREDDIE AND UNFAIR ADVANTAGE. THERE WILL BE POLITICAL PRESSURE THAT COULD GO IN ONE OF TWO DIRECTIONS. YOU WOULD GO IN THE DIRECTION OF CANCELING THE GSE PATCH. OR GO IN THE DIRECTION OF EXPANDING IT. THERE IS LIBERAL CONCERN ABOUT CANCELING, AT LEAST IN SOME QUARTERS BECAUSE IT HELPS EXPAND MORTGAGE CREDIT TO UNDERSERVED BORROWERS. ON THE OTHER HANDS, LOANS SOLD TO WALL STREET FOR FROM THE FIRST.THEY HAVE THE HIGHEST DEFAULT RATES CERTAINLY HIGHER THAN FANNIE AND FREDDIE LOANS. FANNIE AND FREDDIE AND LENDING TO UNDERSERVED BORROWERS. THEY DID 10 YEARS AGO. I THINK THAT IS ALL TO SAY THE JURY IS OUT ON HOW THIS WILL PLAY OUT. WE HAVE TO SEE THIS DECISION IS PENDING AND COULD AFFECT ACCESS TO CREDIT. IN PARTICULAR STAY TUNED.>>THANK YOU. THIS IS A WELL CAPTIONED CONFERENCE IN AN AGE OF UNCERTAINTY.THAT IS ONE OF THE FEW THINGS WE CAN GENERALIZE FROM CURRENT ACTION OR NONACTION IS WE ARE IN A PROFOUND STATE OF UNCERTAINTY. WE HAVE TO KEEP WATCHING THIS. WE GO TO LISA NEXT BUT LISA RICE IS THE PRESIDENT AND CEO BUT YOU WILL BE PLEASED TO KNOW SHE TAKES AN ANTIDISCRIMINATION DECISION ON THE PART OF ORGANIZATION. SHE WILL TALK TO US. AGAIN, I WILL LET THE SPEAKERS INTRODUCE HIMSELF. I THINK THEY HAVE DIFFERENT ON WHAT THEY WILL TALK ABOUT.>>Lisa Rice: THANK YOU, JOHN. I WILL BE FOCUSING MY COMMENTS ON THE LEGACY OF DISCRIMINATORY HOUSING POLICIES. AT HOW THEY STILL ARE PLAGUING US TODAY. AND IMPACTING THE MARKET TO PROVIDE CREDIT ACCESS TO CONSUMERS. WHAT ARE THE MAJOR CHALLENGES THAT WE ARE STILL DEALING WITH IS THE FALLOUT AND NEGATIVE IMPACTS OF CENTURIES OF LAWS AND POLICIES AND PRACTICES. THAT WERE RACE-BASED. THESE WERE LAWS AND POLICIES THAT WERE EXPRESSLY RAISED BASED LAWS OR POLICIES THAT WERE PURPOSEFULLY DESIGNED TO WITHHOLD AND WITH STRICT OPPORTUNITIES FROM PEOPLE OF COLOR IN TERMS OF ACCESSING HOUSING. OR ACCESSING CREDIT OPPORTUNITIES. THESE POLICIES WERE SPECIFICALLY WEAPONIZED OR TARGETED AGAINST AFRICAN-AMERICANS AND OTHER GROUPS. FOR EXAMPLE WE ALL ARE FAMILIAR WITH THE BEVY OF NEW DEAL PROGRAMS. THE HOLC AND FHC. HOLC DEVELOPED RESIDENTIAL SURVEYS AND RESIDENTIAL SURVEY MAPS. WE COMMONLY REFER TO THEM AS RED LINING MAPS. THOSE RED LINING MAPS WERE BASED ON RESIDENTIAL SURVEYS THE HLC, FEDERAL GOVERNMENT HIRED REAL ESTATE PROFESSIONALS ACROSS THE COUNTRY.O SERVE A GEOGRAPHICAL AREA. SO SMALL COMMUNITIES. EACH OF THESE COMMUNITIES WERE GRADED ON A NUMBER OF THINGS. THE QUALITY OF THE HOUSING STOCK UNDER THE AGE OF THE HOUSING STOCK, THE QUALITY OF THE INFRASTRUCTURE. BUT EVERY SINGLE COMMUNITY WAS ALSO CREATED BASED ON THE RACIAL COMPOSITION OF THE NEIGHBORHOOD. IN FACT IF YOU LOOK AT THE RESIDENTIAL SURVEY THERE IS A FIXED CATEGORY FOR THE REAL ESTATE PROFESSIONAL TO INDICATE HOW MANY AFRICAN AMERICANS. IT IS THE ONLY CATEGORY THAT IS AFFIXED ON THE RESIDENTIAL SURVEY. THE HOLC, THE FEDERAL GOVERNMENT WANTED TO KNOW HOW MANY BLACK FOLKS AREN’T LIVING IN THIS NEIGHBORHOOD. NO I HAVE NOT LOOKED AT EVERY SINGLE RESIDENTIAL SECURITY SURVEY FOR EVERY SINGLE MAP THAT WAS GENERATED.HERE ARE ABOUT 200 OF THEM. I HAVE LOOKED AT A LOT OF THEM. THERE HAS EVER BEEN A TIME THAT ANY LEVEL OF AFRICAN-AMERICANS LIVING IN THE COMMUNITY THAT DID NOT RECEIVE THE WORST GRADE. IN D GRADE. IF THERE IS FIVE PERCENT. AT FIVE PERCENT IT GOT CODED RED. THAT IS HOW STRONG THE CONNECTION BETWEEN RACE AND RISK WAS IN OUR HOUSING AND LENDING POLICIES. AND THIS RESIDENTIAL SECURITIES SURVEYS AND THOSE MAPS WERE OF COURSE USED BY THE FHA WHEN THE FHA GENERATED ITS MORTGAGE LENDING PROGRAMS. WHICH HELPED FUEL, RATE, THE MIDDLE CLASS. TO PROVIDE A FOUNDATION FOR WEALTH ACCUMULATION FOR MANY AMERICANS.AND UPLIFT MANY AMERICANS INTO THE MIDDLE CLASS. THE FHA THEIR OWN UNDERWRITING GUIDELINES TALKED ABOUT TALKING ABOUT THE RACIAL CONSERVATION BEFORE MAKING THE LOAN IN A NEIGHBORHOOD. AND FURTHER CEMENTED THIS ASSOCIATION BETWEEN RACE AND RISK. BUT IT WASN’T JUST THESE POLICIES. BY HOLC THE FEDERAL HOME LOAN MORTGAGE. THE BEVY OF POLICIES. THE INDIAN REMOVAL ACT. THE CHINESE EXCLUSION ACT. THE SOCIAL SECURITY ACT. MODEL CITIES, URBAN RENEWAL, ALL OF THESE PROGRAMS AND POLICIES THAT WERE RACE-BASED. THAT WERE USED IN A WAY THAT HARMED AND HEARD AND WITHHELD OPPORTUNITIES AND WEALTH FROM PEOPLE OF COLOR. AT AFRICAN AMERICANS IN PARTICULAR. SO, WE HAVE THESE CENTURIES OF DISCRIMINATION, DISCRIMINATORY PRACTICES. THAT ARE INCULCATED THEY ARE BAKED INTO OUR SYSTEMS. THEY ARE BAKED INTO OUR DATA. THEY ARE BAKED INTO OUR SOCIETY. AND WHAT WE HAVE NEVER DONE IS JUST A RACE BASED COMMITTEE TO EXTRACT THAT HARMFUL INFORMATION FROM OUR SOCIETY. FROM OUR SYSTEMS. NO, WHAT WE HAVE DONE IS BUILT UPON IT. THIS DATA THAT IS HARMFUL. IF YOU THINK ABOUT THE ADAGE THAT DATA IN, BAD OUTCOMES. DISCRIMINATORY DATA INCOME DISCRIMINATORY OUTCOMES. THERE IS NO OTHER WAY AROUND IT. IT IS ONE OF THE REASONS WE HAVE A DUEL CREDIT MARKET IN THE UNITED STATES. SO LET ME SAY A COUPLE OF THINGS. ONE OF THE REASONS IT WAS SO EASY TO HAVE RACE-BASED POLICIES THAT WERE RECOGNIZED AGAINST COMMUNITIES OF COLOR. IT IS BECAUSE AFTER THE CIVIL WAR, AFTER THE ENDING OF SLAVERY WE HAD OVER 100 YEARS OF JIM CROW. THIS LEGALIZED APARTHEID IN WHICH WE CREATED SEGREGATED AND SEPARATE SOCIETIES AND OUR NEIGHBORHOODS BECAME SEGREGATED. OUR NEIGHBORHOODS WERE NOT SEGREGATED. WE ARE MORE SEGREGATED TODAY THAN WE WERE 100 YEARS AGO. WE SET UP THIS EASY DESIGN WHERE WE CAN GO IN AND TARGET PREDOMINANTLY WHITE COMMUNITIES WITH GREAT CREDIT. AND WITHHOLD GOOD CREDIT OPPORTUNITIES. SAVE CREDIT OPPORTUNITIES FOR COMMUNITIES OF COLOR. BUT, SIMULTANEOUSLY TARGET THE SAME COMMUNITIES OF COLOR FOR BAD AND CRIPPLING AND DEBILITATING CREDIT WHICH IS WHAT WE HAVE DONE. THIS IS THE U.S. MARKET IN WHICH WE OPERATE TODAY. I JUST SAY A COUPLE OF THINGS. THE TEAM SITE REPRESENTS THE FRENCH MARKET. THE PLUS SIDE REPRESENTS THE SAFE MARKET. LET ME FOCUS ON THE 10TH SIDE AND LOOKED UP SOME THINGS BEFORE I TAKE MY SEAT. WHEN YOU ACCESS CREDIT IN THAT 10 SPACE IT BENEFITS THE CREDITOR NOT THE CONSUMER. THAT IS IN THAT 10 SPACE SYSTEMATICALLY. THOSE POSITIVE PAYMENTS WITH CREDIT REPOSITORIES BUT MY MOTHER AND MY FATHER GOT THEIR LOAN FROM A SUBPRIME LENDER BECAUSE NO PRIME LENDER WOULD GIVE MY PARENTS A LOAN. THAT POSITIVE PAYMENT THEY MADE EVERY SINGLE MONTH NEVER GOT REFLECTED IN THE CREDIT REPOSITORY SYSTEM. THEREFORE NEVER DID THEY BENEFIT. CONVERSELY FOR YOUR OBLIGATIONS GO TO COLLECTIONS AND THAT NEGATIVE INFORMATION IS REFLECTED IN THE CREDIT REPOSITORY SYSTEM. SO, I COULD REALLY GO ON ALL DAY. I WILL NOT. I WILL TAKE MY SEAT. BUT I WANTED YOU TO SEE WE ARE DEALING WITH STRUCTURAL ISSUES HERE. WE ARE DEALING WITH STRUCTURAL BARRIERS. AND ONE OF THE THINGS WE HAVE TO DO IS PUNCH A HOLE THROUGH THIS BARRIER AND CREATE MECHANISMS THAT HELP VERY PEOPLE FROM THAT 10 SPACE INTO THAT BLUE SPACE.>>John: THANK YOU. [APPLAUSE] I THINK WE WILL SHIFT TO LAUREN. LAUREN WILLIS IS NEXT. SHE IS ALSO IN OUR RAREFIED WORLD OF BEING A LAW PROFESSOR. SHE COMES TO US FROM CALIFORNIA OR AT LOYOLA LAW SCHOOL. AND LAUREN, I THINK I CAN SUMMARIZE HER CORPUS OF LITERATURE PRICING WE CAN PRETTY MUCH SOLVE EVERYTHING WITH FINANCIAL LITERACY AND EDUCATION.>>Lauren: JUST SO YOU KNOW I AM ACTUALLY THE WORLD BIGGEST CRITICAL FINANCIAL LITERACY.I AM CALLED UPON DESPITE THE FACT THAT I AM TIRED OF TALKING ABOUT IT. BECAUSE NO ONE WILL SPEAK AGAINST IT. SO, I WILL TALK ABOUT SOMETHING TOTALLY DIFFERENT. AND THIS RELATES TO THINGS THAT COMMISSIONER WAS TALKING ABOUT. SORRY. HERE? OKAY. I WILL TALK ABOUT DIGITAL DECEPTION. I WILL JOINING BY THAT? I MEAN THE USE OF MODERN TECHNOLOGY. BIG DATA TRACKING. ANALYZING THE DATA WITH ALGORITHMIC FICTION. MACHINE LEARNING AND A.I. TO RECEIVE PEOPLE OR TREAT THEM UNFAIRLY. USUALLY THROUGH SOME KIND OF DIGITAL INTERFACE. AND JUST EXAMPLES OF HOW THE TECHNOLOGY IS USED. EACH HOMEPAGE OF THIS CASINO IS PERSONALIZED. SO, THERE IS NO SINGLE HOMEPAGE IT DEPENDS ON YOUR CHARACTERISTICS. IF YOU ARE SOMEBODY WHO GETS EXCITED BY A WOMAN’S CLEAVAGE THEN THEY GIVE YOU THAT ONE AND YOU HAVE SIGNIFICANT PASSAGES OF THE CASINO THEY THINK YOU ARE A HIGH ROLLER. IF YOU ARE THE PERSON WHO WANTS TO IMPRESS FRIENDS ACCORDING TO THEIR ANALYSIS. IT WILL SHOW YOU THE ONE ON THE LEFT. THE TECHNOLOGY KNOWS WHERE YOU ARE, WHEN YOU ARE. IT IS LUNCHTIME AND YOU’RE NEXT TO THIS RESTAURANT AND MOBILE PHONES INTO AN ENTICEMENT FOR IT. HERE AGAIN AT THE TIME OF DAY ONE. SO IT IS NOT AS IF EVERY BUSINESS DOES THIS THEMSELVES THE HIGHER OPTIMIZE, THEY PERSONALIZE THESE VARIOUS SERVICES. TO HELP THEM DO IT. FINANCIAL SERVICE INDUSTRIES IS INCREDIBLY SOPHISTICATED ABOUT THIS. AND FOR GOOD REASON. THEY HAVE DEVELOPED THIS FOR FRAUD DETECTION. DEPENDING ON THE ANGLE OF WHICH YOU HOLD YOUR CELL PHONE. HOW HARD YOU PUSH THE CELL PHONE WHEN YOU ARE HITTING TO TYPE THINGS. THE CADENCE OF ABOUT YOU ARE RUSS USED BY BANKS FOR FRAUD DETECTION. HOWEVER THAT SAME DATA CAN BE USED TO DETERMINE THINGS LIKE, ARE YOU ANXIOUS, ARE YOU INTOXICATED, ARE YOU EXHAUSTED OR DEPRESSED? OBVIOUSLY, ALL OF THIS IS ABOUT PREDICTIVE ANALYTICS. NONE OF IT IS 100%. UNTIL RECENTLY I RECEIVED ONLINE ADS FOR THE LARGER WOMEN CLOTHING THING. THE BIG AND BEAUTIFUL WOMEN. SO, CLEARLY IT’S NOT TOTALLY ACCURATE OF COURSE YET, BUT THAT’S THE DIRECTION THAT WE ARE MOVING IN. SO, IT’S EVEN MORE THAN SIMPLY TAKING END DATA. BUT THINGS LIKE IN GAME ADVERTISING. SURE, THEY CAN SEE WHETHER YOU ARE WINNING OR LOSING TO DECIDE WHAT ADS TO DELIVER TO YOU. THEY CAN SEE WHAT YOU SEEM TO BE IN A FLOW STATE. WHICH MEANS YOU ARE LIKELY TO PUSH ANY BUTTON TO GET RID OF WHATEVER POPS UP ON THE SCREEN SO YOU CAN KEEP PLAYING RIGHT? BUT THEY ALSO CAN MAKE THE GAME HARDER OR EASIER, DEPENDING ON WHETHER IT SEEMS BENEFICIAL TO MAKE YOU FRUSTRATED OR EXHILARATED. AND, YOU KNOW, AFTER SOME OF THIS MOVE MANIPULATION STUFF CAME OUT FROM FACEBOOK, THEY QUOTED ONE GUY SAYING, WHAT DO YOU MEAN THIS IS A PROBLEM, THIS IS WHAT SOCIAL NETWORKS DO. WE MANIPULATE PEOPLE’S MOODS. THAT’S OUR WHOLE JOB. SO, CLEARLY IT’S VERY WIDESPREAD. YOU MIGHT THINK OH THIS IS CRAZY,STUFF. BUT, YOU KNOW, ONCE YOU LOOK OUT THERE YOU SEE HOW WIDESPREAD IT IS. SO, THIS IS SORT OF A DATED AND VERY RUDIMENTARY VERSION OF HOW IT HAPPENS. YOU KNOW, TODAY RATHER THAN TESTING THREE DIFFERENT IMAGES EACH WITH THREE DI TYPES OF TESTS, COMBINED WITH 13 DIFFERENT PERSONALITY PREDICTION TYPES, PLUS CONTEXT — SO WHERE YOU ARE WHEN YOU ARE BEING SHOWN THE STUFF — IT’S BLOW THIS UP A THOUSAND TIMES RIGHT? BUT IT GIVES US THE BASIC IDEA. I HAVE WRITTEN AT THE BOTTOM WHAT THEY CALL REAL TIME PERSONALIZATION BUT WHAT I WOULD CALL REALTIME OPTIMIZATION OF WHAT THEY CALL CONVERSES WHICH MEANS IT MAKES IT MORE LIKELY THAT YOU WILL DO WHAT THEY WANT YOU TO DO. CONVERSION MEANS DO WHATEVER IT IS THE PERSON WHO IS DELIVERING THIS TO YOU, THE COMPANY DELIVERING THIS TO YOU WANTS YOU TO DO. NOW, ALL OF THIS IS SET UP FOR MACHINES TO OPTIMIZE CONVERSIONS, OPTIMIZE PROFIT. AND INEVITABLY THAT MEANS WHERE DECEPTION IS PROFITABLE, THESE MACHINES WILL EVOLVE TOWARDS DECEPTION. DECEPTION DIDN’T ALWAYS PROFITABLE. NOT IN EVERY PLACE BUT CERTAINLY SOME PLACES AND SOME CIRCUMSTANCES IT IS. SO YOU START READING AS WE SCAN AND YOU SEE THAT DON’T WORRY YOUR CARD WILL NOT BE CHARGED SO YOU IMMEDIATELY MOVE ON. YOU CAN GO TO DARK PATTERN.ORG AND SEE A DOZEN OF THESE COMMON PATTERNS THAT ARE USED. HERE IS WHERE I AM SPECULATING. I HAVE NOT BEEN ABLE TO GET VERY MUCH INFORMATION FROM THE CFPB. THE CFPB ONLY PUT OUT VAGUE INFORMATION ABOUT WHAT HAPPENED IN THIS CASE. THIS IS A CASE AGAINST PAYPAL IN 2015. AND PAYPAL WAS SIGNING PEOPLE UP FOR PAYPAL CREDIT, AND PEOPLE DIDN’T REALIZE THEY WERE PAYING WITH PAYPAL CREDIT. HOW DID THIS HAPPEN? WELL I’M SPECULATING AS TO HOW IT HAPPENED. I IMMEDIATELY GOT ON DO YOU SEE THE PAY WITH PAYPAL, PAY WITH DEBIT CREDIT ET CETERA. YOU CLICK ON PAY WITH SOMETHING ELSE. YOU SEE THERE’S THREE TABS AT THE BOTTOM? WELL A MACHINE MIGHT DECIDE TO TRY VARIOUS COMBINATIONS OF WHICH TAB IS SHOWING TO YOU RIGHT. NOW AT LEAST ON MY COMPUTER, IF I WANT TO BUY SOMETHING, I JUST PRESS ONE BUTTON AND IT AUTO FILLS. SO I AM NOT EVEN LOOKING AT WHICH TAB IS OPEN THERE. SO, I DON’T SEE THAT I AM ACTUALLY SIGNING UP FOR PAYPAL CREDIT. I THINK I’M JUST PAYING WITH MY DEBIT OR CREDIT CARD LIKE I NORMALLY DO. SO, I’M SPECULATING THAT IS HOW IT HAPPENED, BUT CLEARLY IT HAPPENED. AND YOU CAN IMAGINE THAT A MACHINE TESTING VARIOUS ITERATION OF THIS WEBSITE WOULD FIGURE OUT WHAT’S THE MOST LUCRATIVE RIGHT. AND, OBVIOUSLY, FOR SOME PEOPLE IN SOME STATES, IT’S BETTER NOT TO SHOW THEM THIS. THEY MIGHT COMPLAIN. PEOPLE WHO ARE LIKELY TO COMPLAIN. THERE’S MORE AND MORE DATA USED TO IDENTIFY WHO THOSE FOLKS ARE AND NOT OFFER THEM THINGS THAT MIGHT CAUSE A COMPLAINT, FOR EXAMPLE. AND THIS ALSO BRINGS UP SOMETHING THAT THE COMMISSIONER MENTIONED EARLIER, TOO. SO, CFB GOT $10 MILLION IN SIL CIVIL PENALTIES IN THIS CASE, THAT WAS .003 PERCENT OF PAYPAL’S INCOME FOR THAT YEAR AND THEY HAD BEEN DOING THIS FOR A NUMBER OF YEARS. SO HOW WIDESPREAD IS THIS? CREATIVE CONTENT PERSONALIZATION, MEANING THAT MACHINES ARE DOING THIS, IS BEING USED — THE BLUE LINES ARE COMPANIES ALREADY DOING IT, THE ORANGE ONES ARE ONES PLANNING TO DO IT, AND THE GRAY ONES ARE THE ONES THAT ARE NOT. SO, IT’S REALLY VERY COMMON NOW. SO, THE RESULTING DECEPTION THOUGH RESULTS IN SOME SERIOUS CHALLENGES FOR THE WAY WE NORMALLY HANDLE DECEPTION LEGALLY. HOW WE NORMALLY GO AFTER IT. I MEAN, OBVIOUSLY, ONE THING IT IS VERY HARD TO EVEN PERCEIVE IT’S HAPPENING, TO PROVE THAT IT HAPPENED BECAUSE THINGS ARE MOVING AND THAT KIND OF THING. BUT, ONE ISSUE IS WE OFTEN LOOK FOR BUSINESS INTENT OUT OF THIS, RIGHT. BUT IF IT IS A MACHINE DOING IT, YOU ARE NOT GOING TO HAVE BUSINESS INTENT EVIDENCE WHEN YOU GO AFTER THIS WITH EITHER A PRIVATE ACTION OR PUBLIC ENFORCEMENT ACTION. WE ALSO FOR ASSESSING DECEPTION LEGALLY WE USE FREQUENTLY THE REASONABLE PERSON STANDARD THAT THE JUDGE APPLIES. BUT NONE OF THIS IS DEVELOPED FOR THE REASONABLE PERSON. IT’S DEVELOPED ULTIMATELY FOR AN AUDIENCE OF ONE. THE SINGLE WOMAN WITH KIDS WHO IS VERY ANXIOUS BECAUSE SHE’S GOT A WHOLE BUNCH OF DEBTS AND SHE’S WILLING TO BELIEVE THIS WEBSITE THAT TELLS HER IF SHE SIGNS UP FOR THIS DEBT CONSOLIDATION PROGRAM THAT SHE WILL NOT BE CHARGED ANY FEES. SO, IT’S NOT — THE JUDICIAL STANDARD JUST DOESN’T APPLY. THIS REASONABLE PERSON STANDARD DOESN’T APPLY. IT’S REALLY JUST THIS PARTICULAR PERSON. SO, THE JUDGE LOOKS AT IT AND THINKS THIS ISN’T DECEPTIVE, I CAN SEE THE TINY STAR THAT SAYS OH BY THE WAY WE’RE GOING TO CHARGE YOUR CREDIT CARD, RIGHT. SO, ANOTHER THING WE USE IS EXPERT ANALYSIS. FACIAL ANALYSIS OR THEY CALL IT USE ABILITY ANALYSIS IN THE UX WORLD. AND THE PROBLEM THERE IS THAT, AGAIN, IT IS THE AUDIENCE OF ONE, AND ALSO, YOU DON’T KNOW WHAT’S GOING ON THAT GOT THE CONSUMER TO THAT PARTICULAR INTERFACE. ARE THEY HOLDING THEIR PHONE IN SUCH A WAY TO INDICATE THEY’RE INTOXICATED? SO THE EXPERT DOESN’T HAVE ACCESS TO ALL THAT INFORMATION THAT THE PHONE DOES. BY THE WAY, IT’S NOT LIKE THE FIRM KNOWS THE PERSON IS INTOXICATED. THE FIRM KNOWS THERE IS A PARTICULAR PATTERN WHICH YOU HOLD YOUR PHONE WHICH MAKES YOU MORE LIKELY TO DO CERTAIN THINGS. SO, THERE’S NO KNOWLEDGE, PER SE, ABOUT THIS NECESSARILY. THEN SORT OF THE GOLD STANDARD I THINK THE FTC HAS CALLED IT IN ENFORCEMENT OF DECEPTION CASES. SO, TO DO A RANDOMIZED CONTROLLED TRIAL. SOUNDS SO SCIENTIFIC. SEND THIS WEBSITE OR THIS, YOU KNOW, MOBILE PHONE APP OR WHATEVER, SHOW IT TO A BUNCH OF DIFFERENT CONSUMERS AND GET THEIR RESPONSES. WERE THEY FOOLED BY IT? COMPARE IT TO A GROUP THAT’S SHOWN SORT OF A SANITIZED VERSION THAT DOESN’T CONTAIN THE MISLEADING WHATEVER IT WAS OBVIOUSLY YOU CANNOT MATCH THE CONSUMER SUBJECTS TO WHO WOULD HAVE BEEN SHOWN THESE ADS. AND YOU CAN’T RECREATE THE CONTEXT. JUST LIKE THE EXPERT DOESN’T KNOW THE CONTEST. IN ADDITION FOR ALL OF THESE THREE FORMS OF EVIDENCE HERE, THEY CAN END UP WITH, I THINK DIRECT TV SAID THEY HAD 20,000 DIFFERENT ITERATIONS OF THEIR WEBSITE, RIGHT. YOU CAN’T TEST THAT MANY. YOU CAN’T TEST A STATISTICALLY REPRESENTATIVE SAMPLE OF THAT MANY RIGHT. EVEN IF THEY HAD 100 WEBSITES YOU WOULD HAVE TO TEST 49 WHICH IS VERY EXPENSIVE TO DO AND TIME CONSUMING. THE FTC AND SOME JUDGES HAVE REALLY LABORED ON ON THIS. IN 2010 I THINK THE COMMISSION REVIEWED 36 DIFFERENT ADVERTISEMENTS OR MARKETING MATERIALS IN ONE CASE. THERE WAS ANOTHER CASE IN 2015 WHERE A JUDGE WENT THROUGH 125 DIFFERENT ONES OVER THE COURSE OF LIKE A COUPLE YEARS. SHE DIDN’T DO IT ALL AT ONCE. BUT DIRECT TV, FTC LOST IN PART, AND ONLY IN PART ADMITTEDLY, ON THE BASIS THEY HAD NOT TESTED A SAMPLE, A STATISTICALLY SIGNIFICANT SAMPLE OF DIRECT TV’S 20,000 ITERATIONS. SO, THE AFFECT HERE, ALTHOUGH IT WAS NOT INTENDED, THE AFFECT OF THIS TECHNOLOGY COULD BE TO IMMUNIZE FIRMS FROM LIABILITY FOR DECEPTION. SO WHAT TO DO ABOUT THIS? SO ONE THING IS TO REALIZE THAT THE REASONABLE PERSON UNDER THE CIRCUMSTANCES, WHICH IS ACTUALLY THE LANGUAGE OF THE TEST FOR DECEPTION, IT HAS TO BE A REASONABLE PERSON UNDER THE CIRCUMSTANCES WOULD BE DECEIVED, IS THE ONE PERSON WHO RECEIVED IT. SO, RATHER THAN HAVING TO SHOW, OH, REASONABLE PEOPLE WOULD BE DECEIVED BY THIS, THAT YOU WOULD HAVE TO SHOW THAT THE ACTUAL CUSTOMER WHO TOOK THE ACTION THAT WAS DESIRED BY THE FIRM WAS DECEIVED BY THE MATERIALS. CUSTOMER BEHAVIOR EVIDENCE. SO, ALL THESE PEOPLE OPENING ACCOUNTS AND NONE OF THEM ARE USING THE ACCOUNTS. THAT MIGHT BE SOME INDICATION THAT THEY DIDN’T KNOW THEY HAD OPENED THE ACCOUNTS. LET’S SEE. ANOTHER THING I THINK WE SHOULD DO IS TAKE A BRILLIANT MOVE IN DODD-FRANK, WHICH WAS THE CREATION OF THE ABUSE [ INAUDIBLE ]. I THINK THIS SHOULD QUALIFY FOR UNFAIRNESS, TOO. RATHER THAN REQUIRING THE ENFORCEMENT AGENCY OR THE PRIVATE PLAINTIFF TO PROVE CAUSATION FROM THE PARTICULAR MATERIALS TO THE PARTICULAR CONSUMER, JUST SAY IT IS DECEPTIVE, IT’S BUS ABUSIVE, IT IS UNFAIR TO TAKE ADVANTAGE OF CONSUMER CONFUSION. REGARDLESS OF WHETHER YOU CAUSED THE CONFUSION OR NOT. AND I’M NOT SURE WHY MY SLIDES ARE ALL RUNNING OFF HERE, BUT THE LANGUAGE FROM DODD-FRANK WOULD SUPPORT THAT. OBVIOUSLY THAT’S LIMITED TO THE CONSUMER FINANCE CONTEXT. ONLY THE CFPB CAN ENFORCE IT BUT WE SHOULD — AND STATE AG’S AS WE TALKED ABOUT YESTERDAY — BUT WE SHOULD EXPAND THE USE OF THAT. AND THE AVAILABILITY OF THOSE STANDARDS TO ADDRESS THIS NEW PROBLEM. AND THEN FIRMS WOULD HAVE AN INCENTIVE TO CONTINUE TO OPTIMIZE CONVERSIONS WITHIN THE CONSTRAINT OF NOT CONFUSING CONSUMERS. OKAY. THANKS.>>John Pottow: THANK YOU, LAUREN. [ APPLAUSE ] OKAY. WE’RE GOING TO GO TO ROBNEXT. ROB IS THE SENIOR COUNSEL WITH THE LEADERSHIP CONFERENCE ON CIVIL AND HUMAN RIGHTS AND THE LEADERSHIP CONFERENCE EDUCATION FUND AND HAS THE SINGULAR PLEASURE OF WORKING IN OUR NATION’S CAPITAL AND DEALING WITH THIS. HE WILL UPLIFT US ALL NOW. [ LAUGHTER ]>>Rob Randhava: THANKS, JOHN. I FEEL NAKED BEHIND ME ALL OF A SUDDEN BEING THE ONLY PERSON WITHOUT A POWER POINT. SO, ROB RANDHAVA. WE ARE A COALITION OF 200 NATIONAL ORGANIZATIONS FOUNDED IN 1950. WE’VE BEEN INVOLVED IN EVERY SINGLE MAJOR CIVIL RIGHTS LEGISLATIVE CAMPAIGN SINCE THEN. OUR MEMBERSHIP RANGES FROM — I MEAN, INCLUDES A LOT OF GROUPS THAT WERE INVOLVED IN THOSE LEGISLATIVE FIGHTS FROM THE GET-GO. AND THEN MORE RELEVANTLY FOR TODAY’S DISCUSSION IT ALSO INCLUDES A NUMBER OF CONSUMER ORGANIZATIONS — CENTER FOR RESPONDING LENDING, NATIONAL CONSUMER LAW CENTER AND MANY OTHERS. AND I’VE BEEN THERE SINCE 2001. UNLIKE SOME PEOPLE WHO TALKED ABOUT THEIR FIRST JOB YESTERDAY, THIS IS MY THIRD JOB, THANK YOU WADE HENDERSON. AND I’VE BEEN INVOLVED IN HELPING SHAPE OUR COALITION’S POLICY AND MESSAGING AROUND HOUSING AND LENDING ISSUES SINCE AROUND 2005. IMPECCABLE TIMING I KNOW. JUST IN TIME FOR THE CRISIS. I WANTED TO JUST BUILD ON THE CONTEXT THAT LISA LAID OUT ABOUT THE HISTORIC PATTERNS OF DISCRIMINATION AND TAKE IT FORWARD TO TALK ABOUT WHERE OUR COALITION IS ON ISSUES AROUND FIN TECH. THEN IF I HAVE TIME LEFT I’D LIKE TO TALK ABOUT OUR BROADER COALITION’S PRIORITIES ARE HOUSING AND LENDING ISSUES MOVING FORWARD. LIKE MOST PEOPLE I’M STILL STRUGGLING TO WRAP MY BRAIN AROUND WHAT FINTAC ACTUALLY IS. THE FIELD IS EVOLVING SO FAST IT’S HARD TO FORM CONCRETE OPINIONS. LIKE THE EARLY DAFZ THE INTERNET I WANTED TO THRIVE AND DO WELL BUT I ALSO KNEW THERE WOULD BE A LOT OF BUMPS ALONG THE WAY. WHAT WE’VE SEEN SO FAR IS A MIXED BAG. WITH SOME PRODUCTS THAT CAN BE HELPFUL AND OTHERS THAT ARE THE SAME PREDATORY WINE BEING POURED OUT OF NEW SKINS. FOR EXAMPLE, THERE ARE PRODUCTS THAT LET CONSUMERS ACCESS THEIR OWN WAGES AHEAD OF THEIR PAYDAY. SOME LIKE PAY ACTIVE, A PRODUCT BY WALMART, HAVE PRETTY MODEST FEES AND THEY’RE DIRECTLY TO PAYROLLS AND THEY COST A WHOLE LOT LESS THAN A PAYDAY LOAN. THEN THERE ARE OTHERS. LAUREN TALKED ABOUT SOME OF THE KINDS OF DECEPTIONS THAT GET WRITTEN INTO PRODUCTS. THERE’S ONE LIKE UREN THAT LOOK FLASHY AND NEW BUT POSE THE SAME CONTINUE CONCERNS AS PAYDAY LOANS. THIS USES SOME SYSTEM OF TIPS IN PLACE OF FEES. I WOULD JUST POINT FOLKS TO THE NATIONAL CONSUMER LAW CENTER DID A GREAT REPORT SEVERAL WEEKS AGO ON THE WHOLE RANGE OF FINTEC PRODUCTS AND THE PROS AND CONS. I WOULD DEFINITELY TAKE A LOOK AT THOSE. I WANT TO START WITH A MORE GLOBAL CONCERN. I THINK FOR THE MOST PART THE REGULATORY FRAMEWORK TO PROTECT CONSUMERS AND TO HELP DEFEND ANTI-DISCRIMINATION STATUTES IS STILL THERE BUT IT COMES DOWN WHO IS DOING THE REGULATING. AND BY COMPARISON IN THE YEARS BEFORE THE MORTGAGE CRISIS IN FACT SINCE THE 1990S, REGULATORS UNDER LAWS HAD THE AUTHORITY TO — THE FRAMEWORK IN PLACE TO STOP MORTGAGES THAT WEREN’T IN THE INTEREST OF CONSUMERS. THIS IS SOMETHING THAT LISA AND MIKE CALHOUN AND OTHERS OF US WENT TO THE REGULATORS AND TRIED TO GET THEM TO INVOKE, BUT THEY DIDN’T DO THAT UNTIL IT WAS TOO LATE. SINCE THE CFPB HAS OPENED ITS DOORS I THINK THEY’VE DONE A GOOD JOB OF TRYING TO KEEP UP WITH THE INDUSTRY. BUT THE BIGGEST CONCERN FOR US IS WHO IS IN CHARGE OF THE CFPB IN THE COMING YEARS AND WHAT THEY PLAN TO DO WITH THE LAWS ON THE BOOKS. WHEN IT COMES TO ANTI-DISCRIMINATION LAWS, AS YOU KNOW LAST YEAR MICK MULVANEY ANNOUNCED HE WAS BREAKING UP THE OFFICE OF FAIR LENDING AND MOVING ITS FUNCTIONS AROUND. FOR US THIS WAS A BIG STEP BACK FROM THE COMMITMENT TO FAIR LENDING ENFORCEMENT. AND OUR CONCERNS OVER THAT EXTEND TO FIN TECH. MAYBE EVEN MORE. THAT’S BECAUSE ALL TOO OFTEN CONSUMERS DON’T KNOW THEY FACE DISCRIMINATION. AND IF YOU HAVE REGULATORS WHOSE MISSION IS FAIR LENDING BUT THEY DON’T HAVE THE SUPERVISORY AUTHORITY, THEN DISCRIMINATION GOES UNDISCOVERED. IF THOSE REGULATORS DON’T HAVE ENFORCEMENT AUTHORITY, EVEN IF THE DISCRIMINATION IS DISCOVERED, IT GOES UNAWE DRESSED. AND THAT GETS EVEN MORE COMPLICATED WHEN YOU ARE TALKING ABOUT NEW TECHNOLOGIES THAT ARE HARDER FOR REGULATORS TO UNDERSTAND. MULVANEY TOLD US THAT HIS DECISION WAS ABOUT EFFICIENCY AND RESPONSIVENESS. NOT THAT HE MEETS WITH US A WHOLE LOT FACE-TO-FACE BUT I DID GET A CHANCE TO ASK HIM DIRECTLY AND DIDN’T GET ANY EXPLANATION OF HOW HIS DECISION WOULD ENSURE THE CIVIL RIGHTS LAWS WOULD BE ENFORCED JUST AS VIGOROUSLY MOVING FORWARD. AND THE DIRECTOR HASN’T GIVEN US THE ASSURANCE WE NEED EITHER. SO, THAT’S GOING TO BE AN AIR WE’RE GOING TO CONTINUE PRESSING THE CFPB. BUT I WANT TO TOUCH ON A FEW SPECIFIC CONCERNS. THIS CAME UP A CUP OF TIMES YESTERDAY, THE ISSUE OF SANDBOXS. THERE’S A LOT TO BE SAID ABOUT GIVING COMPANIES THE CHANCE, GIVING THEM THE RIGHT SETTING TO TEST NEW PRODUCTS AND DISCLOSURES. BUT WHAT THE CFPB WANTS TO DO IS SO BROAD IT POSES A MUCH MORE SIGNIFICANT THREAT ON CONSUMER PROTECTION. A TRADE ORGANIZATION COULD APPLY ON BEHALF OF AN ENTIRE INDUSTRY. AND WITHOUT SENSIBLE AND CLEAR TIME CONSTRAINTS EITHER. SO, THERE’S A PLACE FOR NARROWLY TAILORED NO ACTION LETTERS. BUT WITH THESE SANDBOX PROPOSALS WE’RE TALKING ABOUT AN EXCEPTION THAT SWALLOWS NOT JUST ONE RULE BUT A WHOLE LOT IN THE PROCESS. AND WE’VE VOICED OUR CONCERNS TO THE CFPB BUT WE DON’T KNOW THAT WE’RE LIKELY TO PERSUADE THEM. BUT IT’S SO BROAD AND SO BEYOND THE CFPB’S AUTHORITY THAT WE THINK IT’S GOING TO WIND UP FACING LEGAL CHALLENGES AS IT MOVES FORWARD. ANOTHER CONCERN THAT’S ALREADY IN THE MANAGING IS THE OCC TAKING APPLICATIONS FOR WHAT THEY CALL SPECIAL PURPOSE NATIONAL CHARTERS. THIS IS WHERE FIN TECHS CAN OBTAIN THE SAME POWER AS OCC BANKS TO PREEMPT STATE CONSUMER PROTECTION LAWS. THERE’S A LONG HISTORY OF OCC AGGRESSIVELY PREEMPTING STATE LAWS AND THAT HISTORY IS NOT GOOD GOING BACK TO THE SUB-PRIME BUBBLE. THE OCC HAS DOES LITTLE TO REASSURE US THINGS WILL BE DIFFERENT THIS TIME. ON A SIMILAR NOTE, THIRD CONCERN IS WITH AN ONGOING EFFORT IN CONGRESS TO OVERTUSH THE MADDEN V. MIDLAND CASE OUT OF THE SECOND CIRCUIT. THIS WOULD ALLOW NON-BANK LENDERS TO ESSENTIALLY RENT FEDERALLY CHARTERED BANKS IN ORDER TO DO AN END RUN AROUND STATE USERY CAPS. WE HEARD THIS REFERRED TO AS VALID WHEN MADE LEGISLATION OR THE PROTECTING CONSUMERS ACCESS TO CREDIT ACT. THAT NAME SOUNDS PRETTY BENIGN BUT EVERY TIME I HEAR ACCESS TO CREDIT COMING UP MY GUARD — I MEAN, JUST AS A RESULT OF WHAT WE’VE SEEN, THAT TERM WAS THROWN AROUND SO MUCH IN THE YEARS BEFORE THE CRISIS BY PEOPLE WHO WERE FIGHTING REGULATION AND SO MY GUARD ALWAYS GOES UP AND I HOPE IT DOES FOR YOU AS WELL. FINALLY I WANT TO GIVE A LITTLE OVERVIEW OF WHAT OUR COALITION SEES AS PRIORITIES FOR THE NEXT TWO YEARS AND BEYOND. NEEDLESS TO SAY WE’RE LOOKING AT A SENATE AND ADMINISTRATION THAT IS NOT LIKELY TO GIVE US A LOT OF WHAT WE WANT. BUT THERE ARE A LOT OF GOOD IDEAS OUT THERE AND WE’RE WORKING WITH OUR ALLIES IN THE HOUSE AND THE SENATE TO LIFT THEM UP AND SHOW THEY HAVE WIDESPREAD SUPPORT AND HOPEFULLY KEEP BUILDING THE PRESSURE FOR CHANGES WHEN WE CAN GET THEM. FIRST, WE WANT TO ENSURE THAT THE FAIR HOUSING ACT, ECOA, AND OTHER CIVIL RIGHTS ARE FULLY AND FAIRLY ENFORCED. FOR ONE, THIS INCLUDES BILLS BY MAXINE WATERS TO UNDO SOME OF THE RECENT CHANGES MADE BY THE CFPB AND BY HUD AROUND THE FAIR HOUSING ACT AND THEIR FAIR LENDING OFFICE. IT ALSO INCLUDES A BILL BY AL GREEN TO PROVIDE A LOT MORE MONEY FOR FAIR HOUSING ACT TESTING AND ENFORCEMENT. SECOND, AFFORDABLE HOUSING IS SO CRUCIAL TO OVERALL FINANCIAL HEALTH THAT WE HAVE TO KEEP MAKING THE CASE FOR MORE OF IT. WE’VE SPENT A LOT OF TIME IN THE PAST FEW MONTHS WORKING WITH SENATOR WARREN ON A BILL TO DRASTICALLY INCREASE HOUSING SUPPLY AND JUST TAKE SOME STEPS THROUGH DOWN PAYMENT ASSISTANCE AND CRA IMPROVEMENTS TO HELP ADDRESS SOME OF THE LASTING DAMAGE DONE BY RED LINING. IT’S NOT A PERFECT BILL. THERE ARE SOME GREAT IDEAS IN THERE, SOME THAT NEED WORK, BUT I THINK — I REALLY HOPE IT’S GOING TO DO A LOT TO PUT AFFORDABLE HOUSING ON THE NATIONAL SPOTLIGHT OVER THE NEXT YEAR AND A HALF. AND I’M GLAD THAT PAT MENTIONED GSEs BECAUSE THERE’S A LOT AT STAKE FOR AFFORDABLE HOUSING POLICY IN THAT DEBATE. AND RUNNING FROM THE AFFORDABLE HOUSING GOALS TO THE NATIONAL HOUSING TRUST FUND AND THERE ARE HEARINGS NEXT TUESDAY AND WEDNESDAY IN SENATE BANKING, AS A MATTER OF FACT, ON PROPOSALS THAT WOULD POSE A REAL THREAT TO THOSE. THIRD, WE WANT TO HELP PROMOTE POLICIES THAT WILL INCREASE INCLUSIVE AND RESPONSIBLE FINANCIAL PRODUCTS IN THIS CHANGING INDUSTRY. AMONG OTHER THINGS THAT INCLUDES GETTING RID OF FORCED ARBITRATION AND PROMOTING CREDIT REPORTING REFORMS. STUDENT LENDING IS ANOTHER AREA AND I’M LOOKING FORWARD TO WADE’S PANEL ON THAT THIS AFTERNOON. THEN FINALLY WE’RE GOING BE SPENDING A LOT OF TIME WITH MAXINE WATER’S COMMITTEE IN ITS OVERSIGHT ROLE. NOT JUST ON WHAT THIS ADMINISTRATION IS DOING WRONG. WE COULD SPEND A LOT OF TIME ON THAT BUT ALSO THERE’S A NEW DIVERSITY AND INCLUSION SUB-COMMITTEE HEADED BY JOYCE BEATTY WHERE I THINK WE CAN DO A LOT OF WORK HELPING TO PROMOTE WHAT THE INDUSTRY CAN DO TO GET IT RIGHT. I’LL STOP THERE. THANK YOU.>>John Pottow: THANKS VERY MUCH. [ APPLAUSE ] I’M GOING TO EXERCISE SOME CHAIR’S DISCRETION HERE AND I’D LIKE TO JUST SHARE. I WANT TO LEAVE SOME TIME FOR DISCUSSION AND THE PANEL’S INVOLVEMENT. BUT I’LL GIVE MYSELF A COUPLE OF MINUTES TO TALK ABOUT SOMETHING THAT I AM INTERESTED IN AND EXPLOIT MY CAPTIVE AUDIENCE. SO, I’M TRYING TO FIGURE OUT, I’M NEW TO THE GAME HERE ABOUT WHAT TO DO ABOUT THE RENT TO OWN MARKET. WHICH I FIND ONE OF THE MOST TROUBLING AREAS OF DEALING WITH WHAT LISA CALLED THE FRINGED LENDING SECTOR. I’M TROUBLED BY IT BOTH — WHAT I’LL SAY IN LAW PROFESSOR TALK IS NORM ACTIVELY AND ALSO DOCTRINELY. I’M NORMALLY TROUBLED BY IT BECAUSE SOME OF MY CYNICISM OF CONSUMER REGULATION STUDY MAKES ME SUSPECT OF IT BECAUSE I THINK IT’S PREDATORY BOTTOM FEEDING. ON THE OTHER HAND, I’M MORE ATTRACTED TO IT THAN I AM WITH STRAIGHT UTSDZ TET ERD PAYDAY LENDING AND WAGE ADVANCE THINGS BECAUSE AT LEAST IT’S BOUNDED. YOU ARE BHOUNDED BY WHATEVER THE TV OR FRIDGE IS IN QUESTION. YOU ARE GOING TO PAY FIVE TIMES FOR THE TV OR FRIDGE BUT IT IS A LESSER EVIL IN MY MIND. SO MUCH SO IT MIGHT WIN ME OVER TO THE ACCESS TO MARK RECEIPT RHETORIC THAT I KNOW IS THROWN AROUND EASILY AND CHEAPLY AND EXPLOITIVELY BY LOBBYIST WHO USE IT. IT IS A BIG INDUSTRY. IT’S ABOUT 8 BILLION, ACCORDING TO WHAT I FOUND. IT IS DOCTRINALLY CHALLENGING BECAUSE IT’S REALLY HYBRIDY BETWEEN LEASES AND PURCHASES TO GET TO THE COMMERCIAL LAW AREA. IT IS RENT. BUT IT’S ALSO RENT TO OWN. SOMETHING WE WRESTLE WITH IN THE FIELD OF COMMERCIAL LAW IS THE DISTINCTION BETWEEN A REAL LEASE AND PURCHASE. THERE’S DIFFERENT REGULATORY REGULATIONS. AND THIS KIND OF SITS IN THE MIDDLE. ONE OF THE THINGS THAT WE FALL BACK ON IN OUR AREA OF LAW WHEN WE TRY TO CUT THROUGH THE THICKET AND FIGURE OUT WHAT THIS REALLY IS, A LEASE OR PURPOSE, WE LOOK AT ECONOMIC RISK AND REALITY. ON ONE HAND, THIS IS WHY IT’S SO DIFFICULT, FACIALLY THE ECONOMIC RISK IS ON THE LESSOR, RIGHT. THE RENT A CENTER CAN GET IT BACK SO THEY HAVE THE RESIDUAL INTEREST AND SAY IT IS A REAL LEASE. IF YOU START TO DRILL DOWN ON THE CONTRACTAL PROVISIONS THERE’S A LOT OF RISKS. LIKE IF IT BURNS OUT, GUESS WHO THAT GETS PASSED ON TO. AND I WON’T EVEN GET INTO WHAT THE FEES ARE. THERE WAS A GREAT STUDY BY THE BUREAU OF ECONOMICS IN TWO THOUSAND, AND IT’S ALREADY NOW OUTDATED BUT IT HAD GOOD INFORMATION AND IT FOUND THERE WAS A HIGH SATISFACTION RATE WITH IT. BUT THEN THERE WAS A FOLLOW-UP STUDY IN 2003 THAT EXPLOREED THE SATISFACTION MORE. AND ACTUALLY SUGGESTED THAT THE CONSUMERS OF THIS MARKET ARE MORE STRATIFIED AND MIGHT BE SORTING INTO TWO SAT GOERS AND IT’S GOING BE IN MY OPINION WORR WORRISOME. WHEN IT IS A RENT TO OWN SITUATION, SOME PEOPLE ACTUALLY JUST DO RENT AND THEY TREAT IT AS A RENTAL OF CHATTELS THEN THEY GO AWAY. AND OTHER PEOPLE TREAT IT AS A FINANCING PLAN OF HOW THEY’RE GOING TO PURCHASE SOMETHING. GUESS WHO IS HAPPY WITH IT AND GUESS WHO IS UNHAPPY WITH IT? THE PEOPLE HAPPY ARE THE PEOPLE WHO ARE MOVING SHORT-TERM, RENT FOR A BIT AND MOVE ON. THE PEOPLE UNHAPPY ARE THE PEOPLE WHO GO INTO THE STORE, ARE COMPLETELY DECEIVED BY THE DEOFK THAT’S FOR RENT A CENTER BECAUSE THEY THINK THEY’RE BUYING THE FURNITURE AT THE FURNITURE STORE AND NOT REALIZING THEY’RE GOING TO A THIRD PARTY FINANCIER THEN REALIZE THEY’RE PAYING THREE, FOUR, FIVE TIMES FOR IT. I’M ALSO INDIRECTLY SUPPORTED IN MY ANXIETY ABOUT THIS BY TWO HELPFUL DATA POINTS. ONE IS THAT THE BUSINESS MODEL SEEMS LARGELY PREMISED UPON MISS CALCULATION AND DECEPTION OF FEES. SO, THERE’S HUGE BALLOON PAYMENTS INVOLVED IN WHEN YOU MAKE YOUR OPTION TO PURCHASE AT THE END. ANY TIME YOU RELY ON BALLOON PAYMENTS THAT SHOULD START TO BE YOUR YELLOW FLAG AREA. SECONDLY, THERE’S MORE FEES THAN I CAN SHAKE A STICK AT THAT MAKES A CREDIT CARD AGREEMENT SEEM STRAIGHT FORWARD AND TERSE. THOSE ARE NOT JUST THE PRICE DISCLOSURE BUT MY FAVORITE IS THERE’S A PURCHASE FEE. ONCE YOU HAVE MADE THE PAYMENTS, A STANDARD TERM IS IF YOU WANT TO BUY THE THING AT THE END YOU GOT TO PAY A FEE. I GUESS THAT’S TO PROCESS THE BILL OF SELL FOR THE CHATTELS. I DON’T KNOW. SO WHAT DO WE DO — BY THE WAY IT WILL MAKE YOU MORE ANXIOUS. IF YOU START TO DRILL DOWN ON WHO ARE THE PURCHASES AND THE RENTERS THREE GUESSS ON WHICH WAY THE DEMOGRAPHICS GO. ANY REGRESSIVE CONCERNS YOU HAVE ARE VICINITY KATEED BY THIS. THE THEME OF OUR CONFERENCE IS UNCERTAINTY. WHAT DO YOU DO IN AGE OF UNCERTAINTY. I ASKED THE QUESTION YESTERDAY AND I JUST — I DON’T KNOW IF IT’S — I’M GETTING OLDER SO MY BRAIN IS GETTING MORE TIRED, BUT I LIKE THE OPEN ENDED ABUSIVENESS STANDARD TO SCARE PEOPLE BUT I ALSO LIKE THE APPEAL OF GOOD REGULATIONS. LET’S HAVE MINIMUM CAPITAL REQUIREMENTS FOR BANKS. WHAT WE’VE DONE FOR REGULATION OF THIS AT THE STATE LEVEL IS STATES THAT HAVE REG LATE HAVE GONE FOR REALLY HARD NUMBERS. MICHIGAN HAS A 45 PERCENT RULE. IF YOU HAVE PAID OFF THE RENTAL PAYMENTS YOU CAN MAKE THE FULL PURCHASE WITH A DEDUCTION 45%. CALIFORNIA HAS A 2 AND A QUARTER RULE. SO, THE ACTUAL NOMINAL ADDITION OF THE RENT PAYMENTS CAN’T BE MORE THAN 2.25 TIMES THE CASH PRICE OF THE ACTUAL GOOD. WHICH IS STILL 125% MARK-UP. WE’LL CALL THAT A GENEROUS USERY REGULATION. NEW YORK HAS STATUTORILY A MATRIX WHERE IT’S LIKE IT DEPENDS ON THE AGE OF THE PRODUCT, THE CONDITION OF THE PRODUCT AND THAT’S WHAT OUR MAXIMUM RATES ARE GOING TO BE. FINELY REGULATED ALL WITH HARD NUMBERS. THEY HAVE LIKE SHUMRY BOX THINGS THAT SAY THIS IS YOUR TOTAL PURCHASE PRICE. OF COURSE, THE MORE EFFECTIVE THE DISCLOSURE IS, AND THE MORE SALIENT THE DISCLOSURE IS THE MORE YOU HAVE TO START STUFFING IN FEES WHICH IS WHY THE FEES MAKE ME ANXIOUS. THE FEE DEPENDENCY OF THE MODEL MAKES ME SUSPECT OF ITS COME PREHENCEBILITY TO CONSUMERS. THE SECOND THING THAT GIVES ME A FLAG THAT I AM IN TO THE RIGHT AREA THAT WE SHOULD BE REGULATING IS WHEN THE CFPB WENT AFTER RENT ACENTER. RENT ACENTER FOUGHT LIKE HUNGRY DOGS THE SUGGESTION THE WERE SUGGEST TO REGULATION FOR THIS BEHAVIOR. WE’RE NOT A FINANCIAL SERVICE WE’RE JUST MERCHANTS. WE JUST SELL STUFF. AND THERE’S A LITTLE BIT OF FINANCING ON THE BACK END. THE CFPB REJECTED THAT POSITION. RENT-A-CENTER IS BASED IN PLANO TEXAS. LET ME TELL YOU HOW TEXAS REGULATES THIS. TEXAS HAS CRIMINAL LAWS FOR A WONDERFUL CRIME WHICH CAN BE A FELONY CALLED THEFT OF SERVICE. AND THE IDEA OF THE LAW WAS FOR PEOPLE WHO SKIP OUT ON THEIR HOTEL ROOMS. IT’S NOT THEFT OF CHATTELS IT’S THEFT OF SERVICE. WELL IN PLACES LIKE MCCLELLAN COUNTY WHERE WACO IS IN CENTRAL TEXAS, 98 PERCENT OF THE PROSECUTIONS OF THEFT OF SERVICE AT THE LOCAL OFFICE FOR PEOPLE WHO DON’T TURN BACK THE CHATTEL FOR THEIR RENT TO OWN CONTRACTS. THEY’RE BEING CRIMINALLY PROSECUTED AS A COLLECTION TECHNIQUE TO LIGHT A FIRE UNDER THEM TO THINK ABOUT WHETHER THEY WANT TO PAY FOR THEIR NO LONGER USED CHATTEL. THE TEXASTYTRY BUN DID A STUDY AND THEY FOUND OUT THEY’VE GONE AFTER MOM AND DAD CONSUMERS FOR TVs AND STUFF LIKE THAT. AND THEY ADMIT, IF THEY PAY WE DROP THE PROSECUTION. WHICH IS PRETTY MUCH IN MY BANKRUPTCY WORLD A CIVIL ATTEMPT TO COLLECT A JUDGEMENT. ANYWAY. I’LL STOP THERE. I WANT TO TALK ABOUT 30 SECONDS THEN WE’LL OPEN IT FOR DISCUSSION. WE DIDN’T GET A CHANCE TO TALK ABOUT SMALL BUSINESS. BUT THE PANEL SAID WE MIGHT LOOK AT SMALL BUSINESS MARKET. I DO WORK FOR NOW FOR THE FEDERAL GOVERNMENT INVOLVED IN UNITED NATIONS WORK. WE’LL SEE HOW LONG THAT LASTS. AND THE UNITED NATIONS TRIENAL COMMISSION IS TRYING TO WORK ON INSOLVENCY STANDARDS FOR MICRO-, SMALL, MEDIUM ENTERPRISES WHICH IS A BIG THING. MICRO-ECONOMIES. IT IS ONE OF THE HARDEST THINGS FOR TO US DO BECAUSE WE CAN DEAL WITH BIG CROSS-BORDER CHAPTER 11 TYPE THINGS. BUT WHEN YOU GET DOWN TO REGULATE SMALL BUSINESS WHAT WE REALIZED IN THE SOLVENCY IS IT BLENDS SO QUICKLY INTO THE PERSONAL IT’S HARD TO TAKE A CONCEPTION OF DISCRETE BUSINESS ENTITIES LIKE LIMITED LIABILITY. THEY’RE SOLE PROPRIETORS AND EVEN IF THEY HAVE SOME SORT OF ORGANIZATION THEY’RE ALL INDEPENDENTLY GUARANTEEING THE DEBT. SO, WHEN YOU START TO TALK ABOUT SMALL BUSINESSES YOU REALLY ARE TALKING ABOUT INDIVIDUALS AND IT IS A VERY DIFFICULT BORDER TO DO. THAT’S A LITTLE BIT OF DESPAIR. THAT’S ALL I’M GOING TO SAY. I’D LIKE TO ASK A COUPLE QUESTIONS THEN OPEN FOR GROUP DISCUSSIONS. AND YOU GUY CANS SAY I DON’T HAVE TIME TO TALK ABOUT THAT. LET’S START WITH PAT. PAT, I WANT TO KNOW, FIRST OF ALL, I’LL GIVE YOU A SOFTBALL. YOU CAN SAY GOODNESS SHOULDN’T THE MARKET DISCIPLINE WHETHER BORROWERS HAVE THE ABILITY TO PAY. THEN I’M GOING ASK A MORE SERIOUS QUESTION WHICH IS WHAT ABOUT THE ARGUMENT OF THE GSC PART. IS THAT LAW ECONOMICS VOODOO OR IS THERE SOME STUFF THERE AND YOU ARE WORRIED ABOUT THE SUBSTANTIVE. WHAT DO YOU THINK?>>Patricia McCoy: TO ANSWER THE FIRST QUESTION, NO. I THINK EXPERIENCE PROOF THAT LEAVING THE MARKETS TO UNDERWRITE ABILITY TO REPAY DIDN’T WORK. AND INFLICTED UNTOLD HARM ON PEOPLE IN THE LOWER HALF OF THE INCOME SPECTRUM. WITH RESPECT TO THE SUBSIDY. I HAVE TO SAY, I’VE REALLY BEEN ON THE FENCE ON THIS ONE. I WENT INTO MY TIME AT THE CFPB BEING A PRETTY ARDENT FANNIE/FREDDIE SUPPORTER. AND THEN IN MY TOWN THERE FOUND IN PERSONAL INTERACTIONS WITH THE GSEs FOUND THEM THROWING THEIR POLITICAL WEIGHT AROUND IN REALLY SHAMELESS WAYS THAT WERE ANTI-CONSUMER. FOR EXAMPLE, IN THE FIGHTS OVER TRYING TO WATER DOWN FORECLOSURE PROTECTIONS IN STATE LAW FOR BORROWERS. I THINK WE NEED TO THINK VERY CAREFULLY WHEN WE’RE SUPPORTING FANNIE AND FREDDIE WHAT ARE THE STANDARDS TO WHICH THEY’RE HELD, WHAT ARE THE STANDARDS TO WHICH THEY’RE HELD WITH RESPECT TO THEIR POLITICAL LOBBYING, WHICH CONTINUES IN CONSERVATORSHIP. IT WAS NOT SUPPOSED TO, BUT IT DOES CONTINUE. THE GSE PATCH DOES OPERATE AS AN IMPLICIT SUBSIDY BECAUSE IT IS MORE LIBERAL THAN THE REGULAR QM EXCEPTION AND IT’S ALSO MORE LIBERAL THAN THE TREATMENT OF LOANS SOLD TO WALL STREET. THE PREMISE FOR THAT IS THAT CSE UNDERWRITING IS REGULATED. IT IS MORE CAREFUL THAN LOANS SOLD TO WALL STREET. I THINK CERTAINLY BASED ON PRECRISIS EVENTS THERE ARE REASONS TO TAKE THAT POSITION. BUT WHEN I WAS AT THE CFPB MY ARGUMENT WAS WE SHOULD JUST HAVE ONE DEFINITION OF QM AND NOT SPLINTER IT AMONG THE GSEs, AMONG LOANS HELD IN PORTFOLIO VERSUS WALL STREET WHICH IS THE MESS WE HAVE TODAY.>>John Pottow: THANK YOU. I WOULD LIKE TO APOLOGIZE BECAUSE I DON’T THINK MY MICROPHONE OR PROBABLY USER ERROR. FOR THOSE ONLINE I APOLOGIZE IF MY COMMENTS AREN’T BEING PICKED UP. MAYBE THEY’LL BE TRANS KRIEBED IN THE MINUTES. LISA, I WANTED TO ASK YOU A QUESTION, BY THE WAY I DIDN’T EVEN UNDERSTAND SOME OF THE, I MEAN, I GOT THE STRUCTURAL HISTORY OF RED LINEING AND I GET THE JAPANESE INTERNMENT. I DIDN’T EVEN KNOW THERE WAS STRUCTURED STUFF INTO THE SOCIAL SECURITY ACT SO THAT SHOWS HOW NAIVE I AM ABOUT THAT. IS IT TOO BORING FOR TO YOU EXPLAIN WHAT THAT IS? WHAT IS THE STRUCTURAL STUFF? CAN IT BE EXPLAINED RELATIVELY EASY TO THE GROUP?>>Lisa Rice: SO IN THE SOCIAL SECURITY ACT WAS FIRST IMPLEMENTED THERE WERE CERTAIN CATEGORIES OF LABOR THAT WERE EXCLUDED. AND THOSE CATEGORIES OF LABOR CORRELATED VERY HIGHLY WITH COMMUNITIES OF COLOR. SO, YOU WILL FIND THINGS THROUGHOUT THE LATELY OF LAWS THAT I’VE LISTED AND THOSE WERE JUST A HANDFUL OF THEM. THE POINT WAS THAT THE DISCRIMINATION EMBEDDED INTO OUR MARKETPLACE WAS SO SYSTEMIC IT REACHED SO DEEPLY, SO FAR BACK, SO BROAD AND WIDE, THAT THE ARGUMENT TODAY THAT WE’LL JUST IMPLEMENT RACE-NEUTRAL POLICIES AND EVERYBODY WILL BE TREATED FAIRLY, JUST DOESN’T HOLD WATER. AND IT IS ONE OF THE REASONS WHY WE SO FERVENTLY NEED THE DESPAIRIT IMPACT DOCTRINE BOTH UNDER THE FEDERAL FAIR HOUSING ACT AND UNDER THE EQUAL CREDIT OPPORTUNITY ACT AMONG OTHER LAWS — EMPLOYMENT, ET CETERA — SO THAT WE CAN TEAR DOWN THESE STRUCTURAL BARRIERS THAT ARE KEEPING PEOPLE FROM OPPORTUNITIES. WE CAN CHANGE SYSTEMS TO MAKE THEM FAIR FOR EVERYONE, AND HOPEFULLY IN THE PROCESS TRY TO ELIMINATE SOME OF THE DESPAIRIT HARM. THE HARM THAT IS CAUSED BY THESE INEQUITIES, THESE INNATE INEQUITYS THAT WE’VE BEEN TALKING ABOUT >>John Pottow: THANK YOU. AND THAT ACTUALLY TIES IN WITH THE RENT TO OWN STUFF TOO BECAUSE ONE OF THE HOOKS THEY GIVE FOR PEOPLE IS TO SAY DO YOU WANT TO BUY OR DO A RENT TO OWN CONTRACT. THEY SAY THE GREAT THING ABOUT A RENT TO OWN CONTRACT IS YOU START TO ESTABLISH A CREDIT HISTORY. SO, YOU’LL GET MORE MONTHLY PAYMENTS WHICH WILL HELP YOU OUT. SO, THERE’S QUITE EFFECTIVE EXPLOITATION. LAUREN, I’M OVERWHELM PED BECAUSE THE ROBOTS ARE COMING TO TAKE OVER. AND I’M SCARED. [ LAUGHTER ] I DO WANT TO SAY THAT ONE OF THE MAJOR MODELS TO DISCLOSURE FIXES EVERYTHING. ONE OF THE MAJOR PREMISES OF THAT MODEL IS THAT, HEY, IF WE JUST GET ALL THE INFORMATION OUT THERE, EVEN IF NOT EVERYBODY READS IT, ALL WE NEED IS, YOU KNOW, RALPH NADER READING IT OR SOMEONE IS GOING TO READ IT AND THEN THAT INFORMATION WILL DISSEMINATE AND THAT WILL DISCIPLINE. BECAUSE AS LONG AS SOMEONE READS IT WHO KNOWS WHAT’S GOING ON THE OTHER PEOPLE CAN FREE RIDE OFF THAT OPERATIONAL CROSS SUBSIDY. HOW DOES THAT WORK IN AN INDIVIDUALIZED ENVIRONMENT >>Lauren Willis: IT DOESN’T EVEN WORK WELL IN THE MOUSE ENVIRONMENT. EVIDENCE THAT PEOPLE DON’T ACTUALLY READ THEM LIKE INCREDIBLY SMALL NUMBER. NOT NUFD TO TAME THE MARKET. IT’S EVEN BETTER WHEN YOU CAN MAKE SURE THOSE YOU THINK MIGHT TAME THE MARKET LIKE PERHAPS US DON’T GET THAT TERM >>John Pottow: YOU HIDE THE STUFF THAT MIGHT RAISE SUSPICIOUS >>Lauren Willis: ALTHOUGH I MUST ADMIT I RECENTLY HIT A BUTTON THAT I THOUGHT MEANT I WAS WATCHING A MOVIE THAT WAS COVERED BY THE AMAZON PRIME MEMBERSHIP THAT I HAVE AND IT WASN’T. I HAD SIGNED UP FOR AN ENTIRELY NEW FORM OF AMAZON PRIME. I GUESS THERE ARE MULTIPLE KINDS. I HAD NO IDEA. I WAS DOING THIS, LIKE, IN THE DARK TRYING TO NOT, YOU KNOW, DOING IT QUICKLY BEFORE MY KIDS WOKE UP. SO, PERHAPS THERE WAS SOME SENSING GOING ON THERE. BUT, YOU KNOW, IT’S NOT INTENTIONAL, I WOULD SAY. PERHAPS THERE’S RECKLESS INDIFFERENCE. BUT I THINK WE NEED TO SORT OF MOVE BEYOND WORRYING ABOUT THEY’RE TRYING TO GET US TO JUST, LIKE, LET’S — HOW SHOULD WE RUN THIS SO IT’S FAIR FOR EVERYBODY RIGHT? AND I THINK THERE’S A LITTLE BIT OF A TENDENCY TO RUSH FOR TECHNOLOGICAL FIXES. BUT THE GOVERNMENT IS NOT GOING TO BE AS GOOD AT FIGURING OUT THOSE TECHNOLOGICAL FIXES AND STAYING AHEAD OF THE CURVE. SO, THAT’S WHY I THINK RATHER THAN SORT OF ALL THESE SORT OF SPECIFIC KINDS OF RULES WHERE YOU CAN’T, YOU KNOW, HAVE THIS PHRASE HERE ON THE PAGE THAT INTEND WE NEED TO DO THINGS LIKE WORK WITH THE ABUSIVENESS RULE. OR STANDARD. AND CERTAINLY THERE COULD BE THINGS LIKE, WELL, LET’S JUST IDENTIFY A DARK PATTERN AND YOU CAN’T DO IT ANYMORE. ALSO I THINK THERE COULD BE A LOT OF VALUE TO STANDARDIZATION IN THE WAY IN WHICH INFORMATION IS PRESENTED AND CERTAIN KIND OF BUTTONS. BECAUSE, YOU KNOW, YOU THINK YOU ARE DOING YES, YES, YES, BUT TURNS OUT OR NO, NO, NO, BUT TURNS OUT ONE OF THOSE ACTUALLY PURCHASED THE EXTRA LEG ROOM ON — OR THE TRAVEL INSURANCE OR WHATEVER. AND I KNOW WITH SOME OF THESE KIOSKSS THERE A BUNCH OF ISSUES WITH ELDERLY PEOPLE ENDING UP WITH THINGS THEY DIDN’T INTEND TO END UP WITH AT THE AIRPORT. SO, WE COULD HAVE SOME PER SE RULES AND SOME STANDARDATION THAT WOULD CERTAINLY HELP. BUT, YOU KNOW, THE MACHINES ARE PRETTY CREATIVE. AND, YOU KNOW, OBVIOUSLY WE’RE NOT THERE YET. THERE STILL IS ACTUALLY A LOT OF INTENT EVIDENCE THAT YOU CAN FIND. PEOPLE INTERNALLY AT SOME OF THESE COMPANIES WILL BRING UP, WAIT A SECOND, THIS IS FOOLING PEOPLE THEN YOU’LL FIND A PAPER TRAIL. BUT PEOPLE WILL CERTAINLY LEARN TO BE QUIET ABOUT IT AT SOME POINT >>John Pottow: GOD BLESS EMAIL. THERE’S ALWAYS SOME SORT OF PAPER TRAG >>Lauren Willis: NOT ANYMORE. PEOPLE ARE ANOTHER USING EMAIL SO MUCH >>John Pottow: ROB, BACK TO YOUR BROADER POINT WHICH I THINK IS ONE WORTH THINKING ABOUT, WHICH IS THAT THE IDENTITY OF THE REGULATORS CAN MATTER AS MUCH, IF NOT MORE, THAN THE CONTENT OF THE REGULATION. FOR A GROUP THAT HAS A MISSION LIKE YOURS, DOES THAT MEAN YOU SHOULD START GETTING INVOLVED IN PERSONNEL MATTERS? OR SHOULD YOU JUST STICK TO THE CONTENT. OR DO YOU DO THAT ALREADY?>>Rob Randhava: WE DO WEIGH IN ON WHO IS BEING NOMINATED TO THESE AGENCIES. OF COURSE, OUR INTENTION IS SPLIT A LITTLE BIT BETWEEN WHO IS REGULATING AND THEN ALSO MUCH MORE CRITICAL IN A LOT OF WAYS, WHO IS DECIDING THE CASES. I MEAN, THAT IS A HUGE PART OF OUR AGENDA AND HUGE PART OF WHERE OUR TIME GOES. AND YOU KNOW WHAT SHE DOES, I MEAN, SHE HAS A FIVE YEAR TERM, THERE ARE THINGS THAT SHE CAN DO THAT WE DON’T LIKE, BUT WHAT SOME OF THE JUDICIAL NOMS THAT ARE GETTING APPOINTED FOR LIFETIME POSITIONS, THAT DAMAGE IS GOING TO GO FOR DECADES AND FOR, YOU KNOW, WHEN THEY MAKE THE WRONG DECISIONS.>>John Pottow: WELL THIS IS THE CHEERY PANEL. SO, I’M GOING TO ASK IF THERE’S PEOPLE WHO HAVE QUESTIONS. WE HAVE MICROPHONES GOING AROUND IF PEOPLE HAVE QUESTIONS TO ANYONE ON THE PANEL >>AUDIENCE MEMBER: THANK YOU. IT IS A GREAT PAM. PANEL. THIS IS A DECISION FOR LISA RICE. I KNOW THAT NAFA SETTLED A LAWSUIT WITH FACEBOOK REGARDING ITS ADS. COULD YOU TALK A LITTLE BIT ABOUT THAT AND GIVE US A SENSE WHAT THAT WAS ABOUT?>>Lisa Rice: THANKS SO MUCH FOR RAISING THAT QUESTION, WADE. IT’S ACTUALLY A SCARY PROPOSITION FOR ME AS THE HEAD OF THE CIVIL RIGHTS ORGANIZATION WHEN I LOOK AT MY ORGANIZATIONAL CHART I AM USUALLY LOOKING AT FILLING POSITIONS LIKE INVESTIGATORS OR COUNSEL OR PUBLIC POLICY ANALYSTS OR RESEARCHERS. NEVER DID I THINK I WOULD HAVE TO BE TRYING TO FILL POSITIONS FOR TECH ANALYSTS AND ALGORITHMIC SPECIALISTS AND THINGS LIKE THAT. BUT IT’S WHAT THE WORLD IS COMING TO AND WHAT WE HAVE TO DO. AND THIS CASE AGAINST FACEBOOK INVOLVED A SITUATION WHERE FACEBOOK ENGAGED IN SEVERAL ACTIVITIES. ONE IS THEY ACTUALLY DESIGNED THEIR ADVERTISING PLATFORM WHERE ADVERTISERS FOR HOUSING AND CREDIT AND EMPLOYMENT SERVICES WERE UTILIZING THEIR PLATFORM. THE PLATFORMS WAS DESIGNED IN A WAY THAT NOT ONLY ENCOURAGED PEOPLE TO DISCRIMINATE BUT HELPED TO FACILITATE THAT DISCRIMINATION AND THE DISCRIMINATION WAS BUILT INTO THE DESIGN. FOR EXAMPLE, YOU COULD EXCLUDE AUDIENCES FROM SEEING YOUR ADS, AND YOU COULD INCLUDE TO HELP AMPLIFY CERTAIN AUDIENCES YOU WANT TO SEE YOUR ADS. WHEN YOU GO TO FACEBOOK’S WEBSITE AND YOU CLICK ON “EXCLUDE,” THERE ARE MENUS THAT DROP DOWN. THESE ARE PRE-POPULATED LISTS UNDER MULTI-CULTURAL OR ETHNIC AFFINITIES BOXES DROP DOWN. AFRICAN-AMERICAN, NATIVE AMERICAN, ASIAN-AMERICAN, HISPANIC. YOU CAN EXCLUDE ALL OF THOSE AUDIENCES. THERE’S NO BOX FOR WHITE AUDIENCES. SO, YOU CAN NEVER EXCLUDE WHITE AUDIENCES. SAME THING FOR THE INCLUSION CATEGORIES. WHICH MEANS THAT WHITE AUDIENCES ARE THE DEFAULT. SO, THAT WAS BUILT INTO THE SYSTEM. BUT THE OTHER THING IS THEY HAVE ALGORITHMIC FORMULAS AS LAUREN WAS TALKING ABOUT THAT OPTIMIZE WHO GETS TO SEE WHAT TYPE OF AD. AND AS, YOU KNOW, TO THE POINT THAT WE WERE MAKING EARLIER ABOUT THE DISCRIMINATION THAT IS SORT OF EMBEDDED INTO OUR SYSTEMS, JUST LIKE IF YOU ARE FINDING THAT OPTIMIZING FOR DECEPTION IS MORE PROFIT BL, YOU CAN OPTIMIZE FOR DISCRIMINATION IF IT PROVES TO BE MORE PROFITABLE. SO, THOSE ARE THINGS WE ARE GOING TO.TO WORK WITH FACEBOOK ABOUT. I HAVE TO SAY, THOUGH THE SETTLEMENT IS HISTORIC, WE DIDN’T THINK THAT WE WOULD EVER GET TO A SETTLEMENT. WE THOUGHT WE WERE GOING TO BE LITIGATING THIS CASE FOR A LONG TIME. BUT OUR FRIENDS IN THE CIVIL RIGHTS COMMUNITY REALLY GOT BEHIND THIS CASE AND PUSHED IT. OUR FRIENDS AT LEADERSHIP CONFERENCE AND LDF AND NAACP, ET CETERA, AND PUSHED FACEBOOK TO SETTLE THIS ISSUE BECAUSE IT IS IMPACTING SO MANY AUDIENCES AS LAUREN EXPLAINED. IT IS SO CRITICALLY IMPORTANT. BUT THERE WILL BE DESPAIRIT IMPACT ISSUES RAISED AS WE GO FORWARD. FACEBOOK MADE EIGHT BIG CHANGES NOT ONLY TO THEIR PLATFORM AND THEIR SYSTEMS BUT TO THEIR POLICIES. BUT IT IS A FIRST STEP, REALLY. THERE’S MORE WORK TO BE DONE. AND, YOU KNOW, I’M GOING TO BE RELYING MORE ON PEOPLE LIKE LAUREN TO HELP US WALK THROUGH THESE KINDS OF ISSUES BECAUSE THEY’RE HIGHLY TECHNICAL. THEY’RE HIGHLY COMPLICATED. AND, I MEAN, IF YOU THINK ABOUT IT, THESE ARE PROPRIETARY SYSTEMS, RIGHT, THAT THESE COMPANIES DON’T WANT TO SEE SUNLIGHT. THEY DON’T WANT TO BRING SUNLIGHT TO. SO, WE NEED EXPERTS WORKING IN THIS SPACE TO HELP US TO GET BEHIND WHAT IS REALLY HAPPENING. IS THEY THOUGHT THEY HAD IMMUNITY UNDER THE COMMUNICATIONS DECENCY ACT AND ALL INTERNET PROVIDERS TO ROHIT’S POINT EARLIER, WE DO NEED TO DO WORK TO BRING OUR CIVIL RIGHTS LAWS UP TO DATE. THE FAIR HOUSING LAW WAS PASSED SEVEN DAYS AFTER DR. KING’S ASSASSINATION IN 1968. SO, IT DID NOT ANTICIPATE THESE NEW PLATFORMS, RIGHT, AND THESE NEW SPACES THAT WE’RE DEALING IN. THE CIVIL RIGHTS LAWS DID NOT ANTICIPATE THAT THE ROBOTS WERE COMING TO GET US. THEY REALLY ARE LAUREN. [ LAUGHTER ] AND SO WE DO NEED TO THINK ABOUT THIS AS WE MOVE FORWARD. BUT I WILL ALSO SAY THAT THE FAIR HOUSING ACT HAS BEEN INTERPRETED VERY BROADLY AND THE SUPREME COURT HAS SAID THAT THE FAIR HOUSING ACT SHOULD BE INTERPRETED AS BROADLY AS POSSIBLE TO SORT OF TRY TO COVER FOR SOME OF THESE EVENTUALITYS >>MY QUESTION IS FOR LISA RICE. IN TALKING ABOUT THE DISCRIMINATION BEING EMBEDDED IN VARIOUS LAWS I WONDERED IF YOU COULD SPEAK TO WHETHER THERE’S A HISTORY IN THAT SENSE WITH REVERSE MORTGAGES >>Lisa Rice: THAT’S A GREAT QUESTION AND I WOULD LOVE TO HAVE PATRICIA WEIGH IN BECAUSE SHE’S DONE A LOT OF WORK ON THIS AREA. ONE OF THE CHALLENGES THAT WE HAVE WITH REVERSE MORTGAGES IS THAT BECAUSE OF THE DUAL-CREDIT MARKET, BECAUSE OF THE HUGE DISPARITY IN WEALTH BETWEEN AFRICAN-AMERICANS AND WHITES, THE ABILITY OF AFRICAN-AMERICANS TO SUCCESSFULLY UTILIZE A REVERSE MORTGAGE IS PROFOUNDLY DIMINISHED. I MEAN, AFRICAN-AMERICANS ON AVERAGE JUST DO NOT HAVE THE TYPE OF EQUITY IN OUR HOMES THAT WHITE FAMILIES DO. AFRICAN-AMERICANS, AS A RESULT OF THE CRASH, ARE DISPROPORTIONATELY UNDERWATER. SO JUST THE ABILITY TO ACCESS THE PRODUCT IN AND OF IT SELF IS AN ISSUE BECAUSE THERE’S A HUGE GAP THERE. BUT THE WAY THAT THE PROGRAMS ARE JUST DESIGNED, THERE’S STILL SOME PROBLEMS. I THINK THAT THERE HAVE BEEN SOME EFFORTS TO TRY TO CLEAN THEM UP. THOSE EFFORTS HAVEN’T GONE ALL THE WAY AND THERE’S STILL MAJOR PROBLEMS. AND I APOLOGIZE, IT IS NOT MY AREA OF EXPERTISE SO I’VE GOT TO CALL ON MY COLLEAGUES TO HELP OUT.>>Patricia McCoy: I THINK WE HAVE TO SEE REVERSE MORTGAGES. OBVIOUSLY THEY’RE MUCH NEWER PRODUCT THAN THE TRADITIONAL FHA FORWARD MORTGAGE. BUT WE HAVE TO SEE IT AGAINST THE BACKDROP THAT ON AVERAGE AFRICAN-AMERICAN FAMILIES HAVE FAR FEWER RETIREMENT SAVINGS OR DECENT, DEFINED BENEFIT PENSIONS TO HELP THEM IN RETIREMENT. AND SO BEYOND SOCIAL SECURITY WHICH HAS ITS OWN PROBLEMS, WHAT THESE FAMILIES MAY BE LEFT TO FALL BACK ON IS ANY EQUITY IN THE HOME. AND SO WE HAVE TO LOOK AT THIS ISSUE NOT JUST AS IS THE REVERSE MORTGAGE A PROBLEMATIC PRODUCT FOR PEOPLE OF COLOR, BUT LOOK AT IT IN THE LARGER SYSTEM OF WOEFULLY INADEQUATE SOCIAL SAFETY NETS FOR AFRICAN-AMERICAN FAMILIES AS THEY ENTER INTO THEIR RETIREMENT YEARS. I’M NOT SURE THAT WE CAN CREATE A REVERSE MORTGAGE PRODUCT THAT WORKS WITHOUT EQUITY. THAT SAYS TO ME WE HAVE LARGER ISSUES TO SOLVE. AND THAT THERE IS PROBABLY A BETTER WAY OF GOING ABOUT RETIREMENT SECURITY THAN HINGING EVERYTHING ON THAT.>>Lisa Rice: AND THE ONE THING THAT I WILL SAY TOO IS THAT I DON’T THINK THAT — I THINK THAT WE REALLY NEED TO THINK ABOUT WHETHER OR NOT IT IS THE RIGHT IDEA TO GIVE A LUMP-SUM PAYMENT IN THE REVERSE MORTGAGE PRODUCT. AND IF WE SHOULDN’T GO BACK TO MAKING IT MORE OF LIKE AN ANNUITY. BECAUSE THERE ARE SOME DANGERS THERE. WE’VE SEEN SO MANY SENIOR CITIZENS ABUSED WHEN THEY GET THAT LUMP-SUM PAYMENT. AND TALK ABOUT THE FEE EXTRAPOLATION. SO, I DO THINK THAT’S ONE AREA WE NEED TO REVISIT >>John Pottow: OTHER QUESTIONS? WE’VE GOT SOME UP HERE.>>AUDIENCE MEMBER: THANK YOU VERY MUCH TO THE MEMBERS OF THE PANEL. QUITE A VERY INTERESTING DISCUSSION. I’VE BEEN STRUCK BY SOME OF THE ISSUES WE’VE TALKED ABOUT EARLIER IN THE DAY AND CARRYING INTO THIS PANEL ABOUT UNSCRUPULOUS BEHAVIOR AND HOW IT AFFECTS CONTRACTS. I’M WONDERING WHAT YOUR THOUGHTS WERE ON WHETHER OR NOT YOU SEE UNCON SHENBILITY AS A DOCTRINE THAT CAN HELP TO PUSH BACK AGAINST SOME OF THE — [ LAU [ LAUGHTER ] I THINK PROFESSOR MCCOY WANTS TO COMMENT.>>Lauren Willis: WE ARE ON THE MOST MISERABLE PROJECT ON THIS. PAT AND I HAVE BEEN WORKING ON THIS DRAFT RESTATEMENT OF CONSUMER CONTRACTS. I BROUGHT THIS UP YESTERDAY AT THE END OF THE DAY. AND IT TRIES TO RELY ON UNCON SHENBILITY AND SAYS BASICALLY CONSUMERS DON’T HAVE TO ASCENT TO ANYTHING. YOU ARE BOUND BY WHATEVER THE FIRM SAYS YOU ARE BOUND TO AND ALL YOU CAN DO IS DEFAULT AND DEFEND YOURSELF USING UNCON SHEN ABILITY. NOW THAT IS POINTLESS. THAT IS NOT GOING TO PREVENT BAD TERMS FROM GOING IN FOR ALL SORTS OF REASONS. LITIGATION REASONS PEOPLE ARE NOT GOING TO WANT TO DEFAULT FIRST. THERE’S ALSO THE ISSUE WHEN PEOPLE READ THE FINE PRINT OF CONTRACTS, WHICH THEY DON’T DO BEFORE ENTERING INTO A CONTRACT, BUT OCCASIONALLY THERE WILL BE PART OF THEM POINTED OUT TO THEM WHEN THEY COMPLAIN, THEY BELIEVE THAT’S BINDING. NO MATTER WHAT IT SAYS. IF IT SAYS YOU HAVE TO PAY A FEE THAT YOU WERE EXPLICITLY TOLD BEFORE YOU GOT INTO THE CONTRACT THAT YOU WOULDN’T HAVE TO PAY, YOU BELIEVE YOU HAVE TO PAY IT. I MEAN, THERE’S BEEN PSYCHOLOGICAL RESEARCH ON THIS RECENTLY. SO, ONCE YOU PUT A TERM IN THERE PEOPLE ARE GOING TO THINK THEY’RE BOUND BY IT REGARDLESS. IT DOESN’T MATTER HOW UNCONSCIONABLE IT IS. THERE’S A HISTORY OF COURTS NOT WANTING TO FIND THINGS UNCONS UNCONSCIONABLE. BACK IN THE HOPA DAYS WHEN WE WERE TRYING TO GET SOME OF THESE MORTGAGES LOOKED AT THERE WAS A CASE WHERE I THINK IT WAS 98% OF THESE WOMEN’S MONTHLY INCOME WAS GOING TO THEIR MORTGAGES. AND THAT WAS ENOUGH TO FIND UNCON SHENBILITY BUT THE COURT WAS HESITANT ABOUT IT. THAT WAS IN THE FIRST CIRCUIT. JUDGE YOUNG IN MASSACHUSETTS. SO, THINGS THAT WERE LESS THAN THAT WOULD NOT BE ENOUGH.>>Patricia McCoy: I THINK ONE OF THE REALLY IMPORTANT THINGS TO REALIZE HERE IS A FINAL FLAW OF THIS AI PROJECT IS IT KA PITCH RATES TO THE THAT TODAY SINCE WE DON’T READ CONTRACT TERMS WE MIGHT NOT EVEN OPEN UP THE DISCLOSURE TO LOOK AT THEM, IT CAPITULATES AND SAYS YOU ARE BOUND. UNLESS YOU CAN SOMEHOW PERSUADE SOME COURT ON A ONE BY ONE CONTRACT BASIS TO DENY ENFORCEMENT. ULTIMATELY WHERE I HEAD ON THAT IS THAT’S AN INVITATION TO REPLACING CONTRACT LAW WITH STATUTORY REGULATION. ULT ULTIMATELY. CONTRACT LAW IS FAILING US IF THAT’S THE PATH WE’RE GOING DOWN>>John Pottow: I THINK WE’VE GOT TIME FOR ONE MORE QUESTION BEFORE WE HAVE TO BREAK. WHO HAS JURISDICTION TO GET THE MICROPHONE THERE? REMEMBER, YOU KNOW, SEMINOLE UNCON SHENBILITY IMPLEMENTED BY REGULATION. THE FTC CAME AND TOOK OVER.>>MY QUESTION IS FOR ROBIN — ROB AND THE PANEL IN GENERAL. I WANT TO KNOW MORE ABOUT HOUSING ASSISTANCE. RENTS IN DETROIT ARE RISING AT A FASTER PACE THAN NATIONALLY. AND THE WEST COAST THERE SEEMS TO BE A CRISIS.>>Rob Randhava: SO THERE’S A BILL BY SENATOR WARREN THAT — ONE OF THE — THERE’S A PROVISION IN THERE THAT PROVIDES DOWN PAYMENT ASSISTANCE TO PEOPLE WHO HAVE LIVED IN PREVIOUSLY REDLINEED NEIGHBORHOODS. I MEAN, THAT’S THE ORIGINAL CONCEPT OF THE BILL. THE NEWER VERSION OF THE BILL ALSO INCLUDES RECAPS FOR THE FAIR HOUSING MAPS AS AREAS THAT CAN BE TARGETED. WE’RE STILL WORKING ON, YOU KNOW, HOW CAN WE CONTINUE TO IMPROVE THAT COVERAGE? SO IT’S HELPING PEOPLE THAT DESERVE TO BE HELPED WHILE NOT MAKING IT A FREE FALL FOR PEOPLE WHO YOU KNOW WHO DIDN’T EXPERIENCE THE DISCRIMINATORY CONDUCT OF THE PAST. AND SO THERE IS THAT DOWN PAYMENT PART. THERE IS ALSO SIGNIFICANT INVESTMENTS IN THE NATIONAL HOUSING TRUST FUND TO HELP WITH RENTAL. I MEAN, OVERALL IT’S JUST — IT PROPOSES ADDING A WHOLE LOT MORE HOUSING UNITS — RENTAL, HOME OWNERSHIP AND THE BASIC LAWS LETTING THE BASIC LAWS OF SUPPLY AND DEMAND DO THEIR THING. AND THAT’S WHY I’M REALLY ENTHUSIASTIC ABOUT IT. AND I HOPE — I MEAN, HOW IT GETS IMPLEMENTED OF COURSE THERE’S A LOT OF QUESTIONS AROUND THAT AS THERE IS WITH ANY LAW, BUT AT LEAST I’M GLAD THAT THIS APPROACH WOULD HOPEFULLY ELEVATE THE NATIONAL DEBATE AROUND HOUSING. BECAUSE THERE’S A LOT OF ISSUES TO PAY ATTENTION TO IN THE NEXT YEAR AND A HALF BUT HOUSING OFTEN GETS LEFT OUT OF THE AGENDA.>>John Pottow: SO LET ME CONCLUDE WITH A COUPLE THINGS. I WANT TO APOLOGIZE FOR THE MICROPHONE EARLIER. SECONDLY, IN CASE WE SOUND LIKE WE’RE TOO GLOOMY, I WILL CLOSE ON MY FAVORITE FEE I FOUNT FOR THE RENT TO OWNS WHICH IS THE REPOSSESSION FEE. IF YOU DECIDE TO PURCHASE IT, YOU HAVE TO PAY A FEE. IF YOU DECIDE TO GIVE IT UP YOU HAVE TO PAY A FEE. WHICH IS NOT INCLUDED IN THE PRICE. THE POSITIVE PART IS STATES THAT REGULATE CALIFORNIA HAS BANNED THOSE FEES. SO, THERE IS A ROLE FOR HARDLINE CAP REGULATIONS. PLEASE BEFORE WE GO TO LUNCH JOIN ME FOR THIS FANTASTIC PANEL AND THANK YOU FOR THE QUESTIONS.>>THANKS EVERYONE. FROM HERE, WE’RE GOING TO VENTURE OUT INTO THE GREAT HALL AND WE HAVE SOUL FOOD PROVIDED BY DETROIT SOUL. IT’S HEALTHIER. IT’S FANTASTIC. ADDITIONALLY SOME OF OUR STUDENTS HAVE BEEN WORKING ON DIFFERENT RESEARCH PAPERS AND THEY HAVE SOME POSTERS OUT THERE AND WOULD BE DELIGHTED TO HAVE A CHANCE TO TELL YOU ABOUT WHAT THEY’RE THINKING ABOUT AND HEAR YOUR COMMENTS AND SUGGESTIONS. THEN WE’LL ALSO HAVE A CHANCE TO CORNER THE SPEAKERS TO ASK ALL THE QUESTIONS YOU DIDN’T GET A CHANCE TO. WE’LL RECONVENE HERE AT 1:15. WADE HENDERSON FROM THE FORMERLY OF THE LEADERSHIP COUNCIL ON CIVIL AND HUMAN RIGHTS WILL KICK US OFF WITH AN ADDRESS THEN WE’LL HAVE A SPIRITED, INTERACTIVE DISCUSSION ABOUT STUDENT LOANS. SO, PLEASE JOIN US FOR LUNCH THEN COME BACK AT 1:15. THANKS.>>>IT IS GREAT TO SEE EVERYONE HERE. I HOPE EVERYONE ENJOYED LUNCH WITH DETROIT SOUL, UP-AND-COMING PROVIDER IN OUR BUSINESS. I AM REALLY GLAD THAT THEY COULD COME TO HELP SUSTAIN US ALL. I WILL INTRODUCE WEIGHT.AFTER HIS REMARKS, WADE WILL INTRODUCE THE PANEL. WADE HENDERSON ÃI NEED MY GLASSES FOR THIS. [LAUGHTER] >>WADE HENDERSON RECENTLY RETIRED AS A DAVID A SCHOOL OF LAW FIRST JUNIOR CHAIR A PUBLIC INTEREST LAW. HE IS A SENIOR FELLOW AT THE CENTER FOR RESPONSIBLE LENDING. FROM 1996 UNTIL 2017, WADE HENDERSON WAS THE LEADER OF THE WASHINGTON CONFERENCE ON CIVIL AND HUMAN RIGHTS WHICH IS AN ABSOLUTELY ESSENTIAL AND FANTASTIC ORGANIZATION IN WASHINGTON D.C. THAT BRINGS TOGETHER THE CIVIL RIGHTS COMMUNITY AROUND THE REALLY CRITICAL ISSUES OF PUBLIC POLICY. I FOUND IN MY TIME IN WASHINGTON ÃI FIRST MET WADE WHEN HE FIRST STARTED AT THE CONFERENCE IN 1996 WHEN I WAS SERVING IN THE CLINTON ADMINISTRATION. I GOT A CHANCE TO WORK WITH HIM IN THE CONFERENCE ON FAIR LENDING ISSUES IN THE COMMUNITY REINVESTMENT ACT, THEN A CHANCE TO WORK TOGETHER AGAIN IN THE OBAMA ADMINISTRATION. I ALWAYS RELIED ON WADE FOR A WONDERFUL MIXTURE OF DEEP, SUBSTANTIVE KNOWLEDGE, A REALLY STRONG POLITICAL SENSE, A DEEP AND MORAL COMMITMENT TO THE ISSUES AT HAND, AND THAT RARE WASHINGTON TRAIT, COMMON SENSE. SO, I AM DEEPLY GRATEFUL TO WADE HENDERSON FOR BEING HERE. AMONG HIS MANY HONORS AND ACHIEVEMENTS HE IS A GRADUATE OF HOWARD UNIVERSITY AND RUTGERS UNIVERSITY SCHOOL OF LAW, AND HAS GOTTEN HONORARY DEGREES FROM A NUMBER OF INSTITUTIONS INCLUDING THE GETTYSBURG COLLEGE. HE IS A MEMBER OF THE BAR OF WASHINGTON D.C., THE SUPREME COURT BAR, AND I AM DELIGHTED TO WELCOME HIM HERE, TO THE FORD SCHOOL FELLOWS. [APPLAUSE] ♪>>GOOD AFTERNOON, EVERYONE. COME ON, WAKE UP GUYS! THAT WAS A GREAT LUNCH! WAKE UP! FIRST OF ALL, I AM HONORED TO BE WITH YOU. AND MICHAEL, THANK YOU FOR THE VERY GENEROUS INTRODUCTION. I APPRECIATE IT. I WANT TO THANK THE CENTER FOR FINANCE LAW AND POLICY FOR THE INVITATION TO PARTICIPATE IN THIS EXTRAORDINARILY IMPORTANT CONFERENCE. THE GERALD FORD SCHOOL IS AN INCREDIBLY DISTINGUISHED VENUE AND IS PERFECT FOR OUR DISCUSSION ABOUT CONSUMER PROTECTION IN AN AGE OF UNCERTAINTY. NOW, BECAUSE THIS IS THE LAST PANEL, I WOULD LIKE TO TAKE THE LIBERTY OF THANKING THE ORGANIZERS FOR THE EXTRAORDINARY JOB THEY HAVE DONE IN PULLING THIS TOGETHER. KRISTI, YOU, TRACY, YOU KNOW, THIS HAS REALLY BEEN A FIRST RATE PRODUCTION. THANK YOU SO MUCH FOR YOUR GENEROSITY. AND THE LUNCHES, BOTH TODAY AND YESTERDAY, THEY WERE QUITE EXTRAORDINARY. I NORMALLY THINK THE WAITSTAFF AND THE PLACES I GO BECAUSE I KNOW HOW HARD IT IS TO SERVE FOOD. I USED TO DO THAT MYSELF. I USED TO DO THAT MYSELF. IT WAS REALLY GOOD.>>>AS MICHAEL MENTIONED, I AM THE LEADER AT THE CONFERENCE OF THE CENTER FOR HUMAN RIGHTS, BUT I’M HERE IS A SENIOR FELLOW FOR THE CENTER OF RESPONSIBLE LENDING. I WANT TO THANK MY COLLEAGUES THE CENTER FOR THEIR INCREDIBLE RESEARCH ON THE ISSUE OF STUDENT LOAN DEBT AND THEIR HELP FOR PREPARING MY REMARKS. NOW I DECIDED TO ENTITLE MY PRESENTATION, GOOD DEBT, BAD DEBT, THIS STEAMY UNDERSIDE OF THE STUDENT DEBT CRISIS WHICH I HOPE IS PROVOCATIVE ENOUGH TO KEEP YOU AWAKE AFTER ALL OF THE FOOD THIS AFTERNOON. LAUGHTER] >>SO BEFORE WE BEGIN, I WOULD LIKE TO TAKE A MINUTE TO OFFER A COUPLE OF PRELIMINARY COMMENTS AND FIRST I WOULD REALLY LIKE TO ACKNOWLEDGE MICHAEL BARR. HE WAS VERY GENEROUS IN HIS COMMENTS ABOUT ME. I’M NOT A PERSON WHO MICHAEL HIRED IN HIS TENURE. [LAUGHTER] >>ONE OF THE FEW HERE AT THE CONFERENCE, APPARENTLY! [LAUGHTER] >>BUT I DID WANT TO LIFT MICHAEL UP. WHEN I MET HIM, HE WAS YOUNG POLICY, FRESH OUT OF LAW SCHOOL, MAYBE 3 YEARS OR SO. AND WE CONSPIRED TOGETHER TO ACTUALLY INCREASE THE LEVEL OF CIVIL RIGHTS ENFORCEMENT FUNDING ACROSS THE BOARD. MICHAEL WAS AT OMB. BECAUSE OF HIS WORK, BECAUSE OF FRANK RAINES WHO HE WORKED FOR, BUT REALLY BECAUSE OF MICHAEL’S COMMITMENT TO THE ISSUE, WE WERE ABLE TO INCREASE THE AMOUNT OF CIVIL RIGHTS ENFORCEMENT FUNDING AT UNPRECEDENTED LEVELS. I GIVE MICHAEL A LOT OF CREDIT FOR THAT. IT REALLY TOOK COMMITMENT, KNOWLEDGE AND SUBSTANCE, HOW TO WORK THE SYSTEM, IF YOU WILL, TO PRODUCE THAT RESULT. SO IT WAS A REALLY GOOD OUTCOME. MICHAEL, THANK YOU FOR THAT. IT WAS VERY IMPORTANT. AND I WOULD BE REMISS IF I DID NOT ALSO TAKE A MINUTE ÃI’M HERE IN MICHIGAN, GUYS, RIGHT? IF I DID NOT ACKNOWLEDGE 2 OF YOUR NATIVE SONS WHO, IN MY VIEW, I CANNOT COME TO MICHIGAN WITHOUT MENTIONING THEM, THE 43RD AND 44TH DEANS OF THE HOUSE OF REPRESENTATIVES, 2 OF THE LONGEST SERVING MEMBERS IN CONGRESS. JOHN DINGELL WHO SERVED FROM 1955 UNTIL 2015. CHAIR OF THE ENERGY AND COMMERCE COMMITTEE, AND JOHN CONYERS, CHAIR OF THE HOUSE JUDICIARY COMMITTEE WHO WAS NO SLOUCH HIMSELF TO CONGRESSIONAL SERVICE. HE CAME IN IN 1965 AND SERVED UNTIL DECEMBER 2016. [APPLAUSE] >>YEAH, THEY DESERVE ÃTHANK YOU, THEY DESERVE ÃTHEY DO DESERVE CREDIT. NOW JOHN DINGELL REALLY PRIDED HIMSELF ON BEING INVOLVED IN THE 1964 CIVIL RIGHTS ACT. THAT WAS HIS PROUDEST ACHIEVEMENT BUT HE WAS ALSO RESPONSIBLE FOR MEDICARE, FOR THE CLEAN WATER ACT, AND HE HELPED TO LEAD THE FIGHT OF THE AFFORDABLE CARE ACT. YOU DON’T GET BETTER SERVICE THAN THAT, AND THAT SHOULD BE REMEMBERED. JOHN CONYERS TOOK GREAT PRIDE IN BEING INVOLVED IN THE 65 VOTING RIGHTS ACT, THE FAIR HOUSING ACT AND THAT SHOULD BE REMEMBERED. JOHN CONYERS TOOK GREAT PRIDE IN BEING INVOLVED IN THE 65 VOTING RIGHTS ACT, THE FAIR HOUSING ACT OF 1968, 1988, THE MATTHEW SHEPARD HATE CRIME BILL, MANY CRIMINAL JUSTICE LAWS THAT HELP REFORM TO OCCUR. WE ARE THANKFUL FOR THEM, AND WE KNOW THAT THEY ARE HERE IN SPIRIT IN MICHIGAN IS AN IMPORTANT REMINDER. I STAND ON THE SHOULDERS OF PEOPLE LIKE JOHN CONYERS AND JOHN DINGELL, SO THANK YOU FOR INDULGING ME. NOW, MY FINAL PRELIMINARY REMARK, GUYS ÃAND I WILL KEEP THIS SHORT! I PROMISE THAT THIS IS MY FINAL PRELIMINARY REMARK! [LAUGHTER] >>HE REALLY IS A PRELUDE TO MY REMARKS IS HEAVEN WHICH IS A REFERENCE TO THE COLLEGE ADMISSIONS CHEATING SCANDAL WHICH HAS HAD SEVERAL ELITE UNIVERSITIES AND PROMINENT INDIVIDUALS, INCLUDING HOLLYWOOD CELEBRITIES, WHICH HAS EMBROILED THE HIGHER EDUCATION COMMUNITY. NOW I AM QUITE SURE I DON’T HAVE TO ELABORATE EXTENSIVELY ON MY VIEWS ABOUT THE CHEATING SCANDAL, OR AS HIS CHIEF ORGANIZER REFERRED TO IT, THE SO-CALLED SIDE DOOR TO OPPORTUNITY FOR THE SONS AND DAUGHTERS OF THE WEALTHY, A DOOR THAT ONLY MONEY CAN BUY TO ATTEND AN ELITE COLLEGE OR UNIVERSITY. I WAS STRUCK ESPECIALLY BY REALLY, ALMOST IMMEDIATELY, BY THE HYPOCRISY OF THOSE WHO FOCUSED ON THE ALLEGED UNFAIRNESS OF AFFIRMATIVE ACTION, WHICH ARGUABLY, THIS UNIVERSITY KNOWS MORE ABOUT THE MANY OTHERS BECAUSE OF THE ROUTER VERSUS BULLINGER LAWSUIT OF EARLY TO THOUSAND, WHILE AT THE SAME TIME, THEY IGNORED THE ADMISSIONS FROM UNIVERSITY PREFERENCES FOR LEGACY Ã [AUDIO LOST]>>>GRANDPARENTS, OTHER PARENTS, THEY OFTEN TOOK ON STUDENT LOAN, WITH INTEREST RATES, AND A NEW KIND OF CONSUMER DEBT WAS BORN. WHEN WE USE THE WORD CONSUMER DEBT, WHAT WE ARE REALLY REFERRING TO IS FAMILY DEBT THAT AFFECTS MULTIPLE GENERATIONS. I GUARANTEE YOU THAT THERE ARE PEOPLE IN THE AUDIENCE WHO ARE SUBSIDIZING THE EDUCATION OF THEIR OWN CHILDREN WHEN THEY ARE FACT OR MOVING, MEETING THE INDIVIDUALS HIMSELF, AND TO THEIR RETIREMENT YEARS. SO, THE GROWTH OF STUDENT LOAN DEBT HAS BECOME STAGGERING. TODAY, MORE THAN 44 MILLION PEOPLE CARRY OVER $1.5 TRILLION IN OUTSTANDING STUDENT LOAN DEBT, AN AMOUNT THAT EXCEEDS ALL OTHER TYPES OF NON-MORTGAGE LOAN DEBT. TWO OUT OF THREE GRADUATES FROM THE CLASS OF 2017 BORROWED FEDERAL STUDENT LOANS TO FINANCE THEIR EDUCATION. NOW, THIS PHENOMENON IS ESPECIALLY CONCERNING FOR THE AFRICAN-AMERICAN AND LATINO FAMILIES. NOW, I WANT TO REMIND EVERYONE THAT THIS CONFERENCE IS A CONSUMER CONFERENCE THAT TALKED ABOUT THE MORTGAGE AND RECESSION CRISIS OF TO THOUSAND 8. AFRICAN-AMERICANS LOST ABOUT 40 PERCENT OF THEIR COLLECTIVE WEALTH. 40 PERCENT. THE ACLU HAS JUST ISSUED A NEW REPORT, AND I AM SURPRISED. I WAS AN ACLU LAWYER SO I AM SURPRISED THAT THEY DID IT BUT THEY ISSUED A REPORT THAT SAID BY 2031, AFRICAN-AMERICANS WILL HAVE, IN EFFECT, LOST LOST ABOUT $100,000 IN NET WEALTH BECAUSE OF THE RECESSION OF TO THOUSAND 8. $100,000. NOW, GUYS, WHAT WE ARE LOOKING AT, THE WEALTH IN 2013 AS A RESULT OF THE RECESSION WAS 13 TIMES LESS FOR AFRICAN-AMERICANS THAT WAS FOR THE WHITE FAMILIES, SO THE TRUTH IS, YOU ARE ALREADY STARTING FROM A PHENOMENALLY AN EQUAL POSITION MADE WORSE BECAUSE OF STRUCTURAL INEQUALITY, MADE MORE DIFFICULT BECAUSE INDIVIDUALS DO NOT HAVE THE CAPACITY TO PAY BACK THE LOANS, THOUGH AT THE TIME THEY THOUGHT THEY MIGHT. FAMILIES OF COLOR, THEY’RE MORE LIKELY TO HAVE A NEED TO BORROW FOR HIGHER EDUCATION AND IN LARGER AMOUNTS. FOLLOWING GRADUATION, THOSE WHO EARN LOWER RELATIVE INCOMES SIMPLY HAVE LESS TO WORK WITH WHICH CONTRIBUTES TO A HIGHER LIKELIHOOD OF DELINQUENCY AND DEFAULT.AND IN FACT, RECENT RESEARCH SHOWS RATHER THAN HELPING THE COMMUNITIES OF COLOR BUILD WEALTH, A COLLEGE EDUCATION WILL DEEPEN THE WEALTH GAP. FOR EXAMPLE, YOUNG AFRICAN-AMERICANS TAKE ON 85 PERCENT MORE STUDENT DEBT FOR THEIR EDUCATION THAN THEIR WHITE COUNTERPARTS, AND THAT INDEBTEDNESS INCREASES ALMOST 7 PERCENT PER YEAR AFTER LEAVING THE SCHOOL. NOW, IT IS CRITICAL TO NOTE THAT DELINQUENCY AND DEFAULT ON STUDENT LOANS HAPPENED DISPROPORTIONATELY MORE FROM PEOPLE OF COLOR AND WOMEN. A DEGREE IS NOT A SHIELD FROM DISPARITY.AFRICAN AMERICAN BACHELOR DEGREE DEFAULT AT 5 TIMES THE RATE OF WHITE GRADUATES AND ARE MORE LIKELY TO DEFAULT THAN THE WHITES WHO NEVER FINISHED A DEGREE.WOMEN GRADUATES ON AVERAGE WITH $2700 MORE IN STUDENT LOAN DEBT THAN MEN, BUT BECAUSE OF THE GENDER PAY GAP, THEY EARN ABOUT 26 PERCENT LESS. SO PAYING OFF THEIR DEBT TAKES SIGNIFICANTLY LONGER. IF YOU SET ASIDE THE QUESTION OF WHETHER OR NOT THESE INDIVIDUALS ARE SIMPLY IMMORAL, SAYING THAT THEY ARE TAKING THE LOANS WITH NO INTENTIONS TO PAY IN THE BACK NO MATTER WHAT THEIR CIRCUMSTANCES ARE, THAT IS WHAT THEY ARE DOING. YOU SET THAT ARGUMENT ASIDE BECAUSE I DO FEEL THAT THAT IS TERRIBLY UNTRUE.IN THE EVIDENCE OF THE DISPARITIES THAT WE SEE, THEY ARE DEEPLY DISTURBING AND SUGGESTED WITHOUT SOME ATTENTION, THIS PROBLEM WILL ONLY WORSEN. AND, WHILE STUDENT LOAN DEBT IS OFTEN SEEN AS A MILLENNIAL ISSUE, THE CRISIS LEAVES NO AGE GROUP UNTOUCHED. AARP IS GETTING INCREASINGLY CONCERNED ABOUT STUDENT LOAN DEBT AFFECTING THE FINANCIAL STABILITY OF OLDER AMERICANS. STUDENT LOAN DEBT HELD BY BORROWERS OVER THE AGE OF 60 INCREASED BY MORE THAN 50 PERCENT BETWEEN 2012 AND 2017. ACCORDING TO THE GAO, THE GOVERNMENT ACCOUNTABILITY OFFICE, THE INCREASE IN OH LOAN DEBT AMONG SENIORS MEANS THAT MANY MORE ARE SPENDING THEIR GOLDEN YEARS STRUGGLING BECAUSE OF THE FEDERAL GOVERNMENT’S ABILITY TO GARNISH SOCIAL SECURITY INCOME FOR THE REPAYMENT OF FEDERAL STUDENT LOAN DEBT. AND IT HAS BEEN ARGUED THAT THE INABILITY TO DISCHARGE STUDENT LOANS IN BANKRUPTCY INCREASES THE PROBLEM. NOW THERE ARE SOME EXCEPTIONS TO THE RULE BUT THE TRUTH IS THAT IF YOU CANNOT DISCHARGE THAT DEBT, YOU ARE NOW ENTERING YOUR RETIREMENT YEARS RELYING ON SOCIAL SECURITY AS YOUR PRIMARY SOURCE OF INCOME, YOU’RE IN DEEP TROUBLE, GUYS, DEEP TROUBLE. SO ACCORDING TO THE DEPARTMENT OF EDUCATION, FOR JUST ONE YEAR OF UNDERGRADUATE INSTRUCTION, AS A FULL-TIME STUDENT AT A PRIVATE OR NONPROFIT SCHOOL DURING 2017, THE 2018 ACADEMIC YEAR, THE COST AVERAGE ABOUT $28,000, AN INCREASE OF APPROXIMATELY 20 PERCENT HIGHER THAN THE PREVIOUS ACADEMIC YEAR. SIMILARLY, THE DEPARTMENT FOUND THAT THE COST OF FULL-TIME ENROLLMENT AT PUBLIC INSTITUTIONS OFFERING A 4 YEAR DEGREE ALSO ROSE FOR THE SAME 2 ACADEMIC YEARS. IN-STATE STUDENTS ENROLLED IN PUBLIC COLLEGES AND UNIVERSITIES FACE A 2 PERCENT INCREASE IN COST AMOUNTING TO $8300. OUT-OF-STATE STUDENTS ATTENDING THE SAME COLLEGES AND UNIVERSITIES FACED AN AVERAGE COST OF $28,000, AND YET, FEW EMPLOYED PEOPLE HAD CORRESPONDING INCREASES IN INCOME. NOW I WILL NOT DISCUSS THE MEDIAN INCOME OF THE VARIOUS COMMUNITIES. I HAVE THAT INFORMATION, AND IF YOU’RE INTERESTED, I’M HAPPY TO TALK WITH YOU ABOUT IT AFTER THE PANEL BUT YOU KNOW AS WELL AS I DO THAT WOMEN AND PEOPLE OF COLOR DON’T MEASURE UP TO THE MEDIAN INCOME OF WHITE FAMILIES. SO WHEN WE TALK ABOUT STUDENT LOAN DEBT WHEN THEY MIGHT BE BORROWING THE SAME AMOUNT UNDER THE SAME TERMS, THE IMPACT OF THE BORROWING HAS A DECIDEDLY DIFFERENT IMPACT ON THOSE COMMUNITIES. SO, WHILE 250 ÃOH, STUDENT LOAN DEBTS, DEFAULTS, THEY LOWER THEM BY AS MUCH AS 50 TO 90 POINTS ACCORDING TO THE URBAN INSTITUTE, WHICH IS A D.C.-BASED RESEARCH ORGANIZATION. AS THE CREDIT SCORES DROP, THE COST OF ANY FUTURE CREDIT GOES UP MAKING IT HARDER FOR THE AFFECTED CONSUMERS TO MANAGE THEIR PERSONAL FINANCES. WHILE 250,000 DIRECT FEDERAL STUDENT LOAN BORROWERS DEFAULT EVERY QUARTER, AGAINST WHICH CONSUMERS ARE MOST LIKELY TO DEFAULT? WE HAVE ALREADY DISCUSSED THAT, SO I WON’T GO FURTHER BEYOND THAT. BUT BEYOND A 4 YEAR BACCALAUREATE DEGREE AND GRADUATE OF SCHOOLS, TODAY’S EDUCATIONAL OPTIONS INCLUDE VARIED CAREERS IN TECHNICAL TRAINING PROGRAMS IN SUCH FIELDS AS HEALTHCARE, COMPUTERS, COSMETOLOGY, CRIMINAL JUSTICE, FASHION DESIGN, AND THE ENTERTAINMENT BUSINESS. PROMINENT AMONG THE INSTITUTIONS OFFERING THIS EDUCATIONAL MEDLEY OF FOR-PROFIT COLLEGES THAT USE MARKETING STRATEGIES TO TARGET THE FINANCIALLY VULNERABLE CONSUMERS, THEN COMPLETE ENROLLMENT AND FINANCIAL AID APPLICATIONS AS QUICKLY AS POSSIBLE. NOW THESE INSTITUTIONS WOULD EVEN ENCOURAGE DEBT TO BEYOND WHAT IS NEEDED TO PAY TUITION AND FEES. THIS YEAR, THE CENTER FOR RESPONSIBLE LENDING FOUND THAT FOR-PROFIT COLLEGES HAVE TWIN TRAPS OF POOR OUTCOME AND COSTLY DEBT THAT TOGETHER OFTEN LEAD TO LOAN DEFAULT. ACROSS THE NATION, FOR-PROFIT COLLEGE LOAN DEFAULTS OCCUR AT A RATE 3 TIMES THAT OF STUDENTS ENROLLED IN EITHER PUBLIC OR PRIVATE INSTITUTIONS, OFFERING 4 YEAR OR 2 YEAR STUDIES, AND THE SAD RESULTS FOR THE FOUR-PROFIT STUDENTS IS THAT THEY WIND UP IN WORSE FINANCIAL CIRCUMSTANCES AFTER ENROLLMENT. ALL THEY WANTED WAS EDUCATIONAL TRAINING TO IMPROVE THEIR LIVES, AND FURTHER, FEW OF THEM, 40 PERCENT OF FOR-PROFIT STUDENTS GRADUATE 6 YEARS FOLLOWING THEIR ENROLLMENT IN 2 OR 4 YEAR CURRICULUMS. NOW UNFORTUNATELY, DEBT WAS THE PRIMARY TAKE WAY FOR THE FOUR-PROFIT COLLEGE EXPERIENCE. I WON’T GO INTO THE DETAILS INVOLVING REGULATORY ROLLBACK AND CHANGES BUT IT IS SUFFICIENT TO NOTE THAT THE PREVIOUS ADMINISTRATION ISSUED WHAT WAS KNOWN AS GAINFUL EMPLOYMENT RULES, WHICH SOUGHT TO REALLY HOLD DOWN AND REALLY HOLD UP, RATHER, TO A STANDARD OF CARE, FOR-PROFIT SCHOOLS THAT AT THIS POINT EXPLOIT A STUDENT’S BEYOND ANYTHING REASONABLE, JUST BECAUSE WE KNOW OF HIS SCHOOLING TRUMP UNIVERSITY THAT HAS SINCE GONE OUT OF BUSINESS DOES NOT MEAN THAT ALL SCHOOLS ARE BAD PER SOUTHEAST. BUT HAVING SAID THAT, THERE ARE TOO MANY STUDENTS WHO SUFFER IN THIS AREA. IT IS WORTH NOTING AND I NEED NOT MENTION OTHER VENTURES TO SAY THAT WE HAVE FOLLOWED THE FAILURES OF FOR-PROFIT SCHOOLS LIKE CORINTHIAN COLLEGES, EVEREST, ITT TECH, THAT LET STUDENT BORROWERS WITHOUT DEGREES AND CREDIT HOURS THAT COULD NOT BE TRANSFERRED, LOSSES TO TAXPAYERS WHO FUNDED OUR FEDERAL ASSISTANCE. BETSY DEVOS, WHO HAS CHOSEN TO BRING HER OWN AND INEVITABLE ANALYSIS TO THIS PROBLEM. [LAUGHTER] >>UNFORTUNATELY, HAS DONE VERY LITTLE TO ADVANCE THE LARGER CALLS HERE. SO THIS IS THE BACKDROP AGAINST WHICH TODAY’S EXTRAORDINARY PANELS IS BEING ASKED TO ADDRESS. IT IS MY GREAT PLEASURE TO INTRODUCE TODAY’S PANEL, INDIVIDUALS WHO I HAVE COME TO KNOW THROUGH THIS PROCESS AND I MUST SAY, THAT I HAVE DEEP ADMIRATION FOR. NOW, THEY WILL BE PRESENTING IN THE ORDER THAT I PRESENT THEM. SAMUEL LEVINE, THAT WAS A GREAT PRESENTATION THIS MORNING. THANK YOU SO MUCH FOR COMING TO THE CONFERENCE. NOW, OF COURSE SAME AS A WORTHY REPRESENTATIVE OF THE OFFICE, AND SAM WILL BE FOLLOWED BY JOSEPH SANDERS WHO IS THE SUPERVISING ATTORNEY FOR CONSUMER FRAUD BUREAU OF THE ILLINOIS ATTORNEY GENERAL’S OFFICE, AND A STUDENT LOAN OMBUDSMAN FOR THE STATE OF ILLINOIS, IT IS GREAT TO HAVE YOU HERE. FINALLY, WE WILL HEAR FROM DAN ZABEL WHO IS THE ASSISTANT DIRECTOR FOR THE SUPERVISION OF POLICY AT THE CONSUMER FINANCIAL PROTECTION BUREAU. LADIES AND GENTLEMEN, PLEASE JOIN ME IN GIVING THE ÃDID I SAY THAT WRONG? YOU WILL CORRECT IT?>>ALL RIGHT, OKAY, THANK YOU. IN ANY EVENT, LET ME ASK YOU TO JOIN ME IN WELCOMING ALL 3 OF OUR PANEL MEMBERS. [APPLAUSE] >>NOW, WE WILL HEAR FROM THEM INDIVIDUALLY. THEN I WILL POSE A COUPLE OF QUESTIONS AND ASKED THE AUDIENCE TO FOLLOW UP. SAM?>>Samuel Levine: WELL, I WOULD LIKE TO START BY THANKING PROFESSOR ANDERSON. IT HAS BEEN AN HONOR TO MEET ALL OF YOU AND TO WORK WITH YOU HERE. I WANT TO START WITH A DISCLAIMER THAT I HAVE WORKED WITH REPRESENTATIVE CHOPRA, BUT I DO NOT SPEAK FOR HIM. HE IS CERTAINLY ABLE TO SPEAK FOR HIMSELF AS WE FOUND THIS MORNING, OR FOR THE TRADE COMMISSION AS A WHOLE, JUST FOR MYSELF. SO WHAT I WANT TO TALK ABOUT TODAY IS SOME OF THE WORK THAT THE FTC HAS WORKED ON, TO TAKE ON THE MOST ABUSIVE ACTIONS, SOME REPRESENTED BY REPRESENTATIVE HENDERSON. THAT I HAVE A BAD NEWS PORTION OF THE TALK WITH HOW THESE ABUSES THAT THE FTC HAVE TAKEN ON ARE THE SYMPTOMS OF A MUCH BIGGER DISEASE AND HIGHER EDUCATION. WHEN IT COMES TO THE MUCH BIGGER DISEASE IN HIGHER EDUCATION, I DO FEAR THAT OUR FEDERAL GOVERNMENT IS NOT ON THE SIDE OF STUDENTS IN OUR DEPARTMENT OF EDUCATION IS NOT ON THE SIDE OF STUDENTS. THE FIRST OF THE GOOD NEWS, SO THE FEDERAL TRADE COMMISSION FOR THOSE WHO DON’T KNOW IS A BIPARTISAN FEDERAL AGENCY, COMPRISED OF 5 COMMISSIONERS WITH SOME INDEPENDENCE LIKE I SAID FROM THE ADMINISTRATION, AND WHAT WE DO IS WE ENFORCE AMONG OTHER THINGS A PROHIBITION ON UNFAIRNESS OF PRACTICES.SO IF A COMPANY IN THE MARKETPLACE CHEATS STUDENTS OR CUSTOMERS, WE HAVE THE ABILITY TO SUE THEM AND TO HOPEFULLY STOP THE PRACTICES. NOW WE HAVE USE THAT POWER IN THE HIGHER ITS SPACE IN 2 KEY AREAS OVER THE LAST YEAR, I WILL TALK ABOUT EACH IN TURN. THE FIRST IS IN THE GENERATION SPACE, THE 2ND IS IN THE STUDENT LOAN DEBT RELIEF. SO, LET ME START WITH LEAD GENERATION. IF YOU HAVE NEVER HEARD OF LEAD GENERATION, ALL THAT IS IS SOMEBODY WHO TRIES TO CONNECT THE COMPANY LOOKING FOR CUSTOMERS AND POTENTIAL CUSTOMERS.LEAD GENERATORS ARE IN THE MIDDLE TRYING TO CONNECT THEM. IN THE HIGHER EDUCATION SPACE, THIS MEANS THAT CONNECTING SCHOOLS WITH THE POTENTIAL STUDENTS. YOU MIGHT THINK TO YOURSELF, ESPECIALLY IF YOU’RE A STUDENT HERE AT THE UNIVERSITY OF MICHIGAN, THAT IS NOT HOW I RECALL GOING TO SCHOOL. I HAD TO FILL OUT AN APPLICATION BASED ON $10,000 TO TAKE MY SAT FOR ME. [LAUGHTER] >>JUST KIDDING! JUST KIDDING! [LAUGHTER] >>NO! NO, NO, NO. BUT SERIOUSLY, IN AN ELITE EDUCATION THAT IS NOT THE TRADITIONAL WAY THAT YOU APPLY TO SCHOOLS. BUT FOR MOST AMERICANS WHO ARE GOING TO SCHOOL, IT DOES NOT RESEMBLE THIS, AND THERE’S MANY SCHOOLS OUT THE ESPECIALLY THE VOCATIONAL AND FOR-PROFIT PROGRAMS WHO USE LEAD GENERATORS TO CONNECT THEM WITH THE POTENTIAL RECRUITS. SO THE FTC WENT AFTER A PARTICULARLY BAD LEAD GENERATOR LAST YEAR CALLED SON KEY. AND ACCORDING TO OUR COMPLAINT, WHAT SENTI DID WAS BASICALLY THE IMITATED MILITARY RECRUITERS, AND SET UP WEBSITES LIKE ARMY ENLISTED.com AND NAVY ENLISTED.com PUT ADS ON GOOGLE THAT SAID, ENLISTED IN THE NAVY AND SERVE YOUR COUNTRY. FOR THE STUDENTS WHO WANTED TO SERVE THEIR COUNTRY, THEY CAME ACROSS THE WEBSITES AND THOUGHT THAT THESE GUYS WERE THE MILITARY, AND THESE GUYS HAD GIVEN YOUR PERSONAL INFORMATION WE CAN GET YOU IN TOUCH WITH YOUR OPTIONS. SO THE STUDENTS LOOKING TO SERVE THEIR COUNTRY CALL UP Ã EXCUSE ME, THEY PUT IN THEIR PERSONAL INFORMATION AND GET A CALL FROM SOMEBODY WHO CLAIMS TO BE A MILITARY RECRUITER AND SAID HEY, IT IS GREAT THAT YOU’RE INTERESTED IN THE ARMY BUT THE ARMY IS DOWNSIZING. HAVE YOU THOUGHT ABOUT GOING TO ONE OF THE SCHOOLS THAT THE ARMY RECOMMENDS? AND THEN IF THE COMPANY IS SUCCESSFUL IN CONNECTING A SCHOOL TO THAT STUDENT, THAT SCHOOL WILL PAY SENTI $15-$40 A LEAD, DIRECTLY AND INDIRECTLY. NOW, THIS IS AN OUTRAGEOUS PRACTICE THAT IS STEERING PEOPLE WHO WANT TO SERVE THEIR COUNTRY INTO PREDATORY SCHOOLS, NOT NECESSARILY FOR PROFIT. BUT PREDATORY SCHOOLS THAT CLEARLY DON’T HAVE THEIR BEST INTEREST AT HEART. I AM PROUD THAT THE FTC SHOT THIS SCAM DOWN AND FORCE THEM TO TURN OVER A WEBSITE AND BY THE WAY, DID THE COMMISSIONER POINTS EARLIER, SUED THE INDIVIDUALS WHO RAN THE SCAM AND NOT JUST THE COMPANY, AND THEY ARE NOW UNDER A PERMANENT INJUNCTION. BUT IT IS IMPORTANT TO UNDERSTAND WITH THE LEAD GENERATION SPACE ÃI WILL GET TO THAT LATER BUT WHAT ABOUT THE SCHOOLS THAT WERE BUYING THESE LEADS? WE KNOW THAT THERE WERE DOZENS OF SCHOOLS WHO DECIDED THIS IS AN OKAY WAY TO RECRUIT STUDENTS. WHAT I AM GOING TO TALK ABOUT HOW THAT IS THE NEXT BATTLE WE NEED TO FIGHT FOR THE SCHOOLS WHO THINK THAT IT IS ACCEPTABLE TO PRAY ON STUDENTS IN THE WAY THAT THEY DID THROUGH SON KEY. WE ARE GOING TO GET TO THAT IN A MINUTE.HE 2ND AREA THAT I THINK THAT THE FTC HAS BEEN ACTIVE IS IN STUDENT LOAN DEBT RELIEF. YOU MIGHT NOT OF HEARD OF STUDENT LOAN DEBT RELIEF, BUT I AM SURE YOU HAVE HEARD FROM STUDENT LOAN DEBT RELIEF OPERATORS. IF YOU HAD GOTTEN A PHONE CALL IN THE LAST 5 YEARS FROM AN UNKNOWN NUMBER, IT MIGHT HAVE SAID THAT THERE IS AN OBAMA FORGIVENESS PROGRAM THAT INSPIRES TOMORROW, PRESS ONE. YOU CAN SEE ALL OF YOUR LOANS FORGIVEN. NOW IF YOU HAD PRESS ONE AND SPOKEN TO SOMEONE, THAT SOMEONE IS A STUDENT LOAN DEBT RELIEF OPERATOR EXCEPT THEY WILL PROBABLY CLAIM THAT THEY ARE WITH THE DEPARTMENT OF EDUCATION AND PROBABLY CLAIM THAT TO GET YOUR LOANS FORGIVEN ARE YOUR LOAN PAYMENTS REDUCED, YOU WILL NEED TO PAY THEM $1000 A MONTH, THEN $40 A MONTH FOR THE NEXT 40 YEARS. NOW, THE INTERESTING THING Ã AND JOE WILL TALK ABOUT THIS MORE, THAT THESE DEBT RELIEF COMPANIES DID ACTUALLY ÃIF YOU PAY THEM THE $1000, OFTEN PUT STUDENTS INTO INCOME-BASED REPAYMENT PROGRAMS THAT LOWER THEIR PAYMENTS, BUT THE REALITY IS THAT THESE ARE FREE PROGRAMS. THESE ARE FREE TO ENROLL IN, GOVERNMENT PROGRAMS THE TAXPAYERS PAY FOR. NOW THESE COMPANIES WERE ABLE TO DO THIS FOR 2 REASONS. A, THEY LIED TO STUDENTS. AND BE, BECAUSE THE SERVICERS, THE ACTUAL STUDENT LOAN SERVICERS WHO WE PAY TO MANAGE THE PORTFOLIO OF STUDENT LOANS ARE NOT DOING THEIR JOB. NOW JOE WILL TALK MORE ABOUT THAT. BUT THE FTC TOOK ON THESE DEBT RELIEF COMPANIES AND HAVE SHUT A LOT OF THEM DOWN. I DO THINK THAT THAT IS A GOOD THING BUT ONE THING THE COMMISSIONER HAS SAID AND THAT I AM MAKING IS THAT THIS IS A SYMPTOM OF A MUCH DEEPER PROBLEM. I WANT TO GET INTO WHAT I SEE AS 2 OF THE CORE STRUCTURAL WEAKNESSES IN HIGHER EDUCATION TODAY THAT ARE HURTING AMERICAN STUDENTS. THE FIRST IS SCHOOLS THAT ARE TREATING STUDENTS AS NOTHING MORE THAN A SOURCE OF REVENUE. THE 2ND IS THE TOTAL LACK OF ACCOUNTABILITY FOR THE OUTCOMES OF THESE SCHOOLS ARE DELIVERING FOR THEIR STUDENTS, A TOTAL LACK OF ACCOUNTABILITY AGAINST THE SCHOOLS. SO FIRST I WOULD LIKE TO TALK ABOUT THE IDEAS OF STUDENTS AS REVENUE. IF YOU ARE AN AMERICAN CITIZEN, YOU HAVE A BIRTHRIGHT ESSENTIALLY TO TENS OF THOUSANDS OF DOLLARS IN FEDERAL LOANS, THANKS THANKS ABOUT 5700 OR $500 FOR FEDERAL GRADUATES PRETTY CAN TAKE THE 60 GRAND ANYWHERE YOU WANT BASICALLY. YOU CAN’T GO TO TRUMP UNIVERSITY WITH IT, BUT YOU COULD GO TO A LOT OF THE HIGHER END SCHOOLS. WELL, WE LIVE IN AN ENTREPRENEURIAL COUNTRY AND THERE’S A LOT OF PEOPLE WHO THOUGHT ABOUT THIS SYSTEM OF HIGHER ED FINANCING AND THOUGHT, GEE, I COULD MAKE A LOT OF MONEY LIKE THIS. I CAN SET UP A SCHOOL AND EVERY WARM BODY THE WALKS IN THE DOOR CAN BRING IN TENS OF THOUSANDS OF DOLLARS WHICH IS EXACTLY WHAT HAS HAPPENED IN THE COUNTRY OVER THE LAST 30+ YEARS. THERE WAS A SCHOOL THAT JOE AND I WERE INVOLVED IN PROSECUTING. IT WAS CONCEIVED OF AT HARVARD BUSINESS SCHOOL AS A WAY TO MAKE A QUICK BUCK. THAT WAS THE CONCEPTION OF THE SCHOOL AND THAT IS EXACTLY HOW THESE SCHOOLS OPERATE. THEY ARE ONE GENERALLY FOR-PROFIT. THEY USE LEAD GENERATORS LIKE SON KEY TO CONNECT THEM TO CUSTOMERS, THEN THEY HAVE ADMISSIONS COUNSELORS. UNLIKE AN ADMISSION COUNSELOR AT THE UNIVERSITY OF MICHIGAN, IF YOU ARE AN ADMISSION COUNSELOR AT A PREDATORY FOR-PROFIT SCHOOL, YOU’RE NOT A ADMISSIONS COUNSELOR AT ALL BUT A SALESMAN. THEY LITERALLY HIRE THESE FOLKS FROM THE USE SAILED DEALERSHIPS. WE HAVE SEEN THE RECORDS AND THEY ARE TRUE, THEY ARE USED CAR SALESMAN SELLING PEOPLE EDUCATION. OF THESE SALESPEOPLE UNDERSTAND, BECAUSE THEY ARE NOT DUMB AT ALL, THEY UNDERSTAND THAT EVERY STUDENT IS LIKE A NEW LEXUS FOR THE COMPANY THAT THEY WORK FOR. AND I DID NOT MAKE THAT APPEAR THAT WAS IN THE TRAINING FOR THESE COUNSELORS AT THE SCHOOL THAT I REFERENCED EARLIER. EVERY STUDENT YOU RECRUIT IS A NEW LEXUS. WHEN YOU HAVE THOSE KIND OF INCENTIVES IN PLACE, EVERY STUDENT THAT YOU CAN BRING ON IS LIKE ACTUALLY SELLING A LEXUS, OF COURSE THERE WILL BE FRAUD AND DECEIT. OF COURSE YOU WILL HIRE COMPANIES LIKE SON KEY, THESE LEAD GENERATORS TO BRING IN AS MANY WARM BODIES AS YOU CAN. YOU HAVE AN OVERWHELMING ECONOMIC INCENTIVE TO COMMIT FRAUD SO WE SHOULD NOT BE SURPRISED WHEN FRAUD IS EXACTLY WHAT HAPPENED. AS PROFESSOR HENDERSON REFERENCED, AND THIS IS WHERE I GET INTO THE ISSUE ABOUT THE FEDERAL GOVERNMENT, THE OBAMA ADMINISTRATION REALLY MADE AN EFFORT TO CRACK DOWN THE DECEPTION TO STUDENTS. THEY DID A NUMBER OF THINGS. ONE THING THAT I WANT TO TALK ABOUT THE JOE WAS VERY INVOLVED WITH WAS A RULE THAT BASICALLY SAID IF THE SCHOOL LIED TO YOU IN THE COURSE OF THE ENROLLMENT, YOU SHOULD NOT HAVE TO KEEP PAYING YOUR LOANS. YOU SHOULD GET A DISCOURSE OF YOUR LOANS AND RECOURSE AGAINST THE SCHOOL AND THAT THE DEPARTMENT OF EDUCATION COULD TAKE SOME ADMINISTRATIVE ACTION AGAINST THE SCHOOL AS WELL. THIS IS A VERY BASIC RULE WHAT THAT WOULD NOT SOLVE THE PROBLEMS I WAS DESCRIBING HER FUNDAMENTALLY CHANGED THE OVERWHELMING INCENTIVES THAT I AM DESCRIBING BUT IT WOULD’VE Ã I THINK THAT WOULD’VE MOVED THE NEEDLE AND MADE THINGS A LITTLE BETTER AND LESS SLANTED AGAINST STUDENTS. WELL, INSTEAD OF MOVING THE BALL FORWARD ON THIS, THE CURRENT ADMINISTRATION IS ROLLING IT BACK. UNFORTUNATELY FOR THOSE OF US WHO CARE ABOUT STUDENTS, THERE IS A REAR TO FIGHT GOING ON BY THE STATES AND THE PRIVATE PLAINTIFFS LIKE VEINS GROUP TO TRY TO STOP THE TRUMP ADMINISTRATION FROM WATERING DOWN AND ROLLING BACK THESE RULES. BUT MY BROADER POINT IS THAT I WISH WE COULD SAY WE WERE MOVING FORWARD ON ACTUALLY MAKING SURE THAT SCHOOLS DON’T LIE TO THEIR STUDENTS BUT I DO FEAR THAT WE ARE ACTUALLY MOVING BACKWARD. NOW GIVEN THE INCENTIVES THAT I HAVE DESCRIBED, THAT IS A REAL PROBLEM. THE 2ND BIG FAILURE, THE 2ND BIG, BIG FAILURE IN HIGHER EDUCATION IS THE LACK OF ACCOUNTABILITY FOR OUTCOMES. I WILL GO BACK TO THE SCHOOL THAT JOE AND I WERE INVOLVED IN PROSECUTING, AND THIS WAS A SCHOOL THAT CHARGED $80,000 FOR A BACHELORS DEGREE THAT BY THE WAY, WAS NOT RECOGNIZED BY GRADUATE SCHOOLS OF MOST EMPLOYERS. WELL, THE CONSEQUENCE WAS SOMEWHAT PREDICTABLE. THE VAST MAJORITY OF THE STUDENTS WHO ENROLLED AND NOT GRADUATE. THOSE WHO GRADUATED COULD LOOK TO A MEDIAN INCOME OF $23,000 WHICH IS COMPARABLE, I BELIEVE IT IS LESS, THEN WHAT A HIGH SCHOOL DROPOUT WOULD’VE BEEN EXPECTED TO EARN BUT THESE GUYS WERE STUCK WITH $80,000 IN DEBT. NOW FOR THE PRIVATE LENDING THE PROFESSOR HENDERSON DESCRIBED, 90 PERCENT OF STUDENTS WHO TOOK OUT A LOAN FROM THE SCHOOL DEFAULTED. THIS WAS A TRAIN WRECK FOR STUDENTS. THIS SCHOOL DESTROYED THE LIVES OF THOUSANDS OF STUDENTS, EVEN AS THEIR PRIVATE EQUITY OWNERS REAPED TENS OF MILLIONS OF DOLLARS YEAR AFTER YEAR. THAT LACK OF ACCOUNTABILITY, THAT SYSTEM IN WHICH YOU CAN DESTROY LIVES AND DELIVER HORRENDOUS OUTCOMES AS LONG AS YOU KEEP BRINGING IN WARM BODIES, AS LONG AS YOU HAVE THAT KIND OF INCENTIVE STRUCTURE IN PLACE YOU WILL HAVE STUDENT LOAN DEBT RELIEF OUTFITS SPRINGING UP BECAUSE PEOPLE ARE DESPERATE WITH NO INCOME, $100,000 IN DEBT, AND THEY ARE DESPERATE. WHEN YOU HAVE DESPERATION, WE HAVE FRAUD. IF YOU WANT TO STOP THE DESPERATION AND STOP THE FRAUDSTERS AT THE CORE, THEN WE NEED SOME ACCOUNTABILITY FOR THE SCHOOLS ARE PUTTING THE STUDENTS INTO DESPERATE STRAITS IN THE FIRST PLACE. ONCE AGAIN I WILL ECHO MY REFRAIN FROM BEFORE. THE OBAMA ADMINISTRATION TRIED TO DO SOMETHING ABOUT THIS. ROFESSOR HENDERSON REFERENCED IT. A LOT OF US OF THE STATE OF THE DEPARTMENT OF EDUCATION WERE INVOLVED. THERE WAS A GAINFUL EMPLOYMENT RULE.T WASN’T SO RADICAL. IT SAID IF YOU ARE A SCHOOL THAT IS TAKEN MILLIONS OF DOLLARS OF FUNDS IN YOUR STUDENTS CANNOT REPAY THEM THAT MAYBE YOU DON’T NEED TO GET FEDERAL FUNDS. THIS WAS TO PROTECT STUDENTS BUT ALSO TAXPAYERS. WHY ARE WE SUBSIDIZING THESE PRIVATE EQUITY SCHOOLS THAT ARE DESTROYING STUDENTS LIVES? ONCE AGAIN, THE SAME OLD STORY. THAT RULE IS BEING RULED BACK. IT HAS BEEN FROZEN. A LOT OF IT IS IN THE COURSE RIGHT NOW, BUT ONCE AGAIN, GAINFUL EMPLOYMENT WOULD NOT OF SOLVED THE LACK OF ACCOUNTABILITY BUT IT WOULD’VE MOVED US IN THE RIGHT DIRECTION. INSTEAD WE ARE MOVING IN THE WRONG DIRECTION WITH A REARGUARD ACTION WITH PEOPLE LIKE JOE AND DAN WHO WERE JUST TRYING TO STOP THE DAMAGE. SO I WOULD LIKE TO CONCLUDE WITH THIS. COMMISSIONER CHOPRA HAS TALKED A LOT ABOUT HERE AND ELSEWHERE THAT TO BE AN EFFECTIVE REGULATOR, YOU CANNOT JUST DEAL WITH THE SYMPTOMS OF PROBLEMS. YOU NEED TO ADDRESS THIS CORE DISEASE. STUDENT LOAN DEBT RELIEF, THESE ARE SYMPTOMS OF MUCH BIGGER PROBLEMS IN STUDENT EDUCATION. WE NEED TO GET AT THE CORE DISEASE, THE PROFIT MOTIVE. THE LACK OF ACCOUNTABILITY. TREATING STUDENTS LIKE NOTHING MORE THAN ATMS WHICH IS WHY I AM SO GLAD TO BE JOINED ON THE PANEL BY JOE AND DAN BECAUSE THEY ARE ON THE FRONT LINES OF GETTING NOT ONLY AT THE WORST ABUSES, BUT ALSO THE CORE PROBLEMS OF HIGHER EDUCATION THAT ARE ENDANGERING AMERICAN STUDENTS, SO THANK YOU, VERY MUCH. [APPLAUSE] >>HI, EVERYONE. I’M JOE SANDERS WITH THE ONLINE OFFICE. LIKE SAM, I NEED TO LET EVERYBODY KNOW THAT THE VIEWS THAT I AM EXPRESSING ON MY OWN. I DO NOT SPEAK FOR OR BIND THE OFFICE OF THE ATTORNEY GENERAL. AND I WANT TO THANK THE FORD CENTER, THE UNIVERSITY OF MICHIGAN FOR HAVING ME HERE TODAY. I WANT TO THANK MY PANELISTS. I AM REALLY HONORED TO BE ON A PANEL WITH SO MUCH KNOWLEDGE ABOUT STUDENT LOANS AND THE PROBLEMS HERE. AND I WANT TO THANK COMMISSIONER CHOPRA, THE FORMER STUDENT LOAN OF OMBUDSMAN CHOPRA. NOW I AM STILL HERE, STANDING ON THE SHOULDERS OF ALL UGIANTS. . [LAUGHTER] PICK. OKAY, SO I AM GOING TO BUILD ON WHAT SAM TALKED ABOUT. TIM WAS TALKING ABOUT SCHOOLS AND WHERE THE LOANS ÃTHE PRODUCT THAT THE LOANS ARE PAYING FOR, THE PROBLEMS THAT ARE THERE. NOW I AM ALSO GOING TO TOUCH ON THE DEFAULT THE PROFESSOR HENDERSON TALKED ABOUT BECAUSE FOR FEDERAL STUDENT LOANS, THERE ARE PROTECTIONS IN PLACE THAT SHOULD MAKE DEFAULTS ZERO. INCOME DRIVEN REPAYMENT IS A REPAYMENT SYSTEM THAT, BASED ON YOUR INCOME, IF YOU DON’T MAKE VERY MUCH MONEY, YOUR PAYMENT IS LITERALLY ZERO DOLLARS. NOW THAT IS CONSIDERED INTO THE REPAYMENT STATUS. YOU HAVE THESE REPAYMENT STATUSES FOR 20 OR 25 YEARS, THEN THE LOAN IS FORGIVEN. WITH THE EXISTENCE OF THESE PROGRAMS, SOME OF WHICH SAM HAS ACTUALLY HELPED TO CREATE THE NEGOTIATING COMMITTEE FOR THE DEPARTMENT, WHY SHOULD THERE BE STUDENT LOAN DEFAULTS. WHY SHOULD ANYBODY DEFAULT WHEN THERE ARE PROTECTIONS IN PLACE? THERE IS A HOST OF REASONS HERE. BUT I AM GONNA TALK PRIMARILY ABOUT A LARGE LUMP THAT HAS TO DO WITH THE COMPANIES THAT INTERFACE BETWEEN THE STUDENT AND THE U.S. DEPARTMENT OF EDUCATION, JUST THE PRIMARY LENDER A FEDERAL STUDENT LOAN, THOSE OF THE STUDENT LOAN SERVICERS. THESE SERVICERS HAVE MISALIGNED INCENTIVES WHERE WHAT IS GOOD FOR THE SERVICER IS NOT NECESSARILY GOOD FOR THE STUDENT OR THE DEPARTMENT OF EDUCATION. ON THE SERVICEMAN BASICS BECAUSE IT’S EASY TO GET DEEP INTO THE WEEDS, KIND OF THE NEEDY AND GRITTY FAST. SO JUST SOME BASELINE STUFF, THERE’S MULTIPLE KINDS OF FEDERAL REPAYMENT PLANS.WHEN YOU FIRST ENTER REPAYMENT ON YOUR FEDERAL STUDENT LOANS, YOU WILL BE ON A TENURE REPAYMENT PLAN THAT TAKES THE PRINCIPAL, LOOKS AT THE PAYMENT RATE, AMEX RISES IT OVER 10 YEARS, AND THOSE ARE THE PAYMENTS OF THE INITIALLY HAVE TO START MAKING. IF YOU’RE HAVING TROUBLE MAKING THE PAYMENT AMOUNT, YOU CAN EXTEND THE TERM TO 30 YEARS AS LONG AS YOU LOWER THE PAYMENT, IT WILL DECREASE THE PAYMENTS THAT YOU MAKE OVERTIME. THEN THERE ARE ALSO THE INCOME DRIVEN REPAYMENT PLANS. THERE IS A HOST OF THESE, BUT THE BASIC IDEA IS THAT YOU PAY 10 TO 15 PERCENT OF YOUR INCOME. AND YOU DO THIS OVER A PERIOD OF TIME, AND ANY AMOUNT OF REVIEW THAT YOU HAVE IS FORGIVEN. NOW, THAT STRUCTURE IS UNIQUE. YOU DON’T SEE A LOT OF FINANCIAL PROJECTS THAT ARE STRUCTURED IN THAT WAY. ONE WAY TO THINK ABOUT THIS IS IT IS MORE OF A TAX ON INCOME THAN IT IS A LOAN. YOU PAY A CERTAIN AMOUNT OF THE INCOME FOR A CERTAIN AMOUNT OF TIME AND THAT IS YOUR OBLIGATION. THERE’S A HOST OF SCHOLARSHIPS OUT THERE THAT GO INTO DETAIL ON THAT BUT I DO THINK THAT IT IS A HELPFUL DETAIL AS WE REMEMBER WHAT IT IS THAT WE ARE TALKING ABOUT HERE. I THINK THAT HONESTLY, DEPARTMENT OF EDUCATION COULD DO A BETTER JOB Ã [AUDIO LOST]>>>SO GOING THROUGH THESE FACTORS TAKES SOME TIME. YOU NEED TO FIGURE OUT THE FACTS TO GO THROUGH THE PLAN. AN ALTERNATIVE TO THE INCOME DRIVEN PLAN, IF YOU’RE HAVING TROUBLE MAKING THIS IS THE FORBEARANCE, WHICH IS SOMETHING THAT DOES NOT HAVE ALL OF THE REFERENCE QUESTIONS, RIGHT? THIS IS JUST SOMETHING THAT YOU WERE ALLOTTED A CERTAIN AMOUNT OF. YOU COULD SAY, I WOULD LIKE A FORBEARANCE. THEY DON’T HAVE TO MAKE THE FORBEARANCE FOR YOU USUALLY A PERIOD OF MONTHS, BUT YOU COULD QUICKLY ADD UP TO THESE OVER THE YEARS. NOW, ANOTHER BASIC, WHAT IS A STUDENT LOAN SERVICER? NOW THE DEPARTMENT OF EDUCATION DEFINES STUDENT LOAN SERVICES ON THEIR WEBSITE. SOME KEY POINTS, THE DEPARTMENT SAID THAT THE LOAN SERVICER WILL WORK WITH YOU ON REPAYMENT PLANS. IF YOUR CIRCUMSTANCES CHANGE AT ANY TIME DURING YOUR REPAYMENT PERIOD, YOUR LOAN SERVICER WILL BE ABLE TO HELP HER BUT THE DEPARTMENT IS THAT IF YOU CAN’T MAKE YOUR PAYMENT, CALL YOUR LOAN SERVICER. NOW, SERVICERS OFTEN PARENT THESE EXACT SAME STATEMENTS, RIGHT? THEY HOLD THEMSELVES OUT ON AS EXPERTS FOR REPAYMENT OF LOANS, SO THEY WILL SAY ÃTHIS IS THE REPORT OF THE SERVICER WEBSITE, IF YOU ARE EXPERIENCING PROBLEMS MAKING LOAN PAYMENTS, PLEASE CONTACT US. WE CAN HELP YOU IDENTIFY SOLUTIONS THAT CAN MAKE THE RIGHT DECISION FOR YOUR SITUATION, RIGHT? SO THEY ARE OFFERING NUANCED AND EXPERT HELP ON WHAT KIND OF REPAYMENT PLAN YOU SHOULD BE IN. NOW, GETTING MORE TO THE CONCLUSION HERE, WHAT ARE THE SERVICERS INCENTIVES? THE SERVICER’S MAIN CAUSE FOR A LARGE COST OF THE SERVICERS ARE CALL CENTERS, WHICH ARE LARGE OPERATIONS WHERE YOU HAVE A LOT OF PEOPLE ON THE PHONE ANSWERING INCOMING CALLS FROM STUDENT LOAN BORROWERS WHO EXTENSIVELY, SOME OF WHICH NEED HELP ON REPAYMENT OPTIONS. SERVICERS CAN REDUCE THEIR COST SIGNIFICANTLY BY REDUCING THE CALL TIME THAT THEY HAVE ON EACH CALL. AND THAT THEY INCENTIVIZE THEIR REPRESENTATIVES ACCORDINGLY. IF YOU HAVE SHORT AVERAGE CALL TIMES, THEN YOU ARE ELIGIBLE FOR BONUSES. WHAT THIS MEANS IN PRACTICE IS THAT THE CALL REPRESENTATIVES ARE INCENTIVIZED NOT TO GO THROUGH A LONG PERIOD OF QUESTIONS THAT YOU NEED TO ANSWER IN ORDER TO FIGURE WHERE YOU SHOULD BE FOR INCOME REPAYMENT BUT INSTEAD, OFFER FORBEARANCE AS QUICKLY AND OFTEN BECAUSE YOU CAN DO IT IN UNDER 5 MINUTES. THIS HARMS BORROWERS. YOU NEED TO MAKE 20 YEARS OF QUALIFYING PAYMENTS ON AN INCOME DRIVEN PLAN IF YOU WILL GET LOAN FORGIVENESS. SO EACH MONTH THAT YOU ARE IN A FORBEARANCE, INTEREST IS CONTINUING TO ACCRUE.OU ARE LOSING TIME TOWARDS THE FORGIVENESS. THAT RIGHT THERE, YOU START TO SEE WHY STUDENTS DEFAULT. BECAUSE INSTEAD OF GETTING INTO THE PLANS THAT ARE AFFORDABLE THAT WILL ULTIMATELY PAY OFF THE LOAN OVER A PERIOD OF TIME, THEY ARE PUTTING THEM INTO A SERIES OF FORBEARANCES THAT WILL ULTIMATELY INCREASE THE LOAN BALANCE AND DON’T GET THE BORROWER ANY CLOSER TO ULTIMATE REPAYMENT. 270 DAYS IF YOU DON’T PAY FOR 270 DAYS, YOU ARE TECHNICALLY IN DEFAULT ON A FEDERAL STUDENT LOAN. AND, ONCE BORROWERS WHO DO NOT UNDERSTAND THE SYSTEM RUN AT A FORBEARANCES, THAT IS REALLY THE COUNTDOWN UNTIL THE DEFAULT. NOW, EVEN WHEN SOMEBODY GETS INTO AN INCOME DRIVEN PLAN, IF YOU GO IN AND YOU KNOW WHAT YOU’RE LOOKING FOR AND YOU TELL THE SERVICER THAT YOU KNOW WHAT YOU WANT, YOU FORCE THIS ISSUE, THERE’S A SERIES OF HURDLES AND PROBLEMS THAT COME UP IN THE INTERACTION WITH THE SERVICER. SO FOR EXAMPLE, EACH YEAR NEEDS TO RESEARCH IN ORDER FOR THE DEPARTMENT OF EDUCATION TO CALCULATE REPAYMENT. SO IF YOU HAVE THIS MUCH MONEY WHEN YOUR YOU MIGHT BE ON A ZERO DOLLAR PAYMENT OR A NEW JOB WITH MORE, YOU HAVE TO RECALCULATE SO THAT YOU ARE CONTRIBUTING WHAT YOU CAN FROM YOUR INCOME. IF YOU FAIL TO RECERTIFY YOUR INCOME, AT THE ALLOTTED TIME, YOU ARE KICKED OUT OF THE PROGRAM WHICH HAS NEGATIVE CONSEQUENCES FOR BORROWERS RIGHT AWAY. NUMBER ONE, YOUR PAYMENT WILL GO UP DRAMATICALLY. NUMBER 2, THERE IS INTEREST CAPITALIZATION.O THE INTEREST WAS ACCRUING AS I PLAYED LESS, THE ZERO DOLLAR PAYMENT, OR LESS, IT IS ACCRUING IN THE BACKGROUND. WHEN I DROPPED OUT OF THE INCOME DRIVEN PLAN, THAT INTEREST CAPITALIZES TO THE TOP OF THE LOAN. NOW THAT AMOUNT IS USED TO CALCULATE THE INTEREST GOING FORWARD, SO YOU’RE INCREASING THE AMOUNT OF INTEREST THAT IS CREATED FROM THE LOAN. THERE ARE INTEREST SUBSIDIES WHERE THE GOVERNMENT WILL PAY THE PAYMENTS FOR A PERIOD OF TIME. YOU LOSE THOSE IF YOU DON’T PAY FOR YOUR LOAN. NOW ONE OF THE PROBLEMS THAT WE SEE IS THAT THE COMMUNICATIONS ON WHEN THESE RECERTIFICATION DATES COME OUT ARE NOT CLEAR. INSTEAD OF A SUBJECT LINE THAT SAID, HEY, YOU NEED TO RECERTIFY YOUR INCOME NEXT MONTH, IT WILL SAY, YOU HAVE A NEW DOCUMENT ON YOUR KNOBBY AUNT WEBSITE. CLICK THROUGH.THEN YOU HAVE TO GO FIND YOUR PASSWORD AND WE HAVE ALL THAT WITH THIS AND IT IS REALLY A BLOCK TO THE STUDENTS SUCCESSFULLY RECERTIFYING. NOT ALL SERVICER COMMUNICATIONS ARE DONE IN THAT MANNER. WHEN YOU OWE YOUR BILL, THEY WILL SAY HEY, YOUR PAYMENT IS DUE SO PAY US. THEN IT IS MUCH MORE SPECIFIC INFORMATION. SO, AGAIN, PROBLEMS ON THE SERVICING SIDE. WE SEE THIS WITH PRIVATE LOANS. WITH PRIVATE LOANS, YOU OFTEN HAVE TO HAVE A COSIGNER.MOST PRIVATE STUDENT LOANS ARE UNDERWRITTEN ON THE COSIGNER, NOT THE STUDENT, BECAUSE THE STUDENT DOES NOT HAVE SUFFICIENT CREDIT HISTORY WITH MORE INCOME AFTER A DEGREE, SO THE COSIGNERS OFTEN ASK FOR THAT. IN SELLING THE LOANS IN THE COSIGNERS, IT IS OFTEN HIGHLIGHTED THAT THE COSIGNER CAN BE RELEASED THROUGH A SERIES OF CONSECUTIVE AND ON-TIME PAYMENTS BUT UNFORTUNATELY, WHAT CONSTITUTES ON-TIME FOR THE COSIGNER RELEASE IS OFTEN DIFFERENT THAN WHAT CONSTITUTES ON-TIME IN TERMS OF WHETHER YOU ARE DELINQUENT, SO YOU COULD MAKE A PAYMENT THAT IS ON TIME AND NOT IN A DELINQUENCY, BUT IS NOT CONSIDERED ON TIME FOR COSIGNER RELEASE. SO FOR EXAMPLE YOU WOULD GET A 10 DAY GRACE PERIOD. YOUR PAYMENT IS DUE AT THE 10TH OF THE MONTH, THEN YOU’RE FINE. THAT DOES NOT COUNT AS ON-TIME FOR COSIGNER RELEASE, SO A LOT OF PARENTS AND OLDER INDIVIDUALS AS HIGHLIGHTED IN THIS INDUSTRY GET STUCK IN THESE LOANS THAT THEY WERE TOLD THEY WOULD BE ABLE TO GET OUT OF BED OR NOT BECAUSE OF THE SEMANTICS USED. ANOTHER PROBLEM THAT WE SEE IS THE PRESENT AMOUNT DUE. SO YOU MIGHT CALL UP YOUR SERVICE AND SAY, I AM BEHIND. WHAT DO I NEED TO DO TO GET CURRENT ON THE LOAN. THE SERVICERS RESPOND IN SOME INSTANCES THAT WE HAVE SEEN IS, YOUR PRESENT AMOUNT DUE IS Ã THEN THEY GIVE YOU A FIGURE. THE PRESENT AMOUNT DUE AS DEFINED BY THE SERVICER IS NOT THE SAME AS THE AMOUNT TO BRING YOU CURRENT. THE PRESENT AMOUNT DUE IS THE AMOUNT THAT IS CURRENT PLEASURE NEXT PAYMENT, AND THIS IS NOT AT ALL CLEAR TO THE BORROWERS. SO, THESE MISALIGNED SERVICES ARE ONE OF THE PROBLEMS THAT WE FACE, AND WE ARE GOING TO TALK A LITTLE BIT BRIEFLY AS I WRAP UP HERE ABOUT WHAT THE STATES HAVE DONE TO ADDRESS THESE PROBLEMS. SO, THE FIRST THING IS THAT OFFICES LIKE MINE WITH THE ATTORNEY GENERAL HOW BROAD LAWSUITS. ILLINOIS, WASHINGTON, PENNSYLVANIA, HAVE ALL SUED NAVIANT FOR SOME OF THE PRACTICES THAT I HAVE JUST DISCUSSED. NOW, THERE ARE ALSO A SERIES OF STUDENT LOAN SERVICING LAWS, AND THESE ARE ROLES THAT ARE DESIGNED TO GET THE EXACT SAME CONDUCT, SO FOR EXAMPLE, ILLINOIS PASSED A LAW THAT JUST WENT INTO EFFECT ON DECEMBER 31 OF LAST YEAR, ONE OF THE THINGS THAT IS REQUIRED IS THAT IF YOU’RE A BORROWER WHO IS AT RISK, SOMEBODY WHO IS GOING TO MAY BE DID NOT COMPLETE THEIR DEGREE, SERVICERS ARE REQUIRED TO HAVE A SPECIALIST THERE THAT REALLY KNOWS THE INCOME DRIVEN PLAN, AND SERVICERS ARE NOT ALLOWED TO PRESENT FORBEARANCE IS THE ONLY REPAYMENT OPTION. SO THERE’S A SERIES OF REGULATIONS THAT ARE DESIGNED TO CORRECT SOME OF THESE INCENTIVE PROBLEMS. AND THEN, OUR LAW ALSO CREATED AN INVESTMENT PROGRAM. ANOTHER THING THAT STATES CAN DO, AND THERE IS A GOOD EXAMPLE OF THIS, IS TO CORRECT SOME OF THE PROBLEMS WITH THE FEDERAL SERVICERS, AT THE STATE LEVEL. IT COULD BE DONE AT THE FEDERAL LEVEL. THERE’S SOME GRIDLOCK RIGHT NOW WITH THE HIGHER EDUCATION, AND THEY’RE DOING WELL TO LOOK AT PROGRAMS LIKE PROVIDING STUDENT LOAN AUTHORITIES, STATE LENDING PROGRAMS, 2 TOUCHSTONES THEY ARE. FIRST, RHODE ISLAND SERVICES THEIR LOANS AND HOUSE WHICH INCREASES THEIR CASH FLOW AND ALIGNS THE INCENTIVE FOR THE BORROWER AND THE LENDER IN THAT RHODE ISLAND WAS TO KEEP STUDENTS CURRENT AND I WANT THEM IN FORBEARANCES, THEN FALLING INTO DEFAULT. THEY DO WANT THEM TO KEEP PAIN. NUMBER 2, RHODE ISLAND HAS A SINGLE IDR PROGRAM. SO IF YOU START TO HAVE PROBLEMS WITH REPAYMENT, THERE IS ONE PROGRAM. YOU TALK TO THE SERVICER WHO WORKS FOR THE STATE AGENCY THERE. THEY SAY OKAY. THEY WILL PUT YOU INTO THE INCOME PLAN AND THERE’S LESS FRICTION ON THAT PLAN SO I DO THINK THAT THERE ARE SOME GREAT STATE PROGRAMS OUT THERE. [APPLAUSE] >>>GOOD AFTERNOON. MY NAME IS DAN ZIBEL. I AM THE CHIEF COUNSEL OF THE NATIONAL STUDENT EVENTS AT WORK. WE ARE AN ORGANIZATION, A NONPROFIT ORGANIZATION THAT IS ABOUT ONE YEAR OLD. WE ARE DEDICATED TO THE ISSUES OF CONSUMER PROTECTIONS REALLY, ACROSS THE STUDENT AID CYCLE FOCUSING ON ISSUES. SOME OF THE STUDENT LOAN SERVICING ISSUES AS WELL. IT IS REALLY GREAT TO BE HERE TODAY. I WANT TO THANK PROFESSOR BURNS WITH THE LAW SCHOOL, I AM AN ALUM OF THE LAW SCHOOL, JUST MORE WALKING AROUND OR OVER THE PAST 24 HOURS, IT HAS BEEN NOSTALGIC AND FANTASTIC. BUILDINGS LIKE THESE WERE NOT HERE WHEN I WAS IN SCHOOL, SO THIS IS A PRETTY FANTASTIC SET UP. NOW I THINK THAT AS PROFESSOR HENDERSON SAID, THE CRISIS HERE IS HUGE, RIGHT? WE HEAR THE $1.5 TRILLION NUMBER ALL THE TIME, ABOUT 1 TRILLION IN GROWTH OVER THE LAST DECADE ALONE, MORE PEOPLE ARE BORROWING. MORE PEOPLE ARE BORROWING MORE. THE AVERAGE STUDENTS ARE AVERAGING MORE MONEY, THE DELINQUENCY RATES ARE HIGH, BANKRUPTCY IS VIRTUALLY IMPOSSIBLE TO OBTAIN, AND THERE’S LOTS AND LOTS OF CAUSES FOR THAT. I THINK MAYBE THERE ARE FEWER SOLUTIONS RIGHT NOW BUT I WANT TO OFFER SOME COMMENTS AND THOUGHTS ON THE ROLE OF THE U.S. DEPARTMENT OF EDUCATION IN ALL OF THIS. THAT IS SOMETHING WE NOT HAVE BEEN FOCUSING THAT MUCH ON, AND I OFFER THESE THOUGHTS FREELY AS SOMEBODY WHO WORKED THERE, SPENDING 3 YEARS IN THE GENERAL COUNSEL’S OFFICE FOCUSING ON THE ISSUES OF HIGHER ED. REPRESENTATIVE CHOPRA WAS THERE, A LITTLE BIT UNDER SECRETARY DUNCAN AND JAMES, AND THE END OF MY TIME UNDER THE CURRENT ADMINISTRATION. JUST FOR THE FIRST CHUNK OF THAT, I HAVE SERVED ON THE OBAMA ADMINISTRATION’S INTERAGENCY TASK FORCE ON FOR-PROFIT EDUCATION.E HAD HELP TO DO A LOT OF THINGS THAT I THINK SOME OF THE OTHER PANELISTS WERE REFERRING TO DURING THE LAST FEW YEARS OF THE ADMINISTRATION, STARTING TO OPERATIONALIZE THE GAINFUL EMPLOYMENT REQUIREMENTS THAT HAD BEEN A MULTIYEAR EFFORT IN THE COURSE BACK DOWN TO THE AGENCY, BACKUP TO THE COURTS, AND FINALLY, IT WAS REALLY GETTING GOING. WE DESIGNED A ENFORCEMENT UNIT FOR THE FOUR-PROFIT AND OTHER PREDATORY UNITS OF HIGHER EDUCATION, AND THAT THERE WAS A LOT GOING ON. THERE’S A LOT GOING ON WITH THE STUDENT LOAN DEBT RELIEF. A LOT WAS GOING ON IN THE ENFORCEMENT ACTION AGAINST SOME OF THE BIG ACTORS. CORINTHIAN, ITT, MANY OF THESE ACTORS WERE ENGAGED IN SIMILAR OR ALMOST IDENTICAL BEHAVIOR AS CORINTHIAN AND ITT HAD USED THAT VERY FEW PEOPLE IN THIS ROOM HAVE EVER HEARD WHAT THESE SCHOOLS ARE. BEAUTY AND TRADE SCHOOLS, OTHER TYPES OF TRADE SCHOOLS, FOR-PROFIT LAW SCHOOLS. THERE IS A WHOLE HOST OF PLAYERS WHO NEVER GOT THE KATA PRESS THAT CORINTHIAN AND ITT DO, BUT THEY ARE OUT THERE. AND I THINK THAT THEY OFTEN GET OVERLOOKED REALLY BECAUSE OF THE SIZE AND SCOPE AND THEIR ATTENTION SPAN PALES ON THE ISSUES. IN CONTRAST, THE DEPARTMENT OF EDUCATION OVER THE LAST FEW YEARS HAS TAKEN A VERY DIFFERENT APPROACH. THERE HAS BEEN A LOT IN THE WORLD OF REGULATORY ROLLBACKS. AS WE MENTIONED A LITTLE BIT, THE GAINFUL EMPLOYMENT RULE WHICH WAS REALLY DESIGNED TO BE A VALUE PROPOSITION. OUR STUDENTS TAKING OUT A LEVEL OF DEBT THAT IS COMMENSURATE WITH HER EARNINGS? A DEBT TO RATIO LEARNING, THAT RULE WAS IN EFFECT AND IS STILL THE LAW OF THE LAND BUT IS NOT BEING ENFORCED BY THE CURRENT DEPARTMENT OF EDUCATION, AND THE DEPARTMENT HAS PROPOSED IN AN MPR M THAT CAME ABOUT ONE YEAR AGO, THE NOTICE OF RULEMAKING TO ESSENTIALLY SELECT ALL AND DELETE THE RULE. THE DEPARTMENT HAS UNLAWFULLY REFUSED TO IMPLEMENT RULES DESIGNED TO PROVIDE AUTOMATIC DEBT RELIEF TO THE PEOPLE WHO WENT TO COLLEGES, LARGELY FOR-PROFIT COLLEGES BUT ALL COLLEGES WHO CLOSED WHILE THEY WERE THERE. THAT WAS THE SUBJECT OF LITIGATION, AND THE DEPARTMENT WILL FINALLY BEGIN TO IMPLEMENT THAT RELIEF. WE ARE SEEING THE FRUITS OF LITIGATION JUST IN THE LAST FEW MONTHS. THE DEPARTMENT HAS UNLAWFULLY DELAYED THE DEFENSE ROLE, INCLUDING THE CLASS ACTION WAIVER, THE BAND OF CLASS ACTION WAIVERS AND MANDATORY ARBITRATION THE THE DEPARTMENT BUT IN IN 2016, THE DEPARTMENT HAS SAID UNDER SECRETARY DEVOS, TO DELAY THE IMPLEMENTATION OF THAT RULE BUT THAT HAS BEEN FOUND TO BE ILLEGAL. THE DEPARTMENT DELAYED WHAT IS CALLED THE STATE AUTHORIZATION RULE WHICH IS DESIGNED TO PROTECT THE STUDENTS WERE ENROLLING IN ONLINE INSTITUTIONS OF HIGHER EDUCATION. I DO BELIEVE THAT THAT IS ALSO UNLAWFUL AND WE DO HAVE A SUMMARY JUDGMENT ARGUMENTS IN ABOUT 3 WEEKS IN CALIFORNIA WHERE A JUDGE WILL MAKE THE DECISION. THE DEPARTMENT HAS REVERSED COURSE ON ONE OF THE MOST CONTROVERSIAL PREDATORS OF FOR-PROFIT COLLEGES, AN ORGANIZATION CALLED A CICS. THAT WAS SOMETHING THAT SECRETARY CAN GET THE DEAL END OF THE OBAMA ADMINISTRATION SAID YOU’RE NOT DOING YOUR JOB WELL ENOUGH. YOU ARE NO LONGER FIT TO BE SERVED AS A DEPARTMENT RECOGNIZED CREDITOR, FOR PRACTICAL PURPOSES MEANS THAT YOU CANNOT GET ÃIS A SCHOOL THAT IS ACCREDITED BY THAT ACCREDITOR, IF THEY ARE NOT RECOGNIZED BY THE DEPARTMENT, THEN YOUR STUDENTS ARE NO LONGER ELIGIBLE TO GET 8, PELL GRANTS AND DIRECT LOANS. SO THEY WERE OUT. A CICS WAS OUT THEM BACK IN, AND QUITE REMARKABLY, EVEN AFTER LETTING IT BACK IN, EVEN WHEN THEY LEAD IT BACK AND IT BECAME CLEAR THAT THE DEPARTMENT ACTUALLY BELIEVED THAT THEY DID NOT MEET THE FEDERAL STANDARDS FOR COMPETENCY, FOR CONFLICT OF INTEREST, BUT LOAN DEFAULT, THEY ARE BY THE SAME RATE DEPARTMENT OF EDUCATION.THE DEPARTMENT HAS EFFECTIVELY DISMANTLED THE ENFORCEMENT UNIT DESIGNED TO FERRET OUT THE KINDS OF BEHAVIOR THAT WE HAVE BEEN HEARING ABOUT. THEN ON THE STUDENT LOAN SERVICING SIDE, WE HAVE SEEN THE DEPARTMENT ARGUE FORCEFULLY THE STATE CONSUMER PROTECTION LAWS, THEY CANNOT TO BE USED AGAINST STUDENT LOAN SERVICERS. SO THAT IS TRYING TO STOP THE KIND OF LAWSUITS THAT ILLINOIS AND JOE HAVE BEEN BRINGING AGAINST NAVIENT AND OTHER STATES, TRYING TO STOP THE LOSSES OF THE PRIVATE CLASS ACTION LAWSUITS AND PLAINTIFFS HAVE USED AGAINST STUDENT LOAN SERVICERS. THE PLAINTIFFS HAVE MADE THE ARGUMENT IN THE FEDERAL REGISTER, THAT THE STUDENT LOAN SERVICERS ARE LATCHING ONTO THAT. YOU CAN QUERY THE LEVEL OF RELATIONSHIP THERE. BUT THAT IS THE ARGUMENT THAT IS BEING MADE IN THE COURTS, AND IT HAS BEEN HAVING LIMITED SUCCESS. I THINK THAT EVERY STATE IN SHE HAS BEEN ABLE TO FEND OFF THIS PRESUMPTION ARGUMENT BUT THERE’S A COUPLE OF CASES THAT HAVE COME OUT THE WRONG WAY, AND THEY ARE NOW IN THE COURTS OF APPEAL, INCLUDING ONE THAT I ARGUED LAST OCTOBER, I THINK AS WE WAIT FOR A RULING FROM THE SEVENTH CIRCUIT ON THAT. SIMILARLY, THIS LOGIC ALSO APPLIES TO THE KINDS OF STUDENT LOAN SERVICING BILLS THAT JOE WAS TALKING ABOUT THE DEPARTMENT SAYING TO STATES, HANDS-OFF REGISTRATION, LICENSING, HIS OFFER STUDENT LOAN SERVICERS, THE FEDERAL CONTRACTORS THAT STATED YOU HAVE NO RULE IN PREDICTING THE STUDENTS IN THIS SPACE. AND ON TOP OF THAT, ON THE STUDENT LOAN SERVICING FRIEND, THERE IS A RECENT REPORT FROM THE DEPARTMENT OF EDUCATION’S OFFICE AND INSPECTOR GENERAL THAT SAID AN AD IS NOT ACTUALLY DOING A GOOD ENOUGH JOB SELF POLICING THE LOAN SERVICERS. SO YOU HAVE THE IDEA THAT THAT YOU ARE NOT DOING A GOOD ENOUGH JOB ALL THE WHILE, THE DEPARTMENT OF EDUCATION IS THAT NOBODY ELSE IS ALLOWED TO OVERSEE THE SERVICERS. SO, WHO IS LEFT? AS WE THINK ABOUT THAT ISSUE, AND JOE DID MENTION BRIEFLY THAT THE HIGHER EDUCATION ACT IS CURRENTLY BEING DEBATED FOR REAUTHORIZATION, I THINK THAT THERE IS A FUNDAMENTAL QUESTION THAT HAS TO BE ASKED. THAT IS, WHAT COULD HAVE BEEN DONE IN THE STUDENT LOAN SPACE, RIGHT? IF WE LOOK BACK AT THE ORIGINS OF STUDENT LOANS, I DO THINK THAT THE MODERN SYSTEM COULD HAVE DATED BACK TO POST-WORLD WAR 2, THE G.I. BILL, LARGELY A GRANT SYSTEM. THE GOAL IS OPPORTUNITY IN PROVIDING ACCESS, ABOUT STUDENT AND EDUCATION WORKFORCE TRAINING. OBVIOUSLY, A LOT HAS CHANGED SINCE THEN. HE DID NOT HAVE THE DEPARTMENT OF EDUCATION BACK THEN. THAT CAME ABOUT IN THE LATE 70s WERE THERE WERE STILL PEOPLE WHO WORK WITH THE DEPARTMENT OF HEALTH AND EDUCATION WELFARE, WHO ACTUALLY HAD AN AMAZING AMOUNT OF KNOWLEDGE ABOUT THAT TIME. NOW, I THINK IT WAS IN THE LATE 90S, WHEN THE DEPARTMENT OF THE FEDERAL OFFICE OF STUDENT AID WAS GREETED THROUGH THE ALCOR REINVENTING GOVERNMENT CONTEXT DESIGNED TO GIVE GREATER FLEXIBILITY TO THE AGENCY TO ACT A LITTLE MORE BUSINESSLIKE. AND THEN, LATER, THE TO THOUSAND 8 FINANCIAL CRISIS, THE GOVERNMENT SWITCHES TO ENTIRELY DIRECT LOAN SYSTEM RATHER THAN THE SYSTEM OF GUARANTEED COMMERCIALLY MADE LOANS UNDER THE FEDERAL FAMILY EDUCATION PROGRAM. SO THAT IS A LOT OF CHANGE, RIGHT? NOW, THE QUESTION REALLY IS, WHERE IS THE DEPARTMENT IN ALL OF THIS? IS THIS THE KIND OF DEPARTMENT, AS CONSTITUTED RIGHT NOW, REALLY HAS THE ABILITY TO OVERSEE IN A WAY THAT IS EFFECTIVE? ONE OF THE THINGS THAT HAS AFFECTED ME IN THE PAST 24 HOURS AS I SAT IN A ROOM, WITH SO MANY FINANCIAL EXPERTS, THE WAY THAT A LOT OF PEOPLE HAVE TALKED ABOUT BANKS AND THE SUPERVISORY AUTHORITY, ALL OF THE CONSUMER PROTECTION THAT SORT OF GOES WITH THE COMPLICATED COMMERCIAL LENDING PRODUCTS LIKE AUTO LOANS AND PAYDAY LOANS, YOU SPEND TIME WITH THE DEPARTMENT OF EDUCATION, AND THEY’RE TALKING A DIFFERENT LANGUAGE ABOUT THEIR CUSTOMERS WERE USUALLY THE SCHOOLS, OR THEIR CUSTOMERS ARE THE SERVICERS. WE ARE ALL JUST NODDING ALONG BUT I THINK THAT THERE ARE TONS OF WELL-MEANING PEOPLE AT THE DEPARTMENT OF EDUCATION, BUT IT REALLY IS A DIFFERENT CONVERSATION THAT IS HAPPENING THERE, AND IS NOT A FOCUS ON HOW TO BEST PROTECT STUDENTS, BUT THE PROTECTION OF TAXPAYERS.WHETHER IT IS WORKING OR NOT THAT WE COULD TALK ABOUT. BUT A LOT OF IT IS TALKING ABOUT PROTECTING AND ENABLING THE SCHOOLS. WELL, WE CAN’T SHUT THE SCHOOL DOWN BECAUSE WHAT ABOUT THE STUDENTS WHO GO THERE RIGHT NOW? THE CONVERSATION IS NEVER ABOUT THE STUDENTS WILL GO THERE IN TWO YEARS, 3 YEARS, 5 YEARS? IT’S ABOUT THE STUDENTS THAT ARE THERE TODAY AND RIGHT NOW? HOW DO WE PROTECT THEM? THERE’S NOT A CONVERSATION ABOUT WHETHER THAT IS IN THE BEST INTEREST AT LARGE. NOW THERE ARE EXCEPTIONS TO THIS. I THINK THAT THERE WERE EXCEPTIONS IN THE LAST FEW YEARS OF THE OBAMA ADMINISTRATION WHEN YOU SAW CARINTHIA, ITT, EVEN RECENTLY WE HAVE HAD EXCEPTIONS TO THAT. AND EVEN THIS ADMINISTRATION I THINK HAS A TIPPING POINT WITH SOME OF THE ARGOSY UNIVERSITY THAT COMES TO MIND JUST IN THE PAST FEW WEEKS, WHERE THE DEPARTMENT OF EDUCATION HAS SAID, ENOUGH IS ENOUGH. THERE IS INDICATION THAT SHE CANNOT FIND $16 MILLION OF FEDERAL MONEY, THAT IS ENOUGH FOR US TO FINALLY PUT YOU OUT OF BUSINESS OR AT LEAST TAKE AWAY THIS TITLE FOR AID. BUT I DO THINK THAT THERE IS A FUNDAMENTAL QUESTION TO SAY, WHAT IS THE ROLE OF THE DEPARTMENT? IN THE STATUTE RIGHT NOW THE DEPARTMENT HAS A ROLE IN CONTRACTING SERVICERS, OVERSEEN SERVICERS, OVERSEEING CREDITORS IN SCHOOLS, DECIDING WHICH SCHOOLS CAN PARTICIPATE IN TITLE IV, WHICH SCHOOLS CANNOT PARTICIPATE IN TITLE IV.WHICH CREDITORS CAN CREDIT, WHAT DO REPAYMENT PLANS LOOK LIKE? ALL OF THAT MEANS IS THAT THE DEPARTMENT OF EDUCATION IS THAT THE CENTRAL FOCUS POINT OF A $1.5 TRILLION STUDENT DEBT PORTFOLIO. AND AS I HEAR THESE CONVERSATIONS THAT GO ON IN D.C. ABOUT THE AREA AUTHORIZATION, THERE’S A LOT OF PROPOSALS AT THE MARGINS. THEY ARE GOOD PROPOSALS AND CONVERSATIONS THAT WE ABSOLUTELY HAVE TO BE HAVING ABOUT THINGS LIKE, AND INCENTIVE-BASED COMPENSATION FOR RECRUITER SCHOOLS, THE FEDERAL 9010 RULE, THE USE OF PRIVATE ACTION, ALL THINGS THAT GET DISCUSSED, BUT I WOULD LIKE TO SEE FROM THE OUTSIDE IS, YOU KNOW, IS A BROADER CONVERSATION? WHAT ARE WE DOING HERE AND WHAT IS THE ROLE OF THE DEPARTMENT? WHAT HAS THE DEPARTMENT TRIED TO EDGE OUT? FROM THEIR ROLE IN POLICING STUDENT LOAN SERVICING COMPANIES? WHAT ARE THE ROLES OF STATES, STATES THAT ARE PROVEN TO HAVE A GREAT ABILITY IN THIS SPACE, AND SHOULD PROBABLY HAVE MORE OF AN ABILITY IN THIS SPACE, BUT THEY ARE UNDER RESOURCED AS WELL, SO HOW DO WE BRING THAT ALL TOGETHER INTO A SYSTEM THAT WORKS FOR STUDENTS?ND WITHIN THE DEPARTMENT OF EDUCATION, WHAT CAN BE DONE MORE ON THE SUPERVISORY SIDE, THE MONITORING SIDE, THE PROGRAM COMPLIANCE? THE SAME PEOPLE ARE LOOKING AT THE FINANCES OF INSTITUTIONS, AND ARE ALSO LOOKING AT WHETHER OR NOT THEY ARE MEETING CAMPUS SECURITY REQUIREMENTS? THESE ARE VERY DIFFERENT THINGS WITH VERY DIFFERENT SKILLS. NOW, I SHOULD NOT NECESSARILY BE THE PEOPLE CHECKING THE BOX TO MAKE SURE THAT THEY HAVE ALL OF THE BLUE LIGHTS, BUT ALSO THAT YOU ARE NOT LYING TO STUDENTS DURING RECRUITING, 2 DIFFERENT SETS THAT ARE REQUIRED DURING THIS. THERE’S A LOT OF 2 NEED TO BE DONE ON ALL OF THESE ISSUES, AND REALLY, I HAVE FAILED IN ASKING QUESTIONS BUT NOT PROVIDING A LOT OF ANSWERS. BUT I DO THINK THAT THIS IS A CONVERSATION THERE REALLY NEEDS TO HAPPEN MORE. I THINK AS PROFESSOR HENDERSON HAS SAID, THE TRAVESTY HERE IS WITH THE STUDENTS. WE HAVE ALL HEARD FROM SO MANY STUDENTS HAVE BEEN SO DEEPLY IMPACTED BY THESE ISSUES IN THEIR LIVES, AND THEY ARE JUST CLOBBERED WITH DEBT, YOU KNOW? THIS IS ÃTHEY ARE TRULY SOLD HOPE, BUT IN THE END, NOT ONLY ARE THEY NOT GIVEN THE PROMISE OF HOPE, THEY ARE LEFT PAYING FOR WITH NOTHING TO SHOW FOR IT.>>ALL RIGHT! [APPLAUSE] >>THANK YOU, DAN, AND THANK YOU TO OUR OTHER CANDIDATES, >>NO, I WENT TO PICK UP ACTUALLY THIS ISSUE WITH THE DEPARTMENT OF EDUCATION. IT DOES SEEM THAT THE DEPARTMENT IS CAPTIVE OF THE STUDENT LOAN SERVICES, WHICH BY THE WAY, FOR THE MEMBERS OF THE AUDIENCE, OVER THE PAST 5 YEARS OR SO, THERE HAVE BEEN COMPLAINTS ABOUT STUDENT SERVICES THAT ARE HORRIBLE. IT’S JUST DOCUMENTED, BUT THERE ARE DIFFICULTIES THAT THE INDIVIDUAL STUDENTS IS ARE EXPERIENCING. I’M TRYING TO GET THE PROPER INFORMATION TO TRULY UNDERSTAND, BUT I THINK THE MODERATOR FROM HER LAST PANEL | [LAUGHTER] >>I THINK THAT WE ALL WENT TO ÃTHIS CONVERSATION NEEDS TO HAPPEN. BUT SINCE THE DEPARTMENT REALLY HAS THIS ACTIVITY, INCLUDING AN EFFORT TO PREEMPT BOTH STATE AND OTHER FEDERAL AGENCIES, IT REALLY IS AT THE CRUX.>>FIRST, I WANT TO MAKE CERTAIN THAT WE ARE ON THE SAME PAGE. WOULD YOU ALL AGREE THAT THE DEPARTMENT IS TRYING TO RESOLVE THIS ISSUE? FOR THINGS TO BE CHANGED?>>YES, NO, THEY MAKE ALL OF THE LOANS. RIGHT? THEY APPROVED THE SCHOOLS IN THE CREDITORS AND HAVE ALL OF THE MONEY, THEY READ ALL THE RACE AND ENFORCE THE RAKES, AND THEY THINK NOBODY ELSE CAN DO IT.>>I THINK THAT THAT IS POWER.>>I DO THINK THAT THAT IS VERY TRUE. IT IS A PHILOSOPHICAL QUESTION, AND IF ANYBODY WANTS TO ANSWER THAT’S FINE, BUT THE FIRST PHILOSOPHICAL QUESTION IS, WHY IS THE FEDERAL GOVERNMENT MAKING A PROFIT ON STUDENT LOANS, AND WHY, GIVEN THE MAGNITUDE OF THE DEBT, THE INDEBTEDNESS, THE $1.5 TRILLION, 44 MILLION PEOPLE, WHY IS THE FEDERAL GOVERNMENT SEEKING TO MAKE A PROFIT ON SOMETHING THAT SHOULD BE AN INVESTMENT IN THE NATION? THAT IS AN ISSUE THAT LOOMS LARGE, THAT ENTIRE QUESTION. WE WILL GET BACK TO THAT ARUBA WILL TRY TO ADDRESS THAT. BUT, TRYING TO REFORM THE DEPARTMENT OF EDUCATION, NO ONE OF THE ORGANIZATION THAT I AM FAMILIAR WITH IN D.C. AGREES THAT IT IS A NONGOVERNMENTAL ORGANIZATION, AND ADEQUATE SCOPE, CAN REALLY ANSWER THAT. NOW I AM LOOKING AT CONGRESS, AND THEIR SYSTEM THAT IS ACHIEVING EVERYTHING, WE HAVE TO HAVE BY PARTISANS. YOU CAN TAKE, YOU KNOW, THE VOTES OF ONE PARTY, IN THE SENSE THAT DEMOCRATS HAVE CONTROLLED THE HOUSE OF REPRESENTATIVES, AND THAT COULD MAKE A DIFFERENCE AS WE DO SEE THE REFORM GOING FORWARD, BUT IF YOU’RE REALLY TRYING TO ACCOMPLISH SOMETHING MEANINGFUL AND PERMANENT, YOU WILL HAVE TO HAVE SOME BIPARTISAN SUPPORT. THAT IS GOING TO BE A KEY ISSUE. SO I AM GOING TO ENCOURAGE EVERYONE TO SORT OF THINK ABOUT THE CHALLENGE OF REALLY DOING THAT. THANK YOU VERY MUCH. SO, HOW DO WE DO THAT? HOW DO WE DO THAT? I’M JUST TRYING THIS OUT THERE? ARE THERE ANY IDEAS? IT IS VERY TRUE THAT THE STATES AND LABORATORIES HAVE CHANGED IN THE AREA. THE STATES REALLY ARE FAR AHEAD OF THE FEDERAL GOVERNMENT, AND LOOKING FOR MEANINGFUL CHANGE, BUT OBVIOUSLY, IF THE STATES ARE PREEMPTED FROM DEALING WITH SOME OF THE ISSUES THAT WE HAVE TALKED ABOUT, THEY, TOO, WILL HAVE DIFFICULTIES. ANY IDEAS ON THESE LOANS?>>I THINK THAT THERE ACTUALLY MIGHT BE A GLIMMER OF HOPE IN SOMETHING THAT YOU SAID DURING THE TALK. IT DID NOT SOUND HOPEFUL BUT I THINK FROM A POLITICAL ECONOMY PERSPECTIVE, IT MIGHT BE. HE POINTED OUT THAT EVEN AARP, THE AARP, IS NOW CONCERNED ABOUT THE ISSUES. AND I DO THINK THAT THAT SPEAKS A DEEPER PROBLEM IN THE SPACE AND THAT OUR POLITICAL SERVICE DOES NOT SERVE YOUNG PEOPLE WELL. IT DOESN’T. YOU CAN SAVE IT IS BECAUSE WE DON’T VOTE OR ÃI SAY WE. I DON’T KNOW IF I SHOULD STILL SAY WE. [LAUGHTER] >>BUT YOU CAN SAY THAT IT IS BECAUSE YOUNG PEOPLE DO NOT VOTE OR BECAUSE THEY DO NOT CONTRIBUTE TO POLITICAL CANDIDATES BUT THE REALITY IS THAT OUR POLITICAL SYSTEM DOES NOT ÃWHAT IS HAPPENING TO STUDENTS NOW, WHAT WE HAVE ALL BEEN TALKING ABOUT, WE WOULD NEVER LET THIS HAPPEN TO SENIORS. WE WOULD NEVER LET IT HAPPENED. NOW THAT IT IS TALKING TO SENIORS, THERE MIGHT BE HOPE. THIS COULD BE A WAKE-UP CALL, A BIPARTISAN WAKE-UP CALL.THIS IS NO MORE ACCEPTABLE FOR YOUNG PEOPLE THAN IT IS FOR THE OLDER AMERICANS.>>AND I THINK THAT THE SENIORS POINT IS RELEVANT. AS THE OMBUDSMAN, I DO TAKE IN THE COMPLAINTS ON THE STOCK. AND THE AMOUNT OF PARENTS A CALL IN WITH PARENT PLUS LOANS AS COSIGNERS WITH THEIR OWN DEBT IS REMARKABLE. YOU GET A LOT OF OLDER PEOPLE WHO ARE ENGAGED AND HAVE THIS PROBLEM.>>NOW, I DO THINK THAT Ã REPEATING THE SENIORS THING, ANOTHER THING THAT WE HAVE NOT TALKED ABOUT OUR VETERANS IN THE MILITARY. YOU HAD MENTIONED A LITTLE BIT, AND THE RECRUITING, THE LEAD GENERATION, BUT THERE IS A HUGE INCENTIVE BUILT IN, PARTICULARLY FOR THE FOUR-PROFIT COLLEGES, TO TARGET THE VETERAN POPULATIONS, SOMETHING THAT IS CALLED THE 9010 RULE THAT PROVIDES THAT FOR-PROFIT COLLEGES CANNOT GET MORE THAN 90 PERCENT OF THE REVENUE FROM THE U.S. DEPARTMENT OF EDUCATION. LET ME SAY THAT AGAIN. FOR-PROFIT COLLEGES CANNOT GET MORE THAN 90 PERCENT OF THEIR REVENUE FROM THE DEPARTMENT OF EDUCATION, BUT STILL, THAT REQUIRES A LOOPHOLE. ONE OF THE LOOPHOLES IS THAT THE DEPARTMENT OF DEFENSE AND THE DEPARTMENT OF THE ÃTHE VA DEPARTMENT, THAT MONEY DOES NOT COUNT TOWARDS THE 90 PERCENT. SO THE G.I. BILL FUNDS COUNT TOWARDS THE TIMBER DID THAT MAKE THE G.I. BILL FUNDS INCREDIBLY VALUABLE. IN THE DEPARTMENT OF DEFENSE PROGRAMS, THAT IS A VERY PROFITABLE FOR THE FOR-PROFIT COLLEGES. SO FOR ONE, THE PERCENTAGE OF VETERAN POPULATIONS THAT ARE THERE ARE GOING TO BE YOUR THAT. WE NEED PEOPLE WHO ARE EXPERTS IN THIS FROM THE EXPERTS AND OTHER TYPE OF LENDING PRODUCTS TO REALLY BE FOCUSED ON THIS ISSUE. THIS IS NOT NECESSARILY AN ISSUE THAT THE HIGHER EDUCATION COMMUNITY CAN SOLVE ON HIS OWN, BUT THE PEOPLE WHO DO HAVE A FAMILIARITY WITH, YOU KNOW, HOW WE LOOK AT AND THINK OF MORTGAGES? HOW DO WE THINK OF ALL OF THESE OTHER PRODUCTS? WHAT LESSONS CAN WE DRAW FROM THEM? WHAT LESSONS CAN WE DRAW FROM THE OTHER REGULATORS TO THINK ABOUT HOW BEST THE DEPARTMENT OF EDUCATION, IF INDEED IT IS THE DEPARTMENT OF EDUCATION, BUT HOW BEST TO OVERSEE AND MONITOR THE STUDENT LOAN SERVICERS?>>WELL, I THINK THAT YOU HAVE MADE A NUMBER OF GREAT POINTS, GUYS. AND I WOULD SAY, WITH YOUR OBSERVATION OF THE AARP AND THE OTHER VETERAN GROUPS, THERE’S TO OTHER ELEMENTS IN WASHINGTON THAT I THINK ARE GOING TO COME TOGETHER AS A PART OF A NEW POTENTIAL COALITION THAT CAN HELP TO ADDRESS THESE ISSUES. BVIOUSLY, THE GROUPS REPRESENTED HERE ARE A PART OF THE DISCUSSION. AND THE ORGANIZATIONS, THE CIVIL RIGHTS COMMUNITY, BUT YOU ALSO HAVE THE HOME BUILDERS THAT ARE EXPRESSING GREAT CONCERN THAT INDIVIDUALS WHO MAY BE ELIGIBLE TO PURCHASE HOMES ARE DELAYING THEIR PURCHASES ON AVERAGE BY 7 YEARS BECAUSE OF STUDENT LOAN DEBT. YET THE NATIONAL ASSOCIATION OF REALTORS WHO ARE REALLY CONCERNED ABOUT THEIR ABILITY TO CONTINUE TO KEEP THE HOME MARKET BUILD. WITH ALL OF THAT, I DO SEE THE POSSIBILITY OF A NEW EMERGING COALITION COMING TOGETHER IN PART BECAUSE OF THE REAUTHORIZATION OF THE HIGHER EDUCATION ACT WHICH WILL LIKELY BE THE LEGISLATIVE VEHICLE AT THE FEDERAL LEVEL THAT WILL, AT LEAST, ONE OF THE CENTRAL ELEMENTS OF ADDRESSING THESE ISSUES.ECONDLY, AGAIN I WANT TO MENTION THE IMPORTANCE OF BIPARTISANSHIP. I WOULD SAY THAT CLEARLY THE SENATE WILL BE A BIG CHALLENGE IN MOVING THE LEGISLATION FORWARD. BUT I AM ENCOURAGED BY THE FACT THAT LAMAR ALEXANDER, CHAIR OF THE EDUCATION COMMITTEE OF THE SENATE, THE HEALTH AND EDUCATION COMMITTEE IS COMMITTED TO REAUTHORIZING THE HIGHER EDUCATION ACT STUPID LAMAR ALEXANDER HAS A HISTORY IN THIS AREA, AND I DO THINK THAT HE SHOULD CERTAINLY BE LIFTED UP BECAUSE IN ISSUES OF CIVIL RIGHTS IN THE EDUCATION CONTEXT, HE HAS BEEN A LEADER. HE AND PATTIE MURRAY THE SENATOR FROM WASHINGTON ARE THE CHAIR AND RANKING MEMBERS OF THE COMMITTEE AND I DO HAVE A SENSE OF OPTIMISM THAT THEY WILL AT LEAST EXAMINE THESE ISSUES CLOSELY, IF WE CAN BRING ADEQUATE ATTENTION TO THE MATTER.UT WE ARE GOING TO HAVE TO GET THE ATTENTION OF CONGRESS ON THIS ISSUE, AND WE WILL HAVE TO DO IT BEYOND WHAT WE HAVE DONE SO FAR IN PROVIDING GENERAL INFORMATION. I THOUGHT THAT THIS PANEL WAS SO WONDERFUL BECAUSE A LOT OF THIS INFORMATION HAS BEEN KNOWN AS A GENERAL MATTER, BUT PULLING IT TOGETHER IN A SINGLE FORMER WE HAVE HAD A CONVERSATION LIKE THIS IS A RARITY, AND I DO THINK THAT WE SHOULD TAKE ADVANTAGE OF IT. ONE OF THE HOPES THAT I HAVE HAD COMING OUT OF THIS IS THAT THERE WILL BE A FOCUSED AND DETAILED REPORT ON THE ROLE OF THE DEPARTMENT OF EDUCATION THAT WILL BE, IN ESSENCE, SHARED BY A NUMBER OF DIFFERENT CONSTITUENCIES, AND OWNERSHIP THAT THEY WILL SIGN ONTO IT, TO HELP PROMOTE IT, AND THAT THEY WILL BRING THIS REPORT AND FOCUS ON THE ROLE THAT THE DEPARTMENT IS PURSUING AND NOT PURSUING TO THE ATTENTION OF A BROADER PUBLIC. I THINK RIGHT NOW, SECRETARY DIVORCE GETS AWAY WITH MANY OF HER ACTIONS BECAUSE THEY ARE A PART OF SEVERAL GROUPS OF THINGS THAT SHE IS DOING, SOME OF WHICH WE DO HAVE A DISAGREEMENT WITH, BUT NONE OF IT HAS REALLY PIERCED THE CONSCIOUSNESS OF POLICYMAKERS IN WASHINGTON. NOW UNTIL WE DO THAT, WE WILL HAVE A PROBLEM. SO I AM LOOKING TO BRING PEOPLE TOGETHER TO LAY OUT IN ESSENCE A DETAILED ANALYSIS OF THE FAILURES OF THE DEPARTMENT IN ADDRESSING THESE ISSUES THEY CAN ENJOY THE SUPPORT CERTAINLY OF THE NGO COMMUNITY IN WASHINGTON, AND MANY OTHER INFLUENTIALS. SECONDLY, I WOULD THINK JUST AS THE STATE ATTORNEYS GENERAL’S, SEVERAL OF THEM, HAVE BANDED TOGETHER IN COLLECTION ACTION OF THE PAST, THAT HAVING THE STATES ATTORNEYS GENERAL’S JOY IN AN EFFORT TO HIGHLIGHT THE WRONGFUL ROLE OF THE DEPARTMENT OF EDUCATION COULD BE HELPFUL. I ASSUME THAT |>>YES, SHE HAS STEPPED IN.E DO HAVE A NEW ATTORNEY GENERAL IN ILLINOIS, THE ATTORNEY GENERAL, HE HAS BEEN Ã CONTINUING TO PUSH ON THESE ISSUES AND, YOU KNOW, WE HAVE A LOT OF IDEAS THAT I THINK CAN SERVE AS A TEMPLATE ON THE FEDERAL LEVEL.>>YEAH.>>HE STATES OBVIOUSLY FUND HIGHER EDUCATION, AND I DO THINK THAT THERE ARE SOME UNIQUE WAYS THAT WE CAN THINK ABOUT USING INCOME DRIVEN REPAYMENT ON THE STATE LEVEL. THERE’S A LOT OF TALK ABOUT FREE TUITION PLANS, AND THESE ARE GOOD TO GET BACK YOUR IDEA OF SHOULD THE FEDERAL GOVERNMENT MAKE A PROFIT? BUT I DO THINK THAT INCOME DRIVEN REPAYMENT IMPLEMENTED CORRECTLY ON THE STATE LEVEL COULD SHOW US A PATH WHERE THOSE WHO GET THE DEGREE AND GO ON TO GREAT SUCCESS PAY INTO THE PROGRAM, BUT THAT THE PROGRAM SUPPORTS THOSE WHO FALL ON HARD TIMES AND DOES NOT OVERBURDEN THEM WITH A DEBT THAT CANNOT BE DISCHARGED IN THINK BANKRUPTCY THAT YOU WILL CARRY WITH YOU FOR THE REST OF YOUR LIFE. SO I DO THINK THAT THE STATES HAVE AN OPPORTUNITY TO CREATE A TEMPLATE THAT COULD SHOW THE FEDERAL GOVERNMENT THE WAY TO WORK.>>I THINK THAT THAT WOULD BE HELPFUL. NOW JUST ONE NOTE. WE HAVE SIMPLY SEEN SOME ANALYSIS THAT SUGGESTS THAT NOT ALL STUDENT LOANS ARE NONDISCHARGEABLE IN BANKRUPTCY. THAT THERE ARE ÃTHE LOANS TO HAVE TO CONFORM TO A CERTAIN STANDARD IN ORDER TO BE NONDISCHARGEABLE. SOME OF THE LOADS OF THE STUDENTS GET, PARTICULARLY, THOSE GO ON BEYOND THE COST OF TUITION AND BOOKS AND PROVIDE MORE MONEY THAN NECESSARILY A STUDENT WOULD NEED TO PURSUE HIS OR HER EDUCATION CAN BE DISCHARGED UNDER APPROPRIATE CIRCUMSTANCES. SO I DO THINK THAT THERE NEEDS TO BE A CLARIFICATION OF WHAT WE DO IN THAT SPACE.>>LET’S OPEN IT UP FOR A FEW QUESTIONS, IF ANYBODY HAS ANY. ARE THERE ANY QUESTIONS?>>OKAY, PLEASE, GO AHEAD. EXCEL, A FEW DAYS AGO THERE WAS AN ANNOUNCEMENT ÃARE NOT AN ANNOUNCEMENT, BUT SOME NEWS STORIES ABOUT A DECISION, AS YOU SAID, A POLICY CHANGE BY THE ADMINISTRATION TO REDUCE THE TOTAL LIMIT ON STUDENT LENDING THAT IS AVAILABLE. AND IN THE NEWS STORIES ABOUT THIS, AND MENTIONED THAT THERE WAS SOME UNLIMITED BORROWING JUST WINDS UP ENCOURAGING SCHOOLS TO CHARGE MORE. AND I AM WONDERING, IF ANY OF YOU HAVE SEEN THE ÃIT DID NOT CITE ANY OF THE RESEARCH, BUT I AM WONDERING IF YOU HAVE HEARD OF THE ARGUMENT, AND WHAT YOUR TAKE IS ON IT.>>A YOU ARE REFERRING TO A CAP ON THE AMOUNT OF STUDENT LOANS?>>THAT IS CORRECT.>>ARE THERE COMMENTS?>>MY RESPONSE WOULD BE, GAINFUL EMPLOYMENT IS THERE FOR A REASON, AND THAT IF SCHOOLS OVERBURDEN STUDENTS WITH THAT THAN THEY SHOULD HAVE SOME SKIN IN THE GAME.>>IS THERE ANYTHING ELSE?>>THE NEXT QUESTION.>>I WAS GOING TO ASK ABOUT THE PUBLIC-SERVICE FORGIVENESS PROGRAM, SOMETHING THAT IS REALLY IMPORTANT TO ME, MY MAIN CAREER PLAN IS BUILT AROUND EXISTING AND CONTINUING TO EXIST, HOPEFULLY. I KNOW THAT THIS IS ONE LITTLE CORNER OF THE STRAND CONVERSATION BUT IT DOES SEEM THAT IF WE WANT TO ENCOURAGE PEOPLE TO CONTINUE TO FALL INTO PUBLIC-SERVICE ÃI JUST GRADUATED FROM LAW SCHOOL, I WORKED AS A LAW SCHOOL AND EVEN AS A LAWYER IT WAS THE MOST CONFUSING PROCESS ÃFAR MORE CONFUSING THAN DOING MY TAXES OR ANYTHING ELSE IS THAT DOES MY LENDER KNOW THAT I AM IN THE PROGRAM? I AM STILL NOT SURE ABOUT THAT. IT JUST SEEMS LIKE ÃTHAT IS JUST ONE PERSON. I KNOW THERE’S PLENTY OF PEOPLE WHO DEPEND ON IT FOR THEIR LAW SCHOOL AND MIDDLE SCHOOL LOANS, JUST INFINITE FOR THINGS. NOW THIS JUST SEEMS LIKE THAT IS ONE OF THE THINGS I WAS WONDERING ABOUT, AND ISSUE.>>THAT IS A GREAT QUESTION. THERE IS A MEMBER OF OUR TEAM WHO IS A LAWYER, HEARING HER STORIES ABOUT WHAT SHE HAS BEEN DEALING WITH, THE PERIODIC EMPLOYMENT CERTIFICATION FORMS ARE FILLED OUT, THEY ARE EYE-OPENING AS TO HOW CHALLENGING THIS IS, EVEN FOR PEOPLE WHO, LIKE YOU, ARE VERY HIGHLY EDUCATED AND THE LIKE. YOU CAN ONLY IMAGINE HOW HARD IT IS FOR THE PEOPLE WHO DON’T HAVE THAT BACKGROUND. IT’S ONE OF THE ISSUES THAT IS COME UP IN THE MASSACHUSETTS ATTORNEY GENERAL’S ACTION AGAINST LOAN SERVICING, AND IT IS REALLY AT THE CORE OF ONE OF THE LOSSES WE HAVE PENDING IN THE 11TH CIRCUIT RIGHT NOW ABOUT WHAT HAPPENED, AND WHAT IS THE RECOURSE WHEN A SERVICER ESSENTIALLY LIES TO YOU ABOUT WHETHER OR NOT YOU’RE ELIGIBLE FOR PUBLIC SERVICE? YOU CALL AND SAY AM EYE ON TRACK? THEY SAY YES, THEN TWO YEARS LATER THEY SAY ABOUT THAT, WE ACTUALLY MEANT TO KNOW. AND YOU HAVE BEEN MAKING PAYMENTS. BUT I DO THINK THAT IT IS AN INCREDIBLY TIMELY TOPIC RIGHT NOW JUST BECAUSE FOR THE FIRST CHUNKS OF PLS ASK, DO NOT FORGIVE JUST TO MAKE 120 CONSECUTIVE QUALIFYING PAYMENTS, AND PAY WHAT IS QUALIFYING AND WHAT IS NOT QUALIFYING , AND PAY WHAT IS QUALIFYING AND WHAT IS NOT QUALIFYING BUT 120 CONSECUTIVE PAYMENTS IS 10 YEARS. THE PROGRAM STARTED A LITTLE UNDER 10 YEARS GOES YOU’RE STARTING TO SEE THE FIRST SORT OF TRANSIENT PEOPLE WHO WERE ELIGIBLE TO RECEIVE LOAN FORGIVENESS COME DUE. NOW THE REALITY IS THAT I THINK THAT THE NUMBERS OR SOMETHING LIKE ONLY ONE PERCENT OF THE PEOPLE WHO THINK THAT THEY ARE ELIGIBLE HAVE ACTUALLY BEEN GRANTED RELIEF.>>YES.>I THINK THAT THE NUMBER WILL PROBABLY TRICKLE UP OVER TIME, BUT IT IS CERTAINLY QUITE LOW AT THE MOMENT.>>EVEN IF IT TRIPLES, THAT WILL STILL BE |>>WILL HAVE TO GO UP MORE THAN THAT.>>THAT IS STILL PRETTY LOW. NOW GUYS, I THINK THAT WE ALL AGREE THAT THERE NEEDS TO BE A DRAMATIC REFORM OF THE PUBLIC SERVICE LOAN FORGIVENESS PROGRAM. THERE ARE TOO MANY PEOPLE WHO WE THINK THAT YOU QUALIFY FOR LOAN FORGIVENESS BECAUSE THEY ARE ENGAGED IN WHAT WE THINK IS PUBLIC-SERVICE, AND THE MOST APPROPRIATE SINCE, AND YET, THEY ARE EXCLUDED. I DON’T THINK ANYBODY WOULD TAKE ISSUE, OR AT LEAST I WOULD HOPE NOT, WITH FIRST RESPONDERS, POLICE, FIRE PEOPLES, TEACHERS, THE KINDS OF THINGS, BUT THERE ARE RESEARCHERS ENGAGED IN CANCER RESEARCH, PEOPLE WHO ARE ENGAGED IN MEDICAL RESEARCH, ALL OF THAT SHOULD BE A PART OF THE LARGER SET OF REFORMS. WHAT IS MISSING IS A SENSE OF OBLIGATION TO MAKE THOSE CHANGES. THE DEPARTMENT KNOWS THAT THE PROBLEM EXISTS, AND IT TOTALLY IGNORES IT. IT TOTALLY IGNORES IT. SO THIS IS SUCH AN IMPORTANT TIME TO PURSUE MEANINGFUL REFORMS. THEY HAVE TO BE CALIBRATED TO THE PEOPLE WHO HAVE A POWER TO DO IT. AS I WAS SETTING UP AN INSTRUCTION LIKE THIS, WHICH I AM INVOLVED IN, I WOULD LIKE TO THINK THAT WE WOULD LOOK TO THE PEOPLE IN TENNESSEE, TO TALK TO LAMAR ALEXANDER AND REALLY, GET SOME FIRST-RATE EXAMPLES OF WHAT WE CONSIDER THE PUBLIC-SERVICE WORK THAT IS NOT BEING RECOGNIZED.E WOULD FOCUS ON PATTIE MURRAY IN WASHINGTON STATE, OTHERS WERE TRYING TO CONNECT THESE STORIES OF INDIVIDUALS TO THE ACTUAL MEMBERS OF CONGRESS WHO SIT ON THE SUBCOMMITTEES, AND I AM LOOKING AT STATES WHO ARE REPRESENTED BY REPUBLICANS, EXCLUSIVELY IN THE SENATE. NOT BECAUSE WE FOCUS EXCLUSIVELY ON REPUBLICANS, BUT I THINK IT IS FAIR TO SAY THAT WE NEED THE REPUBLICANS FOLKS TO MAKE A DIFFERENCE, GUYS.O MAKE A DIFFERENCE. WE DO HAVE TO BE VERY STRATEGIC ABOUT THIS AND THINK OUR WAY THROUGH THE BETTER WAYS TO MAKE AN AFFIRMATIVE CASE FOR CHANGE, THEN PRESENTED THE CHANGE BACKED UP BY A LEVEL OF GRASSROOTS AND GRASS TOP SUPPORT THAT IS MISSING FROM THIS DEBATE. ARE THERE ANY OTHER QUESTIONS? YES, MA’AM? I THINK THAT THERE IS A YOUNG LADY RIGHT BEHIND YOU, TOO? WE HAVE TIME FOR A COUPLE MORE, SO WE WILL TAKE ONE FROM HER IN THEM ONE FROM YOU OVER HERE.>>THANK YOU. MY QUESTION IS ABOUT CONSUMER CHOICE REGARDING LOAN SERVICERS. FOR EXAMPLE YOU SAID THAT THERE ARE PENDING LAWSUITS AGAINST NAVIANT, WHO SERVICE ALL OF MY LOANS. SO IS NOT CLEAR IF THEY HAVE AN OPTION TO SWITCH TO A DIFFERENT SERVICER, OR ARE WE JUST STUCK WITH WHATEVER WE GET?>>YEAH, I MEAN, NO. [LAUGHTER] >>WITH THAT BEING SAID, YOU KNOW, IF, FOR EXAMPLE, IF YOU WANTED TO PURSUE PUBLIC SERVICE LOAN FORGIVENESS, YOU COULD GO OUT WHAT IS CALLED A PUBLIC-SERVICE EMPLOYMENT FORM THAT WOULD AUTOMATICALLY TRANSFER YOUR LOANS FROM NAVIANT TO FED LOAN, BUT THEY’VE ALSO BEEN SUED, THE MASSACHUSETTS ATTORNEY GENERAL HAS SUED THEM FOR MS. COUNTY FORGIVENESS PAYMENTS AND OTHER TYPES OF INCOME AND RECOVERY PAYMENTS, SO I DON’T KNOW THAT I WILL QUALIFY THAT IS A CHOICE. BUT YOU KNOW, THE MISALIGNED INCENTIVES CROSSOVER THE INDUSTRY, SO I THINK THAT, YOU KNOW, CHOICE IS SOMETHING THAT COULD MAKE A CHANGE BUT IT IS NOT CURRENTLY AVAILABLE.>>Man: PROFESSOR HENDERSON, IT HAS BEEN FASCINATING TO HEAR YOU THINKING OUT LOUD ABOUT HOW TO PUT A TOGETHER A COALITION ABOUT THIS. THIS IS NOT A SUBJECT THAT I KNOW ANYTHING ABOUT SO I WILL BE ASKING SOME QUESTIONS INITIALLY. YOU HAVE ANY DATA ON THE PERCENTAGE OF STUDENT LOANS THAT ARE HELD PRIVATELY, EITHER DIRECTLY OR THROUGH SECURITIZATION, AND HOW THAT RELATES TO A $1.5 TRILLION FIGURE? ONE OF THE THINGS THAT WE TALKED ABOUT IN THIS FINANCIAL CRISIS ALONG WITH THE MISALIGNED INCENTIVES IN THIS INDUSTRY WAS AN INABILITY OF REGULATORS TO RECEIVE HOW THE DAMAGE THAT WAS BEING DONE THROUGH THE MORTGAGE SECTOR COULD POSSIBLY BE TRANSLATED INTO THE LARGER FINANCIAL SYSTEM, WHICH UNFORTUNATELY, WE HAVE ALL LEARNED. SO I AM WONDERING, IS THERE ANY PART OF THE FINANCIAL SYSTEM THAT SHOULD HAVE AN INTEREST IN PARTICIPATING IN THE THING THAT YOU ARE TALKING ABOUT?>>IT IS A GREAT QUESTION. A GREAT QUESTION. I DON’T HAVE THE DATA AND I POSE THE QUESTION TO MY COLLEAGUES TO SEE IF THEY DO, BUT REGARDLESS OF HOW THEY RESPOND, WE SHOULD HAVE THE DATA. AND WE SHOULD BE ABLE TO IF WE DON’T HAVE IT CURRENTLY, THAT HAS TO BE ONE OF THE RESEARCH TOPICS THAT WE PURSUE IN TRYING TO PUT TOGETHER THE AFFIRMATIVE CASE OF CHANGE. NOW THERE ARE INSTITUTIONS, AND I THINK THAT THEY WILL BE VERY CONCERNED. WE ARE RINGING THE ALARM IF YOU WILL ABOUT THE PROBLEMS OF STUDENT LOANS. I THINK THE MAJOR BANKS SO THEY MIGHT NOT BE INVOLVED DIRECTLY, WE SHOULD BE ABLE TO PETITION A FEDERAL RESERVE TO TAKE A LOOK AT THIS, SO IT IS A GREAT QUESTION. AND IF ANYBODY HAS THAT KIND OF DATA INDICATING THE DEGREE OF LOANS, PRIVATE LOANS VERSUS THE STAFF GUARDING GOVERNMENT ISSUED? DO WE HAVE THOSE STATS.>>I DON’T HAVE THE DATA, SO INTERRUPT ME, BUT WHAT I THINK IS INTERESTING ABOUT YOUR QUESTION MORE BROADLY IS THAT IT REMINDS ME OF A POINT THAT COMMISSIONER CHOPRA MADE EARLIER ABOUT AUTO LOANS. WHAT HE SAID IS THAT THERE WON’T BE SOME KIND OF CATACLYSMIC EVENT LIKE THERE WAS IN TOO THOUSAND 8 WHERE THE AUTO LOAN BUBBLE COLLAPSES, BANGS COLLAPSED, AND WE NEED AGGRESSIVE INTERVENTION BY THE FEDERAL GOVERNMENT. WE WON’T HAVE THAT IN STUDENT LOANS EITHER. IT DOES NOT PRESENT THE ACUTE RISKS TO THE ECONOMY THAT YOU SAW WITH MORTGAGE LENDING. WHAT IT PRESENTS INSTEAD IS SORT OF ÃWHAT YOU ALLUDED TO EARLIER WAS A SLOW REALIZATION ACROSS THE ECONOMY THAT THE PEOPLE WHO WENT TO SCHOOL ARE NOT ABLE TO BUY HOMES OR GET CARS AND ARE STUCK IN JOBS MAY BE THAT ARE NOT SUFFICIENT TO REPAY THEIR LOANS. SO INSTEAD OF A SLOW-MOTION PAIN FOR THE ECONOMY AND SO THE CATACLYSMIC EVENTS THAT I THINK WOULD TRIGGER THE REFORMS THAT WE SAW IN THE MORTGAGE INDUSTRY.>>ONE QUICK POINT THAT I WANT TO ADD TO THAT, THERE IS A PROBLEM WITH THE LACK OF DATA. THE DEPARTMENT HOLDS A LOT OF THE DATA ON STUDENT LENDING, THEY DON’T SHARE IT AND THEY DON’T MAKE IT AVAILABLE BUT ARE NOW ACTIVELY USING THE PRIVACY ACT TO TRY TO BLOCK MOST SAFE BANKING COMPANIES FROM ACCESSING THE DATA, AND SO I THINK JUST GETTING THE INFORMATION WOULD BE A GOOD STARTING POINT FOR THE ANSWER.>>COUNCILMEMBER?>>WOULD LIKE TO FOLLOW UP ON THE LAST COMMENTS, AND BRING THIS BACK TO WHERE YOU STARTED, ON THE WHOLE PRESENTATION, WADE. THAT IS THAT WE ARE ALREADY WELL INTO THAT CATACLYSMIC EVENT FOR THE BLACK COMMUNITIES AND STUDENTS WITH DEBT. THE NUMBERS THAT YOU SHARED THEIR, FIRST OF ALL, A FIFTH BLACK GRADUATE SUCCESS STORIES ARE CURRENTLY IN DEFAULT. AGAIN, THE DEFAULT NUMBERS ARE WHAT ARE ALLUDED TO HERE. DEFAULT MEANS REALLY A SEVERE LEVEL OF FINANCIAL DISTRESS. SO FIRST OF ALL, JUST THE NUMERATOR AND THE DENOMINATOR, IF YOU ARE IN DEFERRAL WHICH MEANS THAT THE INTEREST IS RUNNING BUT YOU’RE NOT MAKING PAYMENTS OR INCLUDED IN THE DEFAULT CALCULATION, THEN TO HIT DEFAULT, YOU ARE NOT DEEMED IN DEFAULT UNTIL YOUR 270 DAYS LATE, 9 MONTHS IN THE STUDENT LOAN WORLD. SO YOU ARE TALKING ABOUT PEOPLE FACING CATACLYSMIC THINGS LIKE GARNISHMENT OF WAGES AND OTHER PRESSURES, AND THEN YOU LOOK AT THE OTHER DATA, THE MAJORITY OF BLACK STUDENTS ARE MAKING NO PROGRESS ON PAYING OFF THE DEBT. SO EVEN IF YOU’RE TECHNICALLY MAKING PAYMENTS, YOU OWE MORE THAN WHAT YOU STARTED WITH WHEN YOU CAME OUT OF SCHOOL, AND IT IS STILL GROWING. NOT ONLY IS THERE NO STATUTE OF LIMITATIONS ON COLLECTING THIS DEBTS, BUT ALSO THE INTEREST ACCRUING. NOW THE STUDY THAT I CITED FROM A FAIRLY SAFE RESEARCH INSTITUTION, THE BROOKINGS INSTITUTE, THEIR PROJECTION IS THAT BLACK STUDENTS WITH DEBT WHICH IS CLOSE TO 80 PERCENT OF STUDENTS, 70 , 70 PERCENT, 7-0 PERCENT, WILL DEFAULT. AND ON TOP OF ALL OF THAT, CONNECTED WITH THIS EVENT IS THAT WE SEE THIS AS A LENDING INSTITUTION. THAT IS THE NUMBER ONE REASON THAT ARE BLACK APPLICANTS DO NOT RECEIVE MORTGAGES. EVEN SOME OF THESE PROGRAMS IF YOU ARE IN THE INDIVIDUAL REPAYMENT PLAN, FOR 25 YEARS IF YOU DON’T FALL UNDER WONDER ONE OF THE OTHER CIRCUMSTANCES, FOR MANY YOU ARE EXCLUDED FROM THE PARTICIPATION IN THE MAINSTREAM FINANCIAL SYSTEM BY BEING ABLE TO BUY A HOUSE. YOUR KIDS WILL FINISH SCHOOL HOPEFULLY BEFORE YOU ARE ABLE TO EVEN APPLY TO BUY A HOUSE, SEE HOW THE COMBINATION OF STUDENT LOAN DEBT PAIRED WITH AND FEEDING TOGETHER WITH BLACK HOME OWNERSHIP WHICH IS STUCK IN THE DITCH, AT THE RATE THAT WAS FROM THE FAIR HOUSING ACT THAT HAVE BEEN PASSED AT A GREATER GAP BETWEEN BLACK AND WHITE HOMEOWNERSHIP EVEN THEN THERE WAS WHEN THE FAIR HOUSING ACT WAS PASSED 50 YEARS AGO. SO ONE OF THE THINGS THAT WE STRUGGLE WITH, THIS IS OUR MAIN FOCUS, HOW DO WE LIFT THIS UP? THESE PROBLEMS ARE RELATED TO BUT AT A DIFFERENT LEVEL, AND, IN WAYS, DIFFERENT IN KIND THAN OTHERS. SO OFTEN, WE SEE THAT THE BLACK STUDENTS WILL GO TWO FOR-PROFIT COLLEGES WITH ABOUT A 90 PERCENT ADVERSE OUTCOME FOR THAT GROUP. SO YOU START OUT WITH THAT SEGMENT, A LOT OF THEIR ASSIGNED BLACK STUDENT LOAN BORROWERS WHO HAVE RELATIVELY SMALL AMOUNTS OF STUDENT DEBT, $5-$10,000 BUT NO INCREASE IN THEIR EARNING CAPACITY. THEY WERE LIVING PAYCHECK TO PAYCHECK BEFORE THE UNDERCOOKED PROGRAM AND TOOK ON THE DEBT. SO THE FACT THAT THIS IS A SMALL AMOUNT OF DEBT MAKES, IN A LOT OF WAYS, NO LESS OF A FINANCIAL ALBATROSS ON THEM. SO I THINK THAT WE NEED TO BOTH LIFT UP THIS ISSUE AND FOCUS ON THE BLACK STUDENT BORROWERS, BUT ALSO LOOK AT THE THINGS THAT HELPS THEM THE MOST. YOU KNOW? REFINANCING AT TODAY’S INTEREST RATE IS NOT GOING TO BE THE PRIMARILY GREAT THING TO DO BUT IT WILL COST A TON OF MONEY AND WILL NOT REALLY HELP THESE BLACK STUDENT BORROWERS FOR EXAMPLE. SO WE HAVE ONE GROUP, WE NEED TO TRIAGE THIS IN SOME SENSE. WE DO HAVE ONE GROUP THAT IS REALLY BEING HAMMERED BY THIS. AND I WORRY THAT AS WE LOOK FOR THE GLOBAL SOLUTION, THOSE FOLKS ARE GOING TO DIE IN THE WAITING ROOM.>>WELL, THAT IS A VERY SOBERING FINAL COMMENT FOR THE AFTERNOON, GUYS. AND OBVIOUSLY, WE HAVE JUST SCRATCHED THE SURFACE OF WHAT IS A REALLY IMPORTANT NATIONAL DEBATE, A CRISIS HIDDEN IN PLAIN SIGHT THAT IS AFFECTING MORE AND MORE AMERICANS ACROSS THE RACIAL LINES, BUT CERTAINLY WITH A DISPROPORTIONATE EFFECT ON THE AFRICAN AMERICANS AND COMMUNITIES OF COLOR. BUT AGAIN, I DO THINK THAT THIS IS HAVING SUCH A BROAD IMPACT, THIS SOLUTION IS IN REACH, THIS IS AN ORGANIZING CHALLENGE AS WELL AS A SUBSTANTIVE ARGUMENT CHALLENGE. WE HAVE TO THINK OF HOW WE ORGANIZE OURSELVES, AND THOSE WHO WILL SHARE OUR VIEW MORE EFFECTIVELY TO IMPACT THE POLICYMAKERS IN WASHINGTON AS THE OPPORTUNITY PRESENTS ITSELF. THIS REAUTHORIZATION OF THE HIGHER ED ACT IS A GOOD THING. THE INITIATIVES TAKING PLACE IN THE STATE ARE GOOD THINGS. THESE ARE THE LABORATORIES OF CHANGE. GETTING THESE IDEAS FROM THE ATTORNEYS GENERAL WHO HAVE WORKED COLLECTIVELY TOGETHER ON A NUMBER OF ISSUES WHO MIGHT BE ABLE TO SHINE A LIGHT HERE, THINKING THROUGH HOW WE CAN BRING POLITICAL PRESSURE THEREFORE THROUGH GRASS TOP ORGANIZATIONS, TO HAVE AN INTEREST IN THESE ISSUES BUT DON’T NECESSARILY SEE THEMSELVES AS BEING ACTIVE PLAYERS.WE ARE GOING TO HALF TO BRING THE MEN FROM THE SIDELINES, TO RECRUIT THEM TO BE ENGAGED IN THIS. SO WITH THAT, I WILL BRING THIS PANEL TO THE CONCLUSION. THANK ÃPLEASE HELP ME IN THANKING THE EXTRAORDINARY SPEAKERS. [APPLAUSE] >>I PROMISE THAT OUR AGENDA HAS ME TALKING FOR A HALF-HOUR BUT I DO PROMISE THAT THAT IS NOT TRUE. I JUST WANT TO GIVE SOME BRIEF AND CLOSING REMARKS. WHAT A TERRIFIC PANEL WE JUST HAD. IT IN THE LAST TWO DAYS HAS LEFT ME AND IS SPIRIT THAT I WAS NOT INTENDING WHEN I ORGANIZE THIS CONFERENCE WHICH IS JUST UNBELIEVABLY ANGRY. [LAUGHTER] >>AND I AM HOPEFUL THAT OUR TIME TOGETHER, THE WORK THAT WE CAN DO TOGETHER GOING FORWARD WILL CHANNEL THAT ANGER THAT I AM SURE MANY OF YOU SHARE INTO A CONSTRUCTIVE PATH THAT WILL HELP US TO GET OUT OF THE MESS THAT WE CONTINUE TO BE IN, HELPING AND SERVING HOUSEHOLDS IN THE FINANCIAL SECTOR, NOT JUST WITH THEIR STUDENT LOANS, BUT AS WE HAVE DISCUSSED, IN SO MANY ASPECTS OF THEIR LIVES. I WANT TO THINK FIRST AND FOREMOST CHRISTIE BEAR AND TRACY FOR GETTING US THROUGH THESE TWO DAYS, AND IN SUCH GOOD SHAPE. [APPLAUSE] >>NOW AS I MENTIONED AT THE OUTSET, CHRISTIE AND TRACY HAD A LOT OF HELPERS WHO I WON’T NAME AGAIN BUT WONDERFUL STUDENTS AND STAFF ACROSS THE FORD SCHOOL HAVE BEEN INVOLVED IN THIS EFFORT OF GETTING YOU ALL HERE AND MAKING THIS CONFERENCE WORK. I AM VERY GRATEFUL TO THEM AS WELL, AND I JUST WANT TO GIVE MY THINGS TO ALL OF YOU IN THE SPEAKER AND PANEL AN AUDIENCE WHO HAVE BEEN ON THE JOURNEY WITH US FOR THE LAST COUPLE OF DAYS. THIS HAS BEEN AMAZING FOR ME TO HAVE THE PRIVILEGE OF LEARNING FROM YOU OVER THESE LAST COUPLE OF DAYS, TO BE ABLE TO STEP AWAY FOR A LITTLE BIT FROM MY DAY JOB AND REFOCUS ON THESE ISSUES THAT I CARE DEEPLY ABOUT. THANK YOU ALL FOR BEING HERE, AND FOR YOUR CONTRIBUTIONS. I JUST HAVE A SMALL BIT OF LOGISTICS TO LET YOU KNOW ABOUT. IF YOU WOULD NOT MIND, TAKING YOUR NAME BADGES AND DROPPING THEM OFF WITH TRACY ON THE WAY OUT, WE WILL RECYCLE THOSE. IF YOU HAVE OTHER CONFERENCE MATERIAL THAT YOU WOULD LIKE TO RECYCLE, PLEASE USE THE RECYCLING BINS FOR THOSE, FOR PAPER. IF YOU NEED ANY LOGISTICS HELP AT ALL ON YOUR EXIT THIS AFTERNOON AT ALL, PLEASE HE CHRISTIE OR TRACY ON YOUR WAY OUT. AS YOU HAVE LEARNED, SHE WILL TAKE VERY GOOD CARE OF YOU. SAFE TRAVELS, AND JOURNEYS

One comment on “Consumer Protection in an Age of Uncertainty – Day 2”

  1. Benjamin Campagna says:

    Neato

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