WASHINGTON- U.S. Senators Amy Klobuchar (D-MN), Mark Warner (D-VA), Chris Coons (D-DE), and Richard Blumenthal (D-CT) pressed Facebook CEO Mark Zuckerberg to respond to reports that the company used contractors to retaliate against or spread intentionally inflammatory information about their critics. Since the 2016 election, both the government and Facebook internal investigations have revealed that the company failed to adequately protect the data of its 2.2 billion users. Recent reports—including one from the New York Times—allege that Facebook has taken significant steps to undermine critics, including hiring partisan political consultants to retaliate and spread intentionally inflammatory information about people who have criticized Facebook, which, if not properly disclosed, may have campaign finance implications.

“We are gravely concerned by recent reports indicating that your company used contractors to retaliate against or spread intentionally inflammatory information about your critics,” the senators wrote. “In addition, the staggering amount of data that Facebook has collected on both its users and people who have not subscribed to or consented to use of the platform, raises concern that the company could improperly or illegally use its vast financial and data resources against government officials and critics seeking to protect the public and our democracy.”

“Both elected officials and the general public have rightfully questioned whether Facebook is capable of regulating its own conduct.” 

Russia attempted to influence the 2016 presidential election by buying and placing political ads on platforms such as Facebook, Twitter, and Google. The content and purchaser(s) of those online advertisements are a mystery to the public because of outdated laws that have failed to keep up with evolving technology. The Honest Ads Act, led by Klobuchar, Warner, and the late Senator John McCain (R-AZ) and cosponsored by Coons and Blumenthal, would prevent foreign actors from influencing our elections by ensuring that political ads sold online, including social media platforms like Facebook, are covered by the same rules as ads sold on TV, radio, and print.

The full text of the letter can be found below:

Dear Mr. Zuckerberg:

We are gravely concerned by recent reports indicating that your company used contractors to retaliate against or spread intentionally inflammatory information about your critics.  

Since the 2016 election, both the government and your own internal investigations have revealed that your company failed to adequately protect the data of its 2.2 billion users. Your company also failed to implement protocols to prevent manipulation by foreign adversaries working to undermine America’s political system. Both elected officials and the general public have rightfully questioned whether Facebook is capable of regulating its own conduct.  

According to recent reports, your company hired contractors to retaliate and spread intentionally inflammatory information about people who have criticized Facebook, which, if not properly disclosed, may have campaign finance and other potential legal implications. In addition, the staggering amount of data that Facebook has collected on both its users and people who have not subscribed to or consented to use of the platform, raises concern that the company could improperly or illegally use its vast financial and data resources against government officials and critics seeking to protect the public and our democracy.

In light of these concerns, we respectfully request you answer the following questions:

1.      To your knowledge, did your company hire any entity – including, but not limited to research firms and contractors – to collect or find information to be used in retaliation against people who criticized Facebook, including elected officials who were scrutinizing your company?

2.      Did your company hire any entity – including, but not limited to research firms and contractors – to spread negative or intentionally inflammatory information in retaliation against people who criticized Facebook, including elected officials who were scrutinizing your company?

3.      Did your company – or any entity affiliated with or hired by your company – ever use any of the vast financial and data resources available to Facebook in retaliation against people who criticized Facebook, including elected officials who were scrutinizing your company?

4.      Did your company – or any entity affiliated with or hired by your company – ever seek to conceal information related to foreign interference with the 2016 U.S. election from the public or government investigators? 

5.      Did your company – or any entity affiliated with or hired by your company — ever contact any media outlets with negative or misleading information, or suggest, promote, or amplify negative or misleading social media about your critics, including elected officials scrutinizing your company?

6.      How much money have you expended or paid other entities to collect, find, spread or amplify information about people who have criticized Facebook, including elected officials scrutinizing your company? Has any of that spending been publically disclosed?

7.      Some of us have requested that the Deputy Attorney General expand the scope of the Department of Justice’s existing investigations to include the latest reports that Facebook hired contractors to retaliate and spread negative information about people who criticized the company. If the Department’s investigation is expanded to include this recent report, will you commit to co-operating with any investigation into this matter? 

Thank you for your prompt attention to this request.

Sincerely,

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WASHINGTON — U.S. Sen. Mark R. Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence, and U.S. Sen. Marco Rubio (R-FL), a member of the Committee, urged Canadian Prime Minister Justin Trudeau to reconsider Huawei’s inclusion in any aspect of Canada’s 5G development, introduction, and maintenance. A letter from the two Senators to the Prime Minister follows comments made by Head-Designee of the Canadian Center for Cyber Security Scott Jones regarding Huawei. 

The entry of Chinese state-directed telecommunications companies like Huawei into the Canadian market could seriously jeopardize the relationship between U.S. and Canadian carriers, depriving North American operators of the scale needed to rapidly build out 5G networks.

The full text of the letter is below. A copy of the signed letter is available here. 

Dear Prime Minister Trudeau:

We write with grave concerns about the possibility that Canada might include Huawei Technologies or any other Chinese state-directed telecommunications company in its fifth-generation (5G) telecommunications network infrastructure.  As you are aware, Huawei is not a normal private-sector company.  There is ample evidence to suggest that no major Chinese company is independent of the Chinese government and Communist Party—and Huawei, which China’s government and military tout as a “national champion,” is no exception.

Based on what we know about Chinese state-directed telecommunications companies, it was troubling to learn that on September 20, 2018, the new Head-Designee of the Canadian Center for Cyber Security Scott Jones told the House of Commons Standing Committee on Public Safety and National Security that banning Huawei is not needed, in response to a question about why Canada has not come out against Huawei as other Five Eyes allies have.  Specifically, he claimed that Canada has “a very advanced relationship with our telecommunications providers, something that is different from most other countries,” adding, “We have a program that is very deep in terms of working on increasing that broader resilience piece especially as we are looking at the next-generation telecommunications networks.”

In contrast to Mr. Scott’s comments, however, three former senior Canadian national security officials warned earlier this year against the inclusion of Huawei in Canada’s 5G network.  One of them—Mr. Ward Elcock, former Deputy Minister of National Defence—told the Globe and Mail on March 18, 2018, “I have a pretty good idea of how signal-intelligence agencies work and the rules under which they work and their various operations,” concluding that, “I would not want to see Huawei equipment being incorporated into a 5G network in Canada.”

While Canada has strong telecommunications security safeguards in place, we have serious concerns that such safeguards are inadequate given what the United States and other allies know about Huawei.  Indeed, we are concerned about the impact that any decision to include Huawei in Canada’s 5G networks will have on both Canadian national security and “Five Eyes” joint intelligence cooperation among the United States, United Kingdom, Australia, New Zealand, and Canada.  As you know, Australia effectively banned Huawei, ZTE, and other Chinese state-directed companies from its nation’s 5G networks by excluding firms that “are likely to be subject to extrajudicial directions from a foreign government” and therefore pose unacceptable risks to national security.  Moreover, the United Kingdom’s Huawei Cyber Security Evaluation Centre Oversight Board’s 2018 annual report to Britain’s national security adviser found that “identification of shortcomings in Huawei’s engineering processes have exposed new risks in the UK telecommunications networks and long-term challenges to mitigation and management.”

Further, the strong alignment between the United States and Canada in spectrum management has meant that American and Canadian carriers in many cases share complementary spectrum holdings, jointly benefiting from economies of scale for equipment designed for regionally harmonized frequencies. The entry of suppliers such as Huawei into the Canadian market could seriously jeopardize this dynamic, depriving both Canadian and American operators of the scale needed to rapidly build out 5G networks.

Given the strong statements by former Canadian national security officials as well as similar concerns out of the U.S., Australia, and the United Kingdom, we hope that you will reconsider Huawei’s inclusion in any aspect of Canada’s 5G development, introduction, and maintenance.  Should you have any questions about the threat that Chinese state-directed telecommunications firms pose to your networks, we urge your government to seek additional information from the U.S. Intelligence Community.

Thank you for your attention to this matter.

Sincerely,

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WASHINGTON —U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Committee on Banking, Housing, and Urban Affairs, joined a group of 12 Senate Democrats in demanding CFPB leadership to explain how Consumer Financial Protection Bureau Policy Director Eric Blankenstein was chosen to oversee supervision, enforcement, and fair lending issues given his past racist writings.

Last week, the Washington Post uncovered a 2004 blog where Blankenstein, under an alias, posted bigoted writings on race, hate crimes, and women. In his current role as Policy Director at CFPB, Blankenstein is charged with enforcing consumer protection laws, including laws in place to prevent lending discrimination. CFPB leadership has failed to condemn Mr. Blankenstein’s writings, and failed to explain how someone with Mr. Blankenstein’s views came to be charged with fair lending responsibilities.

“Mr. Blankenstein was not hired through the competitive service process like most CFPB employees; he is one of your hand-selected political appointees. Further, you have specifically tasked him with overseeing the CFPB’s fair lending supervision and enforcement work at a time when you have decided to restructure the Office of Fair Lending and Equal Opportunity.”the Senators wrote.  “It is unclear whether his appointment is due to a failure to investigate Mr. Blankenstein’s background prior to his appointment, Mr. Blankenstein withholding information from you and the CFPB, or an informed decision on your part to ignore his public comments.”

Joining Sen. Warner on the letter are U.S. Sens. Sherrod Brown (D-OH), Catherine Cortez Masto (D-NV), Richard Blumenthal (D-CT),  Kristen Gillibrand (D-NY), Elizabeth Warren (D-MA), Ron Wyden (D-OR), Kamala Harris (D-CA), Jack Reed (D-RI), Maria Cantwell (D-WA), Edward Markey (D-MA), Robert Menendez (D-NJ), and Cory Booker (D-NJ). 

In his role as a member of the Senate Banking Committee, Sen. Warner has advocated for policies that support the well-being of diverse communities. Earlier this year, he led an effort in the Senate to urge banking regulators to take steps that would strengthen access to credit for disadvantaged communities under the Community Reinvestment Act (CRA).

Full text of the letter can be found here and below:

The Honorable Mick Mulvaney
Consumer Financial Protection Bureau
1700 G Street NW
Washington, D.C. 20552

Dear Mr. Mulvaney,

We are deeply concerned that you have placed a person with a history of racist writing at a senior position within the Consumer Financial Protection Bureau (CFPB). 

The Washington Post reported last week that Eric Blankenstein, a political appointee that you chose to oversee supervision, enforcement, and fair lending, wrote under an alias in defense of the use of racial slurs, and claimed without evidence that the majority of reported hate crimes were hoaxes. When confronted with his past writing on these and other subjects, Mr. Blankenstein acknowledged his authorship, but failed to denounce his writings. Only after an outcry from CFPB career staff did Mr. Blankenstein send a note apologizing for the “framing” and “tone” of his arguments – but he did not apologize for his defense of racial slurs, nor did he apologize for reflexively disbelieving victims of hate crimes. 

Mr. Blankenstein was not hired through the competitive service process like most CFPB employees; he is one of your hand-selected political appointees. Further, you have specifically tasked him with overseeing the CFPB’s fair lending supervision and enforcement work at a time when you have decided to restructure the Office of Fair Lending and Equal Opportunity. It is unclear whether his appointment is due to a failure to investigate Mr. Blankenstein’s background prior to his appointment, Mr. Blankenstein withholding information from you and the CFPB, or an informed decision on your part to ignore his public comments.

In order to ensure that the CFPB is fulfilling its fair lending mandate and thoroughly evaluating senior employees with fair lending responsibilities, it is critical for us to understand how someone with Mr. Blankenstein’s views was charged with this particular set of duties.

Please respond to the following requests no later than October 22, 2018.

1)      Were you personally aware of any of the writings referenced in The Washington Post article prior to hiring Mr. Blankenstein?

a.      If not, did you ask Mr. Blankenstein whether he had written anything that would reflect poorly on the CFPB or indicate that he was not an appropriate candidate for this role prior to extending an offer of employment? Did he respond verbally or in writing to any inquiry about past public statements?

b.      If so, how were you made aware of the writings? Why did you believe it was still appropriate to hire Mr. Blankenstein to oversee supervision, enforcement and fair lending?

2)      Please describe your process for identifying potential candidates for political appointment to senior CFPB positions and provide all written guidelines and procedures related to identifying potential candidates for appointment as senior CFPB officials. 

a.      Was Mr. Blankenstein recommended to you by a Member of Congress, a federal employee, or a person or entity subject to CFPB oversight?

b.      Were all established guidelines and procedures adhered to during your search for candidates to fill this position? Were any other candidates considered for this position?

3)      Please describe your process for vetting candidates for political appointment to senior CFPB positions, provide all written guidelines and procedures related to the performance of background checks or other due diligence, and specify whether such background checks include investigations into statements on social media, websites, or in other public forums.

a.      Were all established guidelines related to background checks or other due diligence adhered to in evaluating Mr. Blankenstein’s appointment? Have they been adhered to for all CFPB political appointments during your tenure?

b.      As part of any background check or other due diligence, was Mr. Blankenstein asked about past statements on social media, websites, or other public forums? If so, did Mr. Blankenstein properly disclose the above referenced writings? 

4)      Does Mr. Blankenstein have the confidence and support of the enforcement and fair lending staff he oversees? Will you further investigate Mr. Blankenstein’s past writings, and do you intend to take action if you find more troubling statements?

Sincerely,

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WASHINGTON— Thanks to bipartisan legislation authored and passed into law by U.S. Sen. Mark R. Warner (D-VA), Virginia consumers will be able to freeze and unfreeze their credit files for free, beginning today. 

The free credit freezes – which experts say are one of the best tools available to protect against identity theft – are the result of a provision included in a bipartisan bill Sen. Warner wrote and introduced to boost economic growth and protect Virginia consumers. After five years of bipartisan negotiations that Sen. Warner helped lead, the Economic Growth, Regulatory Relief, and Consumer Protection Act was signed into law by President Trump in May. Following a series of high-profile data breaches that have exposed consumers’ personal and financial information, the bill includes a provision requiring all three major credit agencies – Equifax, Experian and TransUnion – to allow consumers to freeze their credit for no fee.

 “Credit freezes are one of the best ways that consumers can protect themselves against identity theft that could hurt their credit scores,” said Sen. Warner. “Good credit is essential if you want to buy a house, get a small business loan, or simply apply for a new credit card. Free credit freezes give consumers a new tool to protect themselves against criminals seeking to steal their identity.”

A security freeze makes it harder for criminals to use stolen information to open fraudulent accounts or borrow money using a stolen identity. Previously, credit bureaus charged as much as $10 per bureau to place a freeze on a consumer’s credit file. A similar fee would also be charged to temporarily remove the freeze if a consumer wanted to apply for new credit.  As a result, one study by the AARP found that fewer than 15 percent of American adults have ordered a security freeze on their credit more than a year after an enormous data breach at Equifax exposed the personal information, including Social Security numbers, birth dates, driver’s license numbers and other sensitive details, of about 148 million Americans, or nearly half the U.S. population.

With the provision in the law going into effect today, the three nationwide credit agencies – Equifax, Experian and TransUnion – must each set up a webpage for requesting fraud alerts and credit freezes. To place a credit freeze on their accounts, consumers will need to contact all three credit bureaus. The Federal Trade Commission has also posted links to those webpages on IdentityTheft.gov. Freezing prevents activity that could impact a consumer’s credit score – such as fraudulent loans taken out by someone who has stolen your identity. 

Under the new law, parents can also freeze their children’s credit report. Because children generally have a clean credit slate, they are especially valuable for identity thieves; according to research, more than 1 million children were victims of identity theft last year, and two-thirds of them were age 7 or younger. Experian has estimated that one in four minors will be a victim of identity theft before reaching adulthood. 

In addition to providing free credit freezes and unfreezes, the Economic Growth, Regulatory Relief, and Consumer Protection Act included provisions to: 

• Protect consumers’ credit by extending the duration of a fraud alert on a consumer’s credit report from 90 days to one year. A fraud alert requires businesses that check a consumer’s credit to get the consumer’s approval before opening a new account.
• Provide free credit monitoring for all active-duty service members.
• Protect the credit ratings of veterans wrongly penalized by medical bill payment delays by the Department of Veterans Affairs (VA).
• Protect seniors by extending immunity from liability to certain people who disclose suspected exploitation of seniors.
• Protect consumers from cyber security threats by requiring the Treasury Department to submit a report to Congress on the risks of cyber threats to financial institutions and the U.S. capital markets.

Sen. Warner’s bill is also providing needed relief for community banks and credit unions so they can support consumers in small and rural Virginia communities, where regulations designed for big banks have made it harder for small lenders to provide mortgages or loans to expand small businesses and family farms.                                                                                                                   

Sen. Warner has also written legislation that would hold large credit reporting agencies like Equifax accountable for data breaches involving consumer data. The Data Breach Prevention and Compensation Act, which Sen. Warner introduced along with Sen. Elizabeth Warren (D-MA) back in January, would give the Federal Trade Commission (FTC) more authority to enforce data security and assess financial penalties on credit bureaus if they fail to adequately protect consumer data against theft. The bill has been referred to the Senate Banking Committee, of which Sen. Warner is a member.

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WASHINGTON –U.S. Sen. Mark R. Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence and a member of the Senate Banking and Finance Committees, today sent letters to Twitter and Google parent company Alphabet, requesting information about any data sharing agreements between the companies and Chinese vendors. The letter follows a disclosure earlier this week by Facebook that the company has partnerships with Chinese telecom companies including Huawei that allow them to access Facebook users’ non-public data. 

“Since at least October 2012, when the House Permanent Select Committee on Intelligence released its widely-publicized report, the relationship between the Chinese Communist Party and equipment makers like Huawei and ZTE has been an area of national security concern. Since then, numerous articles in the tech trade press have focused on concerns by American and allied intelligence agencies that products from Chinese device makers, such as Lenovo, have security vulnerabilities that could allow Chinese intelligence to access data stored on, or transmitted by, devices.  And the New York Times reported in 2016 that firmware found in low-end smartphone devices, such as those of Huawei and ZTE, continually transmitted local data to Chinese severs, potentially for foreign intelligence purposes,” Sen. Warner wrote to the two companies today. 

It is publicly known that Alphabet has entered into strategic partnerships with Chinese mobile device manufacturers, including Huawei and Xiaomi, as well as with Chinese technology platform Tencent. In light of Facebook’s recent revelations, Sen. Warner requested that the company provide information about those partnerships, as well as any other agreements that Alphabet may have entered into with third-party vendors based in China. A similar request was posed to Twitter. 

Sen. Warner’s letter to Alphabet CEO Larry Page is available here. His letter to Twitter CEO Jack Dorsey is available here.  

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WASHINGTON – U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Banking Committee, released the following statement after President Trump signed his regulatory reform bill, S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, into law:

“The bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act will provide meaningful relief to Main Street. It will roll back unnecessary and burdensome regulations on credit unions and small community banks while ensuring that larger banks remain subject to the rules I helped put in place after the financial crisis. This bill is the result of years of tough negotiations between Democrats and Republicans and will help small lenders provide mortgages and other credit to hardworking Virginians and small businesses. While this bill does not include everything Democrats wanted nor everything Republicans wanted, I’m proud of my colleagues for putting differences aside, finding common ground, and working together to pass this sensible, bipartisan bill into law.”  

The legislation is the result of bipartisan negotiations among Warner, Banking Committee Chairman Mike Crapo (R-ID), and Banking Committee members Sens. Joe Donnelly (D-IN), Heidi Heitkamp (D-ND) and Jon Tester (D-MT).

The legislation was endorsed by a number of Virginia banking institutions including the Virginia Bankers Association (VBA) and the Virginia Association of Community Banks (VACB).

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WASHINGTON – U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Banking Committee, released the following statement after the House passed S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, sending the bill to the President’s desk: 

“The bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act will provide meaningful relief to Main Street. It will roll back unnecessary and burdensome regulations on credit unions and small community banks while ensuring that larger banks remain subject to the rules I helped put in place after the financial crisis. This bill is the result of years of tough negotiations between Democrats and Republicans and will help small lenders provide mortgages and other credit to hardworking Virginians and small businesses. While this bill does not include everything Democrats wanted nor everything Republicans wanted, I’m proud of my colleagues for putting differences aside, finding common ground, and sending this sensible, bipartisan bill to the President’s desk for signature.” 

The legislation is the result of bipartisan negotiations among Warner, Banking Committee Chairman Mike Crapo (R-ID), and Banking Committee members Sens. Joe Donnelly (D-IN), Heidi Heitkamp (D-ND) and Jon Tester (D-MT).

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Mulvaney, who serves on a temporary basis as the head of the Consumer Financial Protection Bureau (CFPB), not to undo or weaken the CFPB’s payday lending rule.

The rule would require lenders to determine upfront whether or not a borrower can afford to pay back a loan without having to take out another loan. The rule represents an important step in reining in predatory business practices by payday lenders nationwide that are designed to exploit the financial hardships facing millions of hardworking families.

“The payday lending rule’s purpose is pretty simple: lenders should figure out whether a borrower is able to pay back a loan so that consumers don’t get caught up in a revolving cycle of debt,” said Sen. Warner during his questioning of Director Mulvaney.

Congress created the CFPB to protect Americans from unfair, deceptive and abusive lending practices. Predatory lenders often target hardworking borrowers who find themselves in need of quick cash—often for things like necessary car repairs or medical emergencies—by charging them excessive interest rates and hidden fees that trap them in long-term cycles of debt. Nearly 12 million Americans use payday loans each year, incurring more than $9 billion annually in fees. The CFPB developed the payday lending rule over the course of five years and reviewed more than 1 million public comments. 

Last month, Sen. Warner also wrote to Director Mulvaney urging him not to repeal the payday lending rule.

The full transcript of Sen. Warner’s exchange with Director Mulvaney follows:

Warner: I want to talk to you about the payday lending rule. Now, I think the payday lending rule’s purpose is pretty simple—and I think actually most Americans regardless of side would agree on this—that lenders should figure out upfront whether a borrower is able to pay back a loan and to make sure that consumers don’t get caught up in a revolving cycle of debt by folks that don’t have the same kind of regulatory oversight that our traditional lending institutions do. Now, you’ve been in this job a few months, acting in this job. Did you order the Bureau to engage in a rule making process to reconsider the rule on payday lending?

Mulvaney: Yes sir.

Warner: And how would revoking the rule or changing it help consumers, particularly consumers who are living paycheck to paycheck?

Mulvaney: Senator, I don’t automatically conclude that making an indication to revisit the rule assumes that we will be revoking the rule or even changing the rule. I have the right under the statute to revisit the rules, which I'm doing, but we have not arrived at any preconceived notions of outcomes. That would violate the Administrative Procedures Act, which we have not done.

Warner: But sir, my understanding is this rulemaking took a number of years. It was a subject of a great deal of scrutiny. I believe there was industry input as well as consumer input and, I guess, I really wonder why in your first few months of coming into this acting role that this would rise to the top of a priority that would say we need to relook at the practices of payday lenders, which I think most folks would agree is a last resort financial tool and one that was absolutely appropriate for this Bureau to take on.

Mulvaney: Again I think was appropriate for it to take on. Although I think you could make the argument that the statute simply says you have to supervise this industry, which may not include regulating, different story for another day perhaps. But why was it at the top of the list? Because it was the last thing the previous Director did on his way out the door. There was a bunch of public criticism as to, or questions, as to whether or not it had been rushed. So for a variety of reasons, I thought it was entirely appropriate in my role as acting Director to do that the very first thing. In fact, I think I did it the first or second day I was there.

Warner: Mr. Mulvaney, I think there was a great deal of work that went on and I think the previous Director took those actions because of an ongoing need that people on both sides the aisle had discussed for a long time. I was disappointed you took that as your first action.

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 WASHINGTON – U.S. Sen. Mark R. Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence, issued the following statement on reports from the New York Times and the Guardian  that Cambridge Analytica misused the data of millions of Facebook users:

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WASHINGTON – U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Banking Committee, released the following statement after the Senate voted 67-31 to pass S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act:  

“The bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act that the Senate passed today will provide meaningful relief to Main Street. It will roll back unnecessary and burdensome regulations on credit unions and small community banks while ensuring that larger banks remain subject to the rules I helped put in place after the financial crisis. This bill is the result of years of tough negotiations between Democrats and Republicans and will help small lenders provide mortgages and other credit to hardworking Virginians and small businesses. While this bill does not include everything Democrats wanted nor everything Republicans wanted, I’m proud of my colleagues for putting differences aside, finding common ground, and passing this bipartisan legislation. The House of Representatives should move swiftly to take up and pass this sensible, bipartisan bill.”

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WASHINGTON – Today, the Senate voted 67-32 in favor of starting debate on S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, bipartisan legislation to grow the economy and protect consumers that was negotiated in part by Sen. Mark R. Warner (D-VA). Today Sen. Warner called for swift passage of the legislation, which will provide targeted relief for community banks and credit unions so they can improve access to capital and increase economic prosperity in the Commonwealth.

The legislation addresses some of the unintended consequences of the Dodd-Frank Act in order to make it easier for smaller community banks and credit unions to lend to Virginia businesses and families, which is good for households and the economy.

“The Senate is on the verge of passing major bipartisan legislation aimed at providing relief for small community banks, credit unions, and the customers they serve. As someone who helped put together the Dodd-Frank legislation, I know there are areas where we can help improve access to capital for consumers, farmers, and small businesses so they can grow the economy and create jobs,” said Sen. Warner. “Virginia’s community banks and credit unions did not cause the financial crisis, and they should not be held back by regulations intended for the big banks. I look forward to seeing the Senate pass this package of bipartisan measures that will provide relief for Main Street, strengthen consumer protections, and keep Wall Street accountable.”

Following the 2008 financial meltdown, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act to crack down on the worst Wall Street abuses and institute strict regulations to prevent another crisis. Sen. Warner played an important role in negotiating and drafting major portions of this legislation, which created new safeguards to protect our financial system and hold Wall Street accountable.

However, as with any major reform, the law also had some unintended consequences. Virginia has lost over a quarter of its community banks and nearly a third of its credit unions since Dodd-Frank was passed. In some cases, the law resulted in unnecessary and burdensome regulations on credit unions and small community banks that made it harder for them to lend money to help local businesses grow and create jobs.

“As a credit union, we have to adhere to the same regulations as large banks do.  But we have to do it with a much smaller base – we only have 10,000 members and 20 employees – adhering to the same regulations that a behemoth like Bank of America has to adhere to,” said Lisa Lambrecht, President & CEO of Entrust Financial Credit Union in Henrico County. “I wish the federal government would understand that these one-size-fits-all regulations don’t work for credit unions. You have to remember; credit unions were formed to fill that gap that the larger established financial system was not serving.”

“In the rural areas, the larger institutions across the whole country have reduced their branches. The smaller banks have held their own, but we’re operating with 2000 less community banks a day than we were 12, 15 years ago. That’s over one fourth of community banks are gone — and I think a primary reason for that is regulatory fatigue,” said Lyn Hayth, President & CEO of the Bank of Botetourt. 

“Every dollar we spend on increased compliance really doesn’t go to our capital. And if we could put that extra dollar into our capital, we could lend it back out into the community on a tenfold basis. So, our hope is that regulation can be decreased, and that we are able to take that capital that we save and invest it back into our communities,” said Alice Frazier, President & CEO of Bank of Charles Town in Middleburg. 

“I think that community banks are the backbone of our country, and many of our rural markets. And not just our rural markets – but I think we serve a vital role to the growth of the economy,” said Mark Hanna, President of Farmers & Merchants Bank in Timberville.

The Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155) ensures that small lenders can provide mortgage and other credit to hardworking Americans, helping them and their families grow and start businesses. The bill also institutes several important consumer protections:

• Allows consumers to get one free year of fraud alerts, which will help consumers who have been impacted by situations like the Wells Fargo scandal or whose identities or personal information has been stolen.
• Unlimited free credit freezes and unfreezes, which helps consumers impacted by data breaches like the Equifax hack that compromised the personal information of approximately 145 million Americans.
• Provides free credit monitoring for all active-duty servicemembers.
• Protects the credit ratings of veterans wrongly penalized by medical bill payment delays by the Department of Veterans Affairs (VA). This measure would prohibit medical debt from services received through the Choice Program and other VA community care programs from being reported to credit reporting agencies for one year. In addition, it would establish a dispute process for veterans seeking to remove adverse actions already on their report.
• Prevents mortgage companies from immediately kicking tenants out of their rentals if the landlord is foreclosed upon.
• Encourages banks to report suspicious behavior if seniors could be getting financially scammed.
• Allows seriously delinquent private student loan borrowers a one-time offer to remove negative reporting from their credit reports after making a series of on-time payments.

The legislation was introduced in November after years of bipartisan negotiations among Sen. Warner, Senate Banking Committee Chairman Mike Crapo (R-ID) and Banking Committee members Senators Joe Donnelly (D-IN), Heidi Heitkamp (D-ND) and Jon Tester (D-MT). It is also co-sponsored by Sen. Tim Kaine (D-VA).

WASHINGTON —Today, U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Banking and Finance Committees, joined a group of 31 Senators to demand answers on reports that the Consumer Financial Protection Bureau (CFPB) has halted its investigation into how credit reporting agency Equifax failed to protect the personal data of more than 145 million Americans.

“We are deeply troubled by recent news reports that, under Director Mulvaney’s leadership, the CFPB has stopped its investigation into the Equifax breach,” the Senators wrote in a letter to Office of Management and Budget Director Mick Mulvaney and CFPB Acting Director Leandra English.“The CFPB is currently the only federal agency with supervisory authority over the largest consumer reporting agencies. Consumer reporting agencies and the data they collect play a central role in consumers’ access to credit and the fair and competitive pricing of that credit. Therefore, the CFPB has a clear duty to supervise consumer reporting agencies, investigate how this breach has or will harm consumers, and bring enforcement actions as necessary.”

According to reports, CFPB has not issued any subpoenas, sought testimony from key executives at Equifax, or proceeded with on-site examinations.

The Equifax breach exposed data that included customers’ names, Social Security numbers, birthdates, addresses, driver’s license numbers, and, for some consumers, credit card numbers. This data could easily be used by criminals to steal people’s identity or commit fraud. The impact on consumers whose data has been stolen is potentially devastating. As a result of identity theft and fraud, customers face the risk of having debt accrued in their name. They could suffer long-lasting damage to their credit, which could lead to them being denied loans, mortgages, employment, or even rental housing. To resolve the damage done by this data breach, they will likely spend months, if not years, trying to correct resulting errors and problems with their financial records.

Sen. Warner has been a leader in calling for better consumer protections from data theft. He has introduced legislation to prevent data breaches and hold credit reporting agencies (CRAs) like Equifax accountable, giving the FTC more direct supervisory authority over their data security, imposing mandatory penalties on CRAs to incentivize adequate protection of consumer data, and providing robust compensation to consumers for stolen data.Following the Equifax data breach, Sen. Warner asked the Federal Trade Commission (FTC) to examine whether credit reporting agencies such as Equifax have adequate cybersecurity safeguards in place for “the enormous amounts of sensitive data they gather and commercialize.” He slammed the credit bureau for its cybersecurity failures and weak response at a Banking Committee hearing with Securities and Exchange Commission (SEC) Chairman Jay Clayton last year.

In addition to Sen. Warner, others joining the letter include Sens. Brian Schatz (D-HI), Bob Menendez (D-NJ), Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Jeanne Shaheen (D-NH), Jon Tester (D-MT), Chris Van Hollen (D-MD), Tom Udall (D-NM), Heidi Heitkamp (D-ND), Tammy Duckworth (D-IL), Catherine Cortez Masto (D-NV), Jeff Merkley (D-OR), Jack Reed (D-RI), Ed Markey (D-MA), Joe Donnelly (D-IN), Tina Smith (MN), Tammy Baldwin (D-WI), Kirsten Gillibrand (D-NY), Gary Peters (D-MI), Patty Murray (WA), Bernie Sanders (I-VT), Richard Blumenthal (D-CT), Angus King (I-ME), Ron Wyden (D-OR), Maggie Hassan (D-NH), Dianne Feinstein (D-CA), Amy Klobuchar (D-MN), Debbie Stabenow (D-MI), Dick Durbin (D-IL), Chris Murphy (D-CT), and Doug Jones (D-AL).

A PDF of the letter can be found here. Full text can be found below. 

Dear Acting Director English and Director Mulvaney,

We write to express serious concerns that, according to recent news reports, the Consumer Financial Protection Bureau (CFPB) may have halted an investigation into the massive Equifax data breach, which compromised the personal information of 145.5 million Americans. 

The Equifax breach exposed significant gaps in cybersecurity standards in an industry that collects a substantial amount of personal information on virtually every adult in the country.  The three largest consumer reporting agencies alone collect information on more than 200 million Americans—information that is used in more than 3 billion consumer reports a year.  The data collected and reported by consumer reporting agencies determines Americans’ access to credit and the cost of that credit for individuals and small businesses.  This data also impacts Americans’ ability to get a job or secure housing.  By letting criminals gain access to its databases, Equifax has put nearly half the US population at risk for identity theft and fraud, which can ruin the financial lives of its victims and increase risk in our financial system. 

Unfortunately, in the immediate aftermath of the breach, Equifax’s response caused more consumer harm and confusion.  Just to name a few examples, the company responded by promoting its affiliated paid credit monitoring service (i.e., LifeLock), asking consumers to waive their rights to access free credit monitoring, and charging consumers to protect their data by freezing their credit reports.  Not only do we need to better understand how this breach has impacted consumers, we also must ensure that consumer reporting agencies are taking the steps necessary to mitigate this harm—not misleading consumers or taking advantage of the situation for their own financial gain.

As established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has a statutory mandate to implement and enforce federal consumer protection laws.  This mandate specifically includes protecting consumers from “unfair, deceptive, or abusive acts and practices” and ensuring that “federal consumer financial laws are enforced consistently.”  Dodd-Frank specifically includes the Fair Credit Reporting Act as one of the enumerated federal consumer financial laws.  The CFPB also has clear supervisory authority over the largest consumer reporting agencies.  Consumer reporting agencies and the data they collect play a central role in consumers’ access to credit and the fair and competitive pricing of that credit.  Therefore, the CFPB has a duty to supervise consumer reporting agencies, investigate how this breach has or will harm consumers, and bring enforcement actions as necessary. 

We are deeply troubled by recent news reports that, under Director Mulvaney’s leadership, the CFPB may have stopped its investigation into the Equifax breach.  According to these reports, the CFPB has not taken even the most preliminary steps to conduct an investigation.  While we are aware of reports that the Federal Trade Commission (FTC) may be taking the lead in investigating Equifax’s failure to maintain adequate data security standards, the CFPB still has a duty to investigate the harm to consumers and whether other federal consumer financial laws have been violated.  We are also concerned that the CFPB appears to be scaling back its supervision of large consumer reporting agencies.  The agency has reportedly scrapped plans to conduct on-site exams of Equifax and other consumer reporting agencies and turned down offers from the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency to help with such on-site exams.

The responsibility of consumer reporting agencies as custodians of consumers’ personal and financial information is of paramount importance to us and our constituents.  Several committees in both the House and Senate have held hearings to investigate the causes of the breach and the inadequate post-breach response.  The CFPB has a statutory mandate to participate in this process by conducting an investigation.  If that investigation exposes wrongdoing or consumer harm, the CFPB has the authority, and indeed a duty, to bring appropriate enforcement actions.

We respectfully ask for more information about the CFPB’s actions with respect to investigating the Equifax breach.  Specifically, please answer the following questions by February 19, 2018:

1.      In September, then-CFPB Director Richard Cordray announced that the CFPB would begin a probe into the Equifax breach.  Has the CFPB stopped this or any other investigation related to this matter?

a.      If so, why was that or any investigation halted?

b.      Who directed the ending of any investigation?

2.      Is the CFPB planning to conduct on-site exams of Equifax and the other consumer reporting agencies under its supervisory authority?

a.      Has the CFPB conducted an examination of a consumer reporting agency following the Equifax hack?

3.      If the CFPB is conducting an investigation, what specific steps has the CFPB taken pursuant to this investigation?

a.      Has the CFPB issued Civil Investigative Demands (CIDs)?

b.      Has the CFPB interviewed Equifax personnel?

c.       Have the CFPB personnel examined Equifax systems or gone onsite to Equifax facilities?

4.      Is the CFPB coordinating with the FTC, state law enforcement officials, or other Federal regulators in their investigations?

Thank you for your prompt attention to this important issue.

Sincerely,

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WASHINGTON — U.S. Sens. Mark R. Warner (D-VA) and Elizabeth Warren (D-MA) introduced today the Data Breach Prevention and Compensation Act to hold large credit reporting agencies (CRAs)—including Equifax—accountable for data breaches involving consumer data. The bill would give the Federal Trade Commission (FTC) more direct supervisory authority over data security at CRAs, impose mandatory penalties on CRAs to incentivize adequate protection of consumer data, and provide robust compensation to consumers for stolen data.

In September 2017, Equifax announced that hackers had stolen sensitive personal information – including Social Security Numbers, birth dates, credit card numbers, driver’s license numbers, and passport numbers – of over 145 million Americans. The attack highlighted that CRAs hold vast amounts of data on millions of Americans but lack adequate safeguards against hackers. Since 2013, Equifax has disclosed at least four separate hacks in which sensitive personal data was compromised.

“In today’s information economy, data is an enormous asset. But if companies like Equifax can’t properly safeguard the enormous amounts of highly sensitive data they are collecting and centralizing, then they shouldn’t be collecting it in the first place,” said Sen. Warner. “This bill will ensure that companies like Equifax – which gather vast amounts of information on American consumers, often without their knowledge – are taking appropriate steps to secure data that’s central to Americans’ identity management and access to credit.”

“The financial incentives here are all out of whack – Equifax allowed personal data on more than half the adults in the country to get stolen, and its legal liability is so limited that it may end up making money off the breach,” said Sen. Warren. “Our bill imposes massive and mandatory penalties for data breaches at companies like Equifax – and provides robust compensation for affected consumers – which will put money back into peoples’ pockets and help stop these kinds of breaches from happening again.”

The Data Breach Prevention and Compensation Act would establish an Office of Cybersecurity at the FTC tasked with annual inspections and supervision of cybersecurity at CRAs. It would impose mandatory, strict liability penalties for breaches of consumer data beginning with a base penalty of $100 for each consumer who had one piece of personal identifying information (PII) compromised and another $50 for each additional PII compromised per consumer. To ensure robust recovery for affected consumers, the bill would also require the FTC to use 50% of its penalty to compensate consumers and would increase penalties in cases of woefully inadequate cybersecurity or if a CRA fails to timely notify the FTC of a breach.

The Data Breach Prevention and Compensation Act is supported by cybersecurity experts and consumer groups:

“U.S. PIRG commends Senators Warren and Warner for the Data Breach Prevention and Compensation Act. It will ensure that credit bureaus protect your information as if you actually mattered to them and it will both punish them and compensate you when they fail to do so,” said U.S. PIRG Consumer Program Director, Ed Mierzwinski.

"This bill establishes much-needed protections for data security for the credit bureaus. It also imposes real and meaningful penalties when credit bureaus, entrusted with our most sensitive financial information, break that trust," said National Consumer Law Center staff attorney, Chi Chi Wu. 

"Senator Warner and Senator Warren have proposed a concrete response to a serious problem facing American consumers,” said Electronic Privacy Information Center President, Marc Rotenberg.

"This bill creates greater incentive for these companies to handle our data with care and gives the Federal Trade Commission the tools that it needs to hold them accountable,” said Director of Consumer Protection and Privacy at Consumer Federation of America, Susan Grant.

Sen. Warner has been a leader in calling for better consumer protections from data theft. Following the Equifax data breach, Sen. Warner asked the Federal Trade Commission (FTC) to examine whether credit reporting agencies such as Equifax have adequate cybersecurity safeguards in place for “the enormous amounts of sensitive data they gather and commercialize.” He slammed the credit bureau for its cybersecurity failures and weak response at a Banking Committee hearing with Securities and Exchange Commission (SEC) Chairman Jay Clayton last year. Similarly, in the aftermath of the 2013 Target breach that exposed the debit and credit card information of 40 million customers, Sen. Warner chaired the first congressional hearing on protecting consumer data from the threat posed by hackers targeting retailers’ online systems. Sen. Warner has also partnered with the National Retail Federation to establish an information sharing platform that allows the industry to better protect consumer financial information from data breaches.Warner, Warren Introduce Legislation to Hold Credit Reporting Agencies like Equifax Accountable for Data Breaches 

To view a fact sheet about the legislation, click here. The bill text can be found here.  

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