Hearing of the Senate Banking, Housing, and Urban Affairs Committee - Opening Statement of Sen. Sherrod Brown, Hearing on Examining the Fintech Landscape

Hearing

U.S. Sen. Sherrod Brown (D-OH) -- ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs -- released the following opening statement at today's hearing entitled, "Examining the Fintech Landscape."

Brown's remarks, as prepared for delivery, follow.

Senator Sherrod Brown

U.S. Senate Committee on Banking, Housing and Urban Affairs

Opening Statement for "Examining the Fintech Landscape"

September 12, 2017

Thank you, Mr. Chairman.

I appreciate your holding this hearing on financial technology -- it has been too long since our committee considered this important topic. I don't think any of us knew how timely this hearing would be until we got news of the Equifax data breach.

While financial technology covers many different activities, all of those activities rely on the responsible use and careful protection of data.

In the case of Equifax, that did not happen. Americans are now forced to worry whether the information that hackers stole will have lasting impacts, from outright theft to damaged credit. And we can't just cancel a credit card to fix the problem; Equifax has let criminals get their hands on the most private and valuable pieces of millions of Americans' financial identities.

Credit reports also include other deeply personal information -- a history of our medical debts can reveal information we usually don't share with anyone but our doctors and families.

More and more, new financial technologies rely on the collection of vast troves of data no longer limited to our financial transactions. Data aggregators collect information regarding our associates, what kind of products we buy, and even how often we check Facebook.

The collection and use of this alternative data may promise some benefits by providing access to credit for people in communities that traditional lenders overlook. But as recent data breaches have shown, the risks are clear and substantial.

It will take us a long time to assess the impact of the Equifax data breach on 143 million Americans. Businesses, consumers, and government watchdogs will have to be even more vigilant about identifying fraud, possibly making it harder for Americans to get access to credit.

It's bad enough the Equifax breach included important personally identifiable information -- names, dates of birth, social security numbers, addresses, and credit card numbers -- the building blocks for your financial identity. Future breaches at firms that use alternative data might include far more personal information with far-reaching consequences.

Today I want to hear how we can improve federal oversight of data collection and data security to better protect working families.

I hope we can work together to make sure companies that use our private data are held accountable for its protection.

If a college student in Columbus misses a credit card payment or a family in Toledo is forced into bankruptcy because of medical debt, Equifax would undoubtedly ding their credit scores. So now that this breach has left millions of people vulnerable to criminals, what should be done to hold Equifax accountable?

At a minimum, customers should have the right to use the court system to help make them whole. That is why I appreciate Equifax answering my call, and that of others on the committee, to remove forced arbitration clauses from its free credit monitoring product.

This is a step in the right direction, but customers cannot be sure their rights are truly protected until Equifax makes this policy clear for all products and on all of its websites.

One year of credit monitoring cannot be expected to undo the damage of this breach. After the 2015 breach of the Office of Personnel Management put information of government employees and Members of Congress at risk, this body passed 10 years of free credit monitoring. We cannot accept any less for the people we serve.

Today's hearing, and the witnesses' testimony, is focused on new products and markets, and I am interested in how Congress can encourage fintech innovation to make it easier for community banks to serve their customers, comply with important safety and soundness and anti-money laundering rules.

If we can encourage banks to partner with each other or innovative startups, we may be able to cut down on red tape without exposing consumers or the financial system to additional risk.

I am also interested in how these new technologies can help Americans who are currently underserved by the traditional banking system. We have already seen how mobile payments have expanded access for many to the financial system, both at home and abroad.

But we also need to fully understand the risks and ensure that oversight gaps do not exist for bad actors to exploit American customers.

I thank the witnesses for their testimony today and look forward to hearing more.

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