Economic Growth, Regulatory Relief, and Consumer Protection Act

Floor Speech

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Mr. SCOTT. Mr. President, today I want to make a few remarks on S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Section 213 of S. 2155, making online banking initiation legal and easy--the intent of this provision, which I introduced as an amendment during Committee consideration of S. 2155, is to facilitate the ability of financial institutions to reach new and potentially underserved consumers by making it possible to offer products and services to consumers through online and mobile applications. I would like to clarify that, with respect to references in this provision to ``copies,'' ``scans,'' or other reproductions of a consumer's government-issued identification, this is, intended to apply to all methods of obtaining information from an identification card, including color and black-and-white copies.

Section 215 of S. 2155, reducing identity fraud--with respect to section 215 of the bill, ``reducing identity fraud,'' the intent is to provide options for permitted entities to crosscheck consumer information with the Social Security Administration, SSA, in such a way that is efficient for those entities, as well as the SSA. In particular, the intent of this provision is to allow a service provider or other permitted entity to contact the SSA's Consent Based Social Security Number Verification database pursuant to appropriate consent provided to a permitted entity--such as a creditor--and to then provide the ``yes/no'' response from SSA to permitted entities who request such information in the future. In this way, creditors can receive the important validation of a name, date of birth, and Social Security number as part of the consumer report they receive when underwriting a credit application. This would result in fewer inquiries made to and received by the SSA. Furthermore, as mentioned, this provision would require consumer consent as part of the normal credit application process, similar to how creditors request consumer consent to obtain consumer credit reports in connection with an application. Under section 215, consumer consent can now be given via electronic signature obtained by the creditor or other permitted entities. Nothing in this provision would require consumers to fill out extra forms, provide extra signatures, or do anything that would significantly alter their expectations for a seamless application experience. The goal is to inform consumers of the possible inquiry to the SSA and allow them to provide consent via the chosen method by the creditor, which now includes electronic signature.

The second point I would like to clarify regarding section 215 is the importance of ensuring the SSA will implement this section with all deliberate speed, with no unreasonable delay to the process. As the author of this provision, it is my expectation that the SSA will have the database described in this section operational within 1 year of the bill's enactment, assuming the appropriate reserve of user fees. Every day that goes by without the SSA implementing the changes called for in section 215 will lead to more children unknowingly becoming victims of synthetic identity theft and having their credit ruined.

Section 310 of S. 2155, credit score competition--the word ``competition'' in the title of section 310, ``credit score competition,'' is the heart of the intent of this part of the bill.

When enacted into law, Section 310 will put in place a mechanism by which credit score model developers may submit their models to Fannie Mae and Freddie Mac for validation for use by the enterprises, if the models meet validation criteria that Fannie Mae and Freddie Mac have established. Lenders will be able to choose the model that they wish to use. The end result of enactment of section 310 of S. 2155 will be a competitive market between the developers of empirically derived, demonstrably predictive, and statistically sound credit scoring models, with appropriate regulatory oversight from the Federal Housing Finance Agency under which both consumers and lenders would benefit. A lack of such a market thus far in the mortgage finance arena has stifled innovation in credit scoring.

Section 310 allows for more than one credit score model provider to have a validated model for use by the enterprises. The Director of the FHFA is given the responsibility to see that the validation process is undertaken in a timely manner for all applicants and that the methodology and results behind each validation decision is released to the public.

Unlike the request for input the FHFA issued in December 2017 on this subject, section 310 does not make specific reference to any credit score model provider. That is deliberate. Section 310 opens the enterprises up to use any model that is able to pass the validation process.

Some critics have raised the specter that providing mortgage lenders the opportunity to choose among credit scoring models validated and approved by Fannie Mae and Freddie Mac might trigger ``a race to the bottom.'' That is prohibited under section 310, as validated models are first deemed to not threaten the safety and soundness of the enterprises in order to be used.

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