 So I think we're going to try and start this panel relatively on time. We've had a series of panels already that I trust have made you scared about the future of the country. And the point of this panel is to make you scared about your status as a consumer. And except for Tom, because Tom likes to disagree, as you have already seen. Tom will be our contrarian. He will tell you that financial firms have your best interests at heart, and so there's nothing to fear. No, we're not really here to tell you about fear. We're also here to tell you a little bit about hope. Hope is part of the message of this panel, as you'll see in just a moment, because I really feel, and I think you'll see from the panelists, that new techniques in technology, big data analytics, and some changes in the regulatory landscape could make the world a lot better for consumers going forward. So hope and fear are both part of the show. And right now I'm fearful that my slides are not loaded, because they're not. So this is that point I was just saying to you, Kabir, when I teach my classes, I'm very bad at this, as you can see. And there's a little button that I can push, the help button, and someone comes right away. And the only problem with this setup is the help button isn't on this piece of wood. This seems much better. I'm so much happier. I'm almost happy. Now I have Jenny here. Now I'm really happy. Awesome. Okay. So if you're wondering what could go wrong with technology, you now know. I'm delighted to be here beginning our discussion on big questions about big data. We're going to be talking about really an eclectic mix of hope and fear. We're going to talk about consumer ownership of financial data. We're going to talk about privacy. We're going to talk about discrimination. We're going to talk about some broader themes about the interaction between data and policy. I mean, in each of these areas, I think you're going to see there is some upside potential and some downside risk. So let me just try and frame the conversation quickly for each of these, and then we'll open it up to our distinguished panel. So the first set of issues is around ownership, consumer ownership of financial data. Right now, we live in a world that has some grayness to it about whether consumers can fully actualize ownership of their own financial information. So what do I mean by that? Let's say you are a customer of a bank, and you would like to share your information with a third-party app. For those of you over 14, an app is the thing on your phone that lets you manage your finances. You can do that, but it turns out that financial firms where you store your data may have all kinds of ways of making it hard for you to actually get access to your own data and to authorize others to get access to your data to be able to use your financial management tool in the way that you want. And there are some legitimate trade-offs involved in financial management tools of privacy, security, integrity of the data. And then there are also some issues around whether the people who are holding onto your data, your bank, for example, may not want to share it because if they share it, they might have to share you as a customer as opposed to having the ability to make a lot of money off you directly. Or think about account switching. So it's very hard to switch bank accounts in the United States. Lots of people want to switch their bank accounts because their banks occasionally do things to them they don't like. Let's say you're a customer of, say, Wells Fargo. You might not be that happy with Wells Fargo because Wells Fargo was fraudulently using your information to open shadow accounts and charging you money for it. That seems like something that would get you rather upset. But if you want to switch your bank account, you have to change all of your direct deposits and your bill pay. That's in one sense not a ton of work, but it's a hassle. And you might not switch your bank account as much because of that. And one of the effects of you not switching very often is maybe the bank can impose lots of pain on you, more pain than they otherwise would if you could switch. So if we reduce switching costs, we might be able to improve competition in the financial services pays and drive down overdraft fees and other contingent fees in the marketplace. So both of these problems, financial management and account switching, could be significantly advanced if we had a universal portable financial ID that we could then use to share information with third parties when we want to, not share it when we don't want to, and keep it secure. And this would also reduce the cost of account switching, reduce friction in the system and therefore increase competition. And that would, I think, be all to the good. So ownership is a key issue we're going to wrestle with on this panel. A second key issue we're going to wrestle on this panel is privacy. Now, again, for the younger people in the audience, you might say, well, does privacy really still exist as a value? After all, people seem willing to share all kinds of things in social media that I would find a little bit embarrassing to share with people I know really, really well in private, but it is made public. But if privacy is a value, and I think it still is a value for many people, the ability to decide whom to share with, under what circumstances, how and for how long is potentially subject to further attack in this age of big data. The third big issue that we're going to be tackling with, wrestling with on this panel, has to do with discrimination. So in some ways, big data can reinforce discrimination in our society. Big data makes it easier for firms to replicate, unintentionally replicate existing patterns of credit access or financial access by using additional data sources. And machines, unless you work very hard at it and do all kinds of special things, will end up replicating the existing patterns of discrimination that we see. On the other hand, big data might be used to help overcome discrimination. Big data might be a way of finding new, useful, valid information about consumers that opens up access, that reduces barriers, that improves credit scores, that makes it easier to provide additional products to people who previously didn't have it, and that basic trade-off exists. And lastly, we're going to be talking about broader themes of how data, big data in particular interact with policymaking. And I mentioned briefly this morning, but we'll return to that theme in our discussion. Ways in which a policy is challenged in the big data world we live in. Basically it's challenged when policymakers don't have access to any data at all, and I think we've heard a lot of depressing things about that this morning, that Dick is going to fix single-handedly. But we also have problems of the use and misuse of data when the data exists. I mentioned the problem of amnesia. It may be possible for members of Congress, for example, with apologies to Graham, to forget things they know because lobbyists ask them to. And so the intersection of politics and data I think is important to keep in mind. We've already talked about the problem of information arbitrage, which exists among the regulatory agencies and in the private sector that inhibit sound policymaking. We have the basic problem of analytic failure of not being able to understand well enough, fast enough what to do with the data we do have in order to make good policy. And lastly, I think there are aspects of technology that are quite challenging for policy. The basic function of automaticity in financial decision making makes it challenging for regulators or policymakers to engage. So if you have a high-frequency trader engaged in widespread, scalable, immediate actions automatically, it's very hard for policymakers to intervene to figure out what to do about it. So I think fundamental challenges for policy as well. With that, let me just say a word or two about our panel. You have their full bios in your handout. But we're going to first hear from Kibir Kumar, who is an OMEDR network. We're then going to next to hear from Tom Brown, who met earlier today in the audience, who will say nothing controversial. Then from Marisa Bel-Torres from the National Council of La Raza. And then finally from Graham Steele, who is on the U.S. Senate Committee on Banking, Housing and Urban Affairs as a staff member, I should say, not a member. And I'm delighted to hear from them. Without further ado, let me turn it over to Kibir. Thank you, Michael. It's great to be here. I have a few slides, but I wanted to say some things before that. So let me give you a bit of a background on OMEDR network. I realized as I had some conversations this morning and over lunch that that might be useful. Pierre OMEDR founded eBay. And after that, the money he made, eBay, he created a private foundation. He realized over time that eBay was having more impact in people's lives than some of the things that people were doing through the private foundation. So he kind of evolved his model and came up with the OMEDR network, which is essentially a set of organizations. There are two main ones, an LLC that functions just like a VC. And a private foundation. So that allows us, and it's a partnership model that allows us on the team to be able to use different instruments to play a role in the market. It's philanthropic in nature. It's a market development orientation. So we are not investing because there's an exciting entity, but we're investing because we believe it plays a part in a bigger story. Put it that way. So, and we are investing in fintech firms. And we're also investing in companies that are in the data space. Let me put it that way, and perhaps in personal data management. So an investment we recently made based out of the UK called digi.me. It's a company that allows you to manage your own data. And there are lots of challenges with that. I'm happy to talk about that later. Because of that work, I can talk about what these companies are doing, but I think one of the things that interests us is sort of what's happening at the level of the plumbing, let's say. What's happening at the level of the infrastructure that enables these innovations to flourish. In a way where consumer interests are protected. In a way where data is being used to give us new services and products but without necessarily abusing that data against our interests. So I think that's a question at the infrastructure and the plumbing level. And something that's been brewing and reached an interesting point just this past weekend has been the sharing of data that Michael set up between large banks that have a lot of data, our data with them, with FinTech players and FinTech companies. And there are companies that sit in the middle that facilitate movement of that data. And there's been some tension, and you might be reading about it. Jamie Dimon earlier this year, JP Morgan Chase, letter to shareholders talked about how he would like to change the mechanism from pulling of data to pushing of data. And so the bank would be really controlling how the data moves. Just this past Sunday, the director of the CFPB said that CFPB will be prioritizing how consumer rights can be protected in the sharing of data. And in fact, under the under Dodd-Frank, this little known piece of legislation, CFPB actually has the right in the 1033 to make rules around sharing of data so that it's machine-readable. What I've been discussing with Michael and picking his brains, and I'm trying to figure out ourselves, is that enough? So once you take that step, it's a very important step, potentially a long overdue step. Is that really going to create that kind of enabling environment for innovation? What more do we need to do? And my mind goes to even deeper into the plumbing arguably, into sort of what's really happening at the infrastructure level for that to really work well. So if I can get the information, is there really a consent framework that allows for that information to flow between companies? If I can get that information, is it truly secure at the end of the day? Are the banks right in their concerns that this data is not secure? So even though you take that step, is it really ensuring that we are standing on firm grounds to really be able to bear the fruits of that step? And most of the work I've done in the last few years has been in emerging markets. And there have been some interesting things happening in other parts of the world where you are arguably innovating in a white space, even in the public sphere. So public interventions and public good orientations are happening where the grounds are, you know, they sort of, not a lot has come before you. So you're really thinking what you could do differently if you were doing things from scratch. And there are two examples that come to mind that I thought would be worth highlighting today to share with you. One is from Estonia and what they have done to really digitize the economy and what's happened at the infrastructure level that's worth highlighting. And the other is India. And I have to say I'm not an expert in either of these systems and what's happened, but I think they give us some interesting ideas for what we could do here. And of course we cannot do exactly what happened in Estonia and India for a variety of reasons, which all of you smart people understand. But we can definitely learn from them, I think, and there could be basis for looking at that moving forward. So let me start with Estonia. So this is, in Estonia you have a system where almost all, I would say all public databases and a large set of private databases are linked. So just above that middle line on that diagram, I have it in front of me here. You see public sector databases, you know, the health insurance register, the population register, the vehicle register, et cetera. This is just a schema, some examples. Public sector and private sector, the private sector of banks, data from the banks, data from the telecoms, data from the energy sector. That's linked with a consent driven layer that sits on the internet protocol. That allows data to move freely between these different databases. And each of these data owners actually have applied API so that movement happens frictionlessly. Now this is a technological intervention. I'm not going to spend a lot of time and I'm giving you sort of the highlights of what's interesting about this. It's a technological intervention. It's federated. So what it's saying is there's not the sort of aggregation of data, but data exists already, it's already been aggregated. How do we make it move in a way that's good for those companies, those data aggregators, as well as individuals, as well as the economy? And this is one intervention. The consent framework works because it sits on a national electronic ID. So it's anchored in a unique ID system, which as I was discussing with someone earlier is likely not going to happen in this market. You know, it's a long shot. There have been many attempts and their ideas and there might be creative solutions, but it seems like it's a long shot. But it points to an important design element in trying to get something like this to work really well. As a result of this system, what this chart is showing, so the top line, the small dotted line is the growth in services. So just focus on that is growing a lot more than the bottom line, which is the growth in data repositories. So if you have an architecture that's really efficient, the need for further aggregation of data goes down over time, but it does not hurt the growth in services. This is important because you're getting growth in services, but you're also reducing vulnerability in the architecture, ultimately. If the data is getting aggregated multiple times, it's at risk for all the things that we talked about in the first panel today. So to achieve that, you need a way to link all these data systems. You need a consent framework that allows for that data to move and for that consent framework to really work, you need a national ID. That's the message from the Estonians, at least, to us. As a result of this, you can do a whole bunch of things very quickly in Estonia, including vote, takes 90 seconds on average to vote, I believe. An average person can file taxes in five minutes. You can sell a car remotely in 15 minutes. So these are just examples from one study, but a lot, as you can imagine, if you have this level of digitization in the economy sitting on this kind of infrastructure, a lot of things can happen very quickly. But it took Estonians, this is now a population, I think 1.5 million, I think 15 years to get to this point. And it was just, and I showed you the schema for the technology, but it was not just a technological intervention, it was a series of legal interventions. So it was people coming together both at the level of technology and law, something like this to happen over 15 years in a population of 1.5 million. The other example is from India. So this is, in India, as you know, as of this summer, a billion people are in a national biometric database. So again, this architecture, I'm not advocating for national IDs, I just want to be very clear, but I am pointing to digital infrastructure where that's an important design element. I'm not advocating for that. Why can't you advocate for a national digital ID? Just because it's like two, you'll get tart and feathered by this group of academics. I mean, like, why not? Because, no, no, no, no, no, I'll be honest with you. I personally am divided in the value of creating a central database that has everyone's information in it, you know? And I think all of us personally feel a degree of ambivalence and concern to us that you would be, you know, not being honest with yourself if you did. You can see the public policy benefit of it, you could see what you can do with it, and there are ways in which you could do it where we can protect people's interests, and I've seen that happen, but it's still a personal question for me. So I'm not advocating for it, but I see the benefits of it. In India, you have a billion people in this database, and they have built a sort of series of technologies, effectively, API standards that sit on top of this, on this standard national unique identifier. And there are four parts to it. One is an ability to sort of do KYC, know your customer for any service from anywhere in the country remotely. So set of technologies, protocols, and APIs that allow that to happen. A system that allows a set of standards that allow sort of a drop box on steroids to emerge in the market. So you have many drop boxes that are far more secure, far more effective, built on a standard and a protocol that's built on the unique identifier, that's the national ID. And then you have a cashless layer, which is an instant payments system. It is instant, as in the very minute you send money, it shows up in another person's account, and it's any account of any kind, and it's a push and pull mechanism. It actually goes beyond accounts. You can create unique addresses for yourself. And so regardless of how many accounts you have behind that address, you can move money. And then the last layer is a consent layer. So there's a piece of technology that enables the secure movement of data backed by consent. So you can validate that consent, and it's arguably more robust. The Indians would argue, because it sits on this unique identifier national ID. What's interesting is that in each case, it's being implemented as a public good. So the national, the EKIC is run by a government entity. The sort of standards and protocols for these drop rocks and steroids is managed by the Department of Electronics Technology. The payments layer is run by what could be considered sort of visa before it had an IPO. So it's the national payments corporation of India owned by all the banks. There's only one foreign bank. That's a member, that's Citibank. And a consent layer that is currently being managed because it's largely being used by the financial sector by the central bank. So it's not one government entity, but multiple entities that are playing a role in this infrastructure coming together. So I bring these up not to advocate for a national ID or to advocate for these particular systems, but they present to the kinds of solutions you would need for us to be able to get to the true movement of data that's secure, that's consent driven. And I might go as far as to say that I feel there are lots of interesting things happening. You heard this this morning, I was telling Michael during the break, but they seem sort of very much in their own part of the universe, right? So there is some effort to orchestrate all of this, to stitch all of this together. I don't know what that would look like. Is it someone at the White House with the mandate to be able to do that or at the Treasury with the mandate to be able to do that? So you take what's happening in the real ID space, you take what's happening on questions around data portability. You take all the different pieces of efforts that are happening already and create a common architecture that drives all of this. So it's not happening in these different parts of the broader universe, unlinked, but there's something that's bringing them all together. Thank you. Thanks very much. They should be. How do you get to them? You ask Christie. Okay. So while Christie figures out where my slides are, couple of points. So on this national ID, so couple of observations. One is it's really odd, I think, and was having this conversation with folks from the OFR yesterday, that we live in a world in which, at this point in time, setting aside sort of the Hobbesian world in which we lived in thatch huts with dirt roofs, like government confers identity on us in all meaningful sense, right? As we know from the Berther movement, right? Like you can't prove who you are in any meaningful sense until you present your birth certificate to Donald Trump, right? And that birth certificate is a government-issued piece of paper that is notarized by someone and signed by the doctor who gave birth to you, right? Like, that is fundamentally a government thing. I have a single unique identifier that follows me throughout my employed life, the social security number, which is used, hashed or unhashed, as the way that those, I do not think of them as miraculous entities, probably because none of them have hired me to work for them. The credit bureaus used to drive their relational databases. If they ever do want to hire me, we can talk about it, but. So we have these things, right? I think the piece that's frustrating is that our political infrastructure has been so badly broken for so long that we can't make the kinds of policy investments that places like Estonia and India are making, even though the sort of Coast-educated Chicagoan in me knows that the reduction in transaction costs applied to our economy would yield enormous improvements from a social benefit perspective. And like, it's just broken, right? Because there are too many political constituencies who enjoy rents from some aspect of the system as it exists today. And so then you just have to accept that that's the way the world is and work with it that way and take the gains where you can get them. So shifting to where there are gains and where we don't need Congress to make new laws and like that's impossible. We'll start there. Kabir sort of stole my thunder, because I was gonna break the news to you that Rich Cordray had made news at Money 2020. I'm a little hoarse because that's where I started the week. So I captured the two quotes that jumped out of the conversation for me. The other person that he's sitting with, by the way, is Joanne Barefoot, a fairly well-known former regulator in the space with real passion for consumer protection and consumer interests in financial services. Iza told me they are. Oh, there you go. I didn't know that. So what Rich said was that consumers have the right to delegate access to their financial accounts. And in language that is unmistakable, he is gravely concerned that incumbent financial institutions, i.e. banks, depository banks in particular, are looking to ways to shut off access to that. And that's a problem. And the Bureau obviously has enormous tools, even if he is subject to presidential appointment, like for five minutes, to exercise supervision, examination, and enforcement with respect to the degree to which financial institutions are adhering to this mandate. So then what is he talking about, right? Like, well, so this is what he's talking about. Oh, one more, one too far, because it doesn't change it here. So I think of this as section 1033 of Dodd-Frank. The formal statutory site is 12 USC section 5533. And what it says is that a financial institution, subject to stuff that the Bureau might do in terms of rulemaking, must make available to a consumer upon request information related to the consumer's accounts at that institution. About a whole bunch of stuff, right? So transactions and information related to the account cost, charges, and usage data. And then the last sentence is like, this is so we don't yet have rules, we have a self enforcing statutory requirement, and then we have this last sentence. So what do they have to do, right? So the information shall be made available in an electronic form usable by consumers. So what does this mean? This will be until the Bureau gets around to making rules a subject of much dispute to sort of anchor the conversation. Like, I think it's interesting to think about like how are consumers sort of voting with their feet about how to use this data? And so Pete Daffron didn't even know, but he was actually giving away one of my punchlines because I have one of those slides, right? That shows you the 150 people who are working with consumers in some way or another to get access to information in a transaction account at a financial institution. So this particular slide is divided by services that we typically associate with banks, right? So you can start wherever on the slide you like. I'm like a consumer guy, right? So I care about mobile banking, personal financial management, lending and financing. Like as an individual advising and investment stuff is interesting, but for the vast majority of American households, it's irrelevant. But even in those other three sectors that I really care about, like access to this information is critical. And it enables a couple of things that I think are interesting to think about again to sort of channel Robert Coase or even Richard Epstein, right? So thinking hard about points of friction in lives of individual people and in which the inability to access information and to apply intelligence leads to bad outcomes. Like that's like a complicated thing to say, what do I mean? Overdraft, right? Like, so an overdraft charge, right? Information sits within the bank that may enable me to avoid that charge, right? The bank at that particular moment in time has no particular interest in sharing that information with me. Certainly not in a timely enough way to avoid the $39 charge, right? But Ethan Block at Digit, not a client, but I guess I do have an investment in it, so I will sort of raise my hand in that regard. Small, not material, but still I'll disclose it. So he is interested in preventing that overcharge to the extent that he can arbitrage the difference between putting those funds in the account and the cost to him of providing those funds, right? And there are a whole set of places around the bank where there's the ability to effectively unbundle the set of services that are provided by typical banks in their relationships with consumers, and let's be clear, corporates too, right? So a sort of thought experiment in terms of thinking about what banks are, right? You can just think of them as siloed databases, right? Siloed databases of debits and credit. And all we're talking about is creating an information layer that enables people to read and write on top of those ones and zeros. Now I know that banks don't really want to think of themselves that way, because we don't pay a lot of money to people who run databases. So, and just to give you a sense of, there's sort of two ways of thinking about this that I'd like to identify. I cannot claim credit for either of them. I have a really smart friend named Kausik Rajgopal. Kausik is the, I guess he's now the head of McKinsey, like West of the Mississippi or something like that. And the head of McKinsey's payments practice, which is how I came to know him. And so as they think about what a read, write world of banking looks like, the analogy that they use, and I think this maybe resonates with people here, is thinking about the transition in fees associated with the brokerage business from 1970 to today, right? So once upon a time, the costs of trading stocks were set by a group of people who had seats at the brokerage houses and blessed by the national regulators of those exchanges. That was like 1970. And each trade costs like, in basis point terms, I think the notes, I think it's like, I just was looking up an academic paper about this. It was like 300 basis points per trade. Maybe that's too, yeah, no, no. 300 basis points on $10,000, right? Yeah, no, that's wrong. So I guess it's three bips. Well, I have the math wrong, but lots. Like to translate it into, because it was like $10 per 100, right? Is that right? Who's got, who's here was worked in the brokerage business back then? Help me out. No one wants to raise their hand. $3 a hundred, see? Okay, so $3 a hundred, right, 300 basis points, right? Like I was not, I was remembering. So what is it today? It's converging on zero. So that's one thing, right? And when we think about people who benefited from that transition, it's not as though the people who were in that business completely went away, right? I mean, they might have gone away for other reasons, but Merrill Lynch is still around. Morgan Stanley's still around, right? These are businesses that were serving in that role before. They just don't make money that way anymore. And it created an opportunity for the emergence of a generational brand like Charles Schwab, right? So really interesting opportunity to create generational brands and to take enormous costs and rents out of the system. And so where are those rents gonna come from? Oh, well I'm gonna come back to that. And I'm gonna talk here. My presentation, I can do what I want. So this is a slide from McKinsey that takes global banking revenues and essentially sorts them into two buckets. Which portions are associated with credit intermediation, which is sort of the reason why we think we have banks, right? So aggregating small deposits and creating investment opportunities longer, right? So taking transaction dollars, aggregating them within an institution, not everybody needs to use $10 every day, so then I can lend it for a longer period of time. Turns out that still accounts for the majority of bank income, but the return on equity associated with that business is small, right? Banks make the vast majority of their profits from an ROE perspective on origination and sales. Now to be a regulated institution, the reason to be a bank is for the balance sheet stuff. Anybody can do origination and sales if they plug into the bank database. And so the question is why aren't banks letting this happen, right? It's because they're not stupid, right? They recognize that this is the way that they're currently monetizing the value associated with their consumer. It's not in their interest to facilitate any individual's consumers avoidance of an overdraft. It's just not. So if we go back then one more and ask how are banks doing as we sort of focus on the extent to which they're allowing consumers to get access to data in the form that consumers clearly want to use it. So I apologize, the whole slide presentation is a bit of a work in progress as a partner to law firm might kind of have a lot going on and there was this whole conference in Vegas and it's just hard to get everything done. So I managed to get through to the extent I could find them the terms of service associated with 55 financial institutions for their basic transaction account because I wanted to sort them into three buckets. So banks that tell consumers that they cannot share their online banking credentials with anyone, that it's just a violation of the terms of use associated with that bank. Banks that impose liability for sharing on consumers which by the way is actually the allocation of liability under federal law. And banks that say hey, I recognize that this is how you want to use information associated with your account. I'm going to design a system that enables you to do it and I'm gonna protect you from any harm that might relate to that account itself. So that instead of merging the ability to read information associated with the account with the ability to originate a transaction, I'm gonna separate those two so that you can provide read-only access but the person who has that credential couldn't go in and take all of Michael's money. And so I have, sorry, I actually couldn't find one in the third bucket. So if there are enterprising law students out there who want to sort of peruse terms of service for various financial institutions, be my guest. You can tweet it to me at at TP Brown Five with the hashtag open data and number four for Fintech. And we'll see if we can find one. We haven't found one, haven't found one yet. So super optimistic. Like have all kinds of comments on the other stuff we're gonna talk about but that's enough for now. Thanks, Tom. And before Marisa Bella joins in, let me just say for the aspiring law student out there, there are lots of examples in what we're talking about of ways to get involved. Section 1033, the first draft of it was written by a law student who was working for me at the time, Sophie Rasmund. So you can do anything is the basic message. That's a very hopeful note. And I didn't actually get the note about this being a hopeful presentation. So this is a little more in the fear category. And I'll tell you why. So I work for the National Council of La Raza. For those who are not familiar, we are the nation's largest Hispanic civil rights and advocacy organization. And our entire mission is to improve opportunities for Hispanics. So I work in our policy department under economic policy, focusing on wealth building policy, which includes access to banking, financial services, retirement and housing opportunities. The other policy areas that we focus on include education, access to healthcare, civil rights, LGBTQ, some telecom, et cetera. But everything really, going back to the mission of improving opportunities for Hispanics really looks at how we can close the existing racial wealth gap. So a lot of times that I give out statistics, it becomes sort of the doom and gloom part of a panel that I'm on. So I'm gonna limit them and just sort of give you some of the overviews. So everyone is, I think here, maybe familiar with the Charm of the Racial Wealth Gap. We know that there's an income gap correlated with the race as well. But when we're talking about the wealth gap, we're looking at tangible assets that households and individuals can accumulate over a lifetime, like a home, a car, savings, retirement investments. And the point of accumulating this is to build wealth. And to pass it on to the next generation, which we believe is really how we're going to attain middle-class status for the majority of Latinos living in the United States. So for some of those statistics or people who are interested in statistics, the median White Household in 2011 had $111,000 in wealth holdings compared to about $7,000 for the median Black family and $8,000 for Latinos. So that's 100,000, 7,000 and 8,000. So when we're talking about disparities, this was not created by the Great Recession, but it was exacerbated by the Great Recession. So we're looking at the accumulation of assets to help get us out of that hole. So the use of big data in finance can actually be used for good. This is a hopeful part. But it can also exacerbate those disparities as well. So when we're talking about big data in finance, what we're talking about from NCLR's perspective is looking at a couple of different buckets that that falls into. So there's the stuff that's always around us that's necessary, which you would traditionally use to build a credit score. There's stuff that's good for us and that can be used for good, like maybe bill pay history, rent history as well. And then there's the stuff that's toxic or potentially toxic. And this goes into what we would call digital redlining. So our lead generators being used to discriminate against people. I will also say that we don't approach this subject as though we think that everyone is out to get minorities or Latino borrowers. But in the same way that I, who is considered the most privileged class in the United States? Anyone? A white man. Right, so I have never approached a white man and said, how does it feel to have all of the best products offered to you? I would not expect someone who was in the financial services sector, predominantly white males, to ask or to consider maybe the minority experience because that is not their experience. But there is a saying that says, once we know better, do better. So there may be a moral imperative to try to do better given this new type of technology, the new way that we can use data in finances. And another way that this has been talked about that I've heard is to compare it to carbon dioxide. So air is all around us and necessary. But when you break it down, you have carbon, which is toxic, and oxygen, which is good. So not to oversimplify it, but just another way of looking at how we can think about this subject matter. I will also note that in some of the readings that I've done, there tends to be the trend that wealthy people tend to have more opportunities based on personal interactions and personal networks and social capital. And those tend to be things or advantages that lower income people don't have. And so they tend to be subject to decisions based on them as a group. And so aggregation of data, automation, and big data tends to disparately impact them for that historical reason. So the decisions that are made using big data are not going to be affecting just line items or accounts or numbers. They will be affecting people. So that sort of drives our interest in this as well. And so we have to ask ourselves, can machines, which has been alluded to earlier and actually was probably stated explicitly, be expected to adjust for fairness when we know that there is bias? So I'm going to just go over some of the historical examples where we have seen some of this play out. We all know about the power of credit. But some people who don't know about the power of credit are people who are not savvy or familiar maybe with the way that the US financial system works, which would include immigrants and non-citizens, who actually have been known to have an aversion to credit because they don't want to look like they actually are in debt. So we did some field research in California a couple of years ago where we were looking at engagement of the financial mainstream for Latino families, talked to a lot of immigrant families, a lot of non-citizen households. And a lot of people told us that when they first came to this country, they did have an aversion to using credit because they didn't want to seem like they were going to be a burden on a system. They wanted to be able to afford things on their own, cash based. I'm sure a lot of people understand that the employment options that they often have you sort of lead to also using cash based systems as well instead of using a bank account maybe, or having access to credit as a result of that. So it wasn't until someone would have to go to rent an apartment or try to buy a car that they realized that the impact that credit would have and the need for credit history. So that's not something that's necessarily something that is top of mind for people when they're first using the financial system in the United States. And then when people have received credit because they might be thin file or no file, the options that they have are limited and pretty bad. So the terms are not great. And so language spoken and maybe assumed ethnic or racial background can also play a role in what people have had offered to them. And then we all know about proxies for race and ethnicity including education, occupation, income level and zip code can also be used to discriminate against these people whether or not the person on the other end or the originator of that algorithm for instance might have that in mind. And also I think it is worth noting that credit score itself can also be used for a correlation with wealth and then ultimately race. If you have a good credit score, you might be wealthier and you might not be a minority. A specific example that we can talk to that I've been closely working with for our team is the payday lending space. So payday borrowers just proportionally come out of poor minority communities. If you know where payday stores physically are located there's not even talking about online lending but physical locations tend to be concentrated in African-American and Latino neighborhoods too. And that's strictly based on the fact that they know that these are people who are more likely to be using them. There are bad products that do entrap people in cyclical debt. And so they know that this is a ready customer base that might have limited options for credit otherwise. People who have the highest odds of having used a payday loan include people without a four year college degree, people who rent their homes, African-Americans, and people who earn less than $40,000 a year and people who are separated or divorced. Of these characteristics, being African-American is the single strongest predictor of using a payday loan. African-Americans are 105% more likely to use a payday loan than any other ethnic group. So if you are a lead generator, looking to push some online loans towards someone, you can use a proxy for race, you can use something like zip code, educational attainment, make some assumptions on your own. And we know that people will be targeted as a result of that. Now we're linking that alternative scores for credit. Again, another power that can be used for good or bad. But then again, it really depends on what the intent of an algorithm for instance is and with what it's going to be used for. So banks use their own data to learn more about the credit worthiness of their own customers. They see rental payments, they see utility payments, et cetera, which can tell a lot more about their own customers using big data tools. But when we look at unregulated data sets or e-scores, these are really based on efficiency. So if you're driving someone to a website and that person ends up clicking on a link and ends up using a loan, that's a successful transaction for you as the person who owns that algorithm or who has sold that data set. So then we're looking at profits, really driving that, not necessarily are you connecting someone with a good product that's gonna help them out of a financial hole because they're looking for a loan, you're looking for did I make a profit off of this transaction. There's also lending that looks at things like social networks, which was mentioned before. It can benefit some and really hurt others. So I think Facebook came up with a lending model where they were gonna look at people's friends' networks to see whether or not that could be used to determine credit value or credit worthiness. So who has decided what education institution might be affiliated with ways more than something else? Or if you have liked a certain band or gone to an event, if that's gonna have a rating on your credit worthiness overall, you can see where I'm going with this and how that could be dangerous. Again, it really depends on the value that's been placed on them by the human who was driving that algorithm. So that's something to keep in mind. When we talk about the housing crisis, which is probably the most famous of these examples, lead generators really helped to push people towards toxic mortgages and bad products, which ended up being defaulted on more than not and led to the housing crisis. And people lost homes to pork leisure. In California, 50%, people who lost homes were Latino families. So people's credit was impacted, people face bankruptcy, no longer able to stay in a home, might not be able to build wealth enough to get a down payment for another home. Then this impacts maybe where your kids are going to school, whether or not you're able to afford to put savings away, can you still contribute to your retirement account? So the long-term effects of this type of lending is pretty detrimental. Another example is in auto insurance and the pricing for auto insurance for consumers, which is pretty much a formula, it's kind of a black box for most drivers. So insurers are allowed to use factors like education, occupation, marital status, zip code, to determine pricing. Even though they have nothing really to do with whether or not you're a good driver and are actually a risk. And so insurance costs actually have been known to deter people from purchasing a vehicle because they know that they can't afford maybe a payment on top of insurance. So this then limits your occupational options, where you're living, again, where you might be going to school, and a lot of the other economic choices and opportunities that you're gonna have available to you just because you might not be able to afford your auto insurance. So when we're looking at considerations for consumer protections, when we're looking at big data, say, I don't know if you're familiar with Latino names, but just using the example of Latino families, sometimes there's two last names. And so sometimes there's confusion about which one goes first. The mother's made a name or the father's last name. So if you've ever tried to correct a credit report with that being a problem for you, you know it can take some time or if you've heard any stories about it. So how do you tell an algorithm if this is the case, this is how the individual corrects it? I mean, that just doesn't make sense because you don't know how many times this can actually happen. Is it worth it to you to take that into account so that ends up really hurting the consumer if they are subject to that problem. A lot of minority or immigrant or non-English speakers don't even know that they do have the ability to correct information if it's wrong, they don't know where to turn to necessarily. If that information isn't readily available on a website in the fine print, you might not know that you do have recourse to try to fix your information as well. I guess I'll just, I can touch on some regulation or maybe some potential solutions as well. So there's room in the regulatory environment. Obviously CFPB has been a big player in these conversations recently. And this is really a way to get ahead of some of these issues rather than being reactionary to talk about these and these types of spaces with the different types of people who are involved in the decision making around this. For instance, the OCC has been considering a federal bank charter for FinTech companies who are using big data. We think that's positive. But overall, I would say again, sort of going back to the who is privileged in society and who's not making sure that there is diversity in finance in general, I think would also go a long way in positively impacting some of these trends. Because if you don't know to look out for some of these and flag some of these issues, you wouldn't necessarily consider it until it's already happened, just for impact has already affected somebody. So I think that keeping that in mind, keeping people engaged in financial mainstream as much as possible, having products that are available to them that actually makes sense that are not necessarily focused on profit all the time, might also go a long way. Consumers should really have access to know when credit is being used against them or just used as a value judgment on a transaction that they're having and the ability to opt into data collection or data sharing rather, should be much more widespread for consumers, especially for those who might not be as engaged or savvy in the financial mainstream as well. Great, thank you very much. A rich set of issues already, but we're gonna broaden out still. Graham. Thanks Michael, yes. I am not a member of Congress. I'm the staff person usually see sitting behind the member of Congress scrunching his face and furrowing his brow and sort of making pain faces as they sort of say whatever it is they say, while they, these hearings. And I should be clear that the views that I'm gonna share here are my own views. They are not the views of the Senate Banking Committee. They are not even the views of the ranking member of the Senate Banking Committee for whom I work. So there, now I can say whatever I want to I guess. And the member I work for is actually from Ohio. Do I think I have some obligatory swipe I'm supposed to take at the University of Michigan? That's what people tend to do. When Rich Cordray came here, I gave him a Michigan hat to wear. So if you have any preference you can give me to take back. I'm happy to do that as well. But I understand that I'm vaguely aware of college football standing. So maybe I'll just leave this where it is. So, I think there was a good point made earlier by Tom about sort of the toxicity of the politics right now. I think a lot of the issues being raised at this conference are really, really important. And they need to be looked at very, very closely and they're evolving very, very, very quickly. And unfortunately our committee at least hasn't looked at any of them in the last, I would say 21 months or so. So we're really already very far behind the curve, I think in terms of a lot of the developments that are going on in the marketplace. And we were already behind in some of the work coming out of the last crisis and getting a lot of that stuff up to date. So we have a lot of work to do here. And frankly, I think it's safe to say a member of Congress ever got elected by saying, I did my due diligence about cybersecurity or FinTech. It's just not to them, I think, a politically scintillating issue necessarily and it's not an easy thing to take back to their constituents, but it's deeply, deeply important and it will affect them very, very deeply each time there's a data breach or as they are discriminated against in the credit markets, it is very meaningful to them. It's just sometimes hard to connect the dots on those things. And if you want to know a little bit more about the political environment around big data, some might not like that you do this, but during the break maybe go on YouTube and search for the OFR as watching. It was a video made by the House Financial Services committee in which they say all sorts of Orwellian things about the agency purely for trying to figure out what's going on in the financial markets. I think the chairman of the committee described it as a hacker's dream and a civil libertarian's nightmare. I would ask you if this is a reasonable assessment of the work that the OFR is actually doing, but that gives you one sense of it. And then on the other hand, agencies are often pushed to base the decisions they make off of actual data and make data-driven decisions. And yet when Rich Cordray and the CFPB did that, they were basically brow-beaten for buying anonymized credit card data to actually try to figure out what was going on in the credit card markets so they can make informed decisions. So I think it's pretty clear there's an agenda there and I'll just leave that where it is. So I won't shock you to hear that often members of Congress and their staffs are asked to make decisions and changes in the law that are basically upon anecdotes, but that lack reliable data. And the lack of high-quality readily available data. For example, you think about the flash crash. These things happen, there isn't good data sort of pointing out what the problems were and that creates a delay and a vacuum that is then filled often by self-serving arguments or arguments that reinforce a particular group's pre-existing worldview. So, and this is true of either side of the debate, right? So industry may come in and make a self-interested argument that is not necessarily supported by data. For example, the bond markets are now illiquid and we can't even trade in them. On the other side, reform advocates might make arguments about a potential future harm, but they don't have a demonstrated track record of, for example, merchant banking has been risky for financial institutions to do. They can't point to see, here's the underlying data that it's a speculative projection forward. But sometimes just having comprehensive data can move you a good ways towards reform and sometimes it can help clarify what a good reform looks like and a way to do it in an early targeted way. Sometimes just shining a light on a particular practice that's going on in a market is enough to make it go away without the heavy hand of government getting in and doing anything about it. And then in terms of targeted, sort of studying issues and targeted reforms, CFPB's comprehensive look at the way that short-term lending operates in consumer arbitration really focused things on rollovers in the payday space and class action bans in arbitration as being really sort of the critical issues in those particular financial products. I'm not saying there aren't other issues there as well, but really focused in some of the reforms on those particular aspects of those products especially harmful. I'm gonna talk about another area though. After 2010, there's been a lot of talk about activity migrating from regulated bank holding companies into what for lack of a better term has been called the shadow banking system. So examples of this you can think of are Blackstone buying the commercial real estate portfolio from GE Capital after it was designated for federal reserve regulation or leverage lending moving into non-bank financial companies after the bank regulators put in place a leverage lending guidance to say nothing of non-bank firms like Citadel getting into a CDS clearing. You're on Capitol Hill and you hear this and you think is this good or bad? I don't really know what to make of this. People are telling me I should be worried about it. How do I figure out what's going on and what to do about it? And so we decided to look at it. And we knew going into the inquiry, there are examples of quote unquote shadow banking activities before the crisis. People have already talked about repo, money market funds, things like that. We know that those were vulnerabilities but there hasn't necessarily been a lot of good observable information about specifically the narrow definition of what shadow banking is which means a short-term runnable money-like liability that is used to fund less liquid credit long-term credit creation. You know there are some examples of how far it's actually pointed out like the shift of leveraged finance to BDCs that rely on short-term wholesale funding. There was a distress at a fund called Third Avenue Focus Credit Fund that basically invests in junk debt but it has shares that are supposed to be redeemable on demand and easily traded. But these again were sort of anecdotes of one form or another. So when we were looking at shadow banking and thinking about it, we had to think about things like what is the definition, what is the data people are using to measure the size of the market. And the FSB alone has estimated that if you take a narrow definition of what the shadow banking market looks like, it's $36 trillion globally. If you take a broader definition of it, it's $137 trillion globally. So it's basically only a difference of $100 trillion give or take potentially the size of the market. But sort of talking to the relevant experts on this and OFR was one of them, we sort of saw a few things that are going on right now that are useful in the near term. But I'll talk more about this in a minute. There's a lot we don't know and there's a lot of work left to be done. So conclusion number one that we had was there are clearly areas where potential risk migration to shadow banking needs to be monitored. And you can think of examples like the work that OFR was undertaken to do its bilateral data collection. You can think of the improvements to form PF that the FSOC and the OFR and other agencies are working on together to sort of figure out what's going on in the hedge fund space. And then some other areas, we actually already put the reforms in place, for example, in Dodd-Frank, in terms of swap data, and it's getting fed into the agencies. And the agencies just don't have the resources to actually analyze the data itself and to make heads or tails of it. So we have a lot more work to do there in terms of information. There are still reforms to some of the crisis-era shadow banking issues that are unfinished. Again, repo is an example of that, a potential proposal from the Fed to do universal haircuts for securities lending and some of the security-based swap rules also haven't been finished. I mean, this is old stuff. This is stuff we knew was central and the work is still not done on it. And I know we're eight years out of it but a lot of this stuff was allowed to metastasize over a long time. You can't immediately fix a lot of these problems. And then number three that was really important to us was that the reforms to banks specifically are changing some of their business practices but we should probably have expected that to happen. Some institutions are adjusting their activities on an activity-by-activity basis. Some institutions are not adjusting at all but really there doesn't appear to be some sort of contraction and available credit or any particular build-up of outside risk in some unregulated sector right now. Folks have talked about some issues with leverage ratio and declining repo volumes. Some might argue that's actually a feature not a bug of some of these reforms is that they are tamping down some of these activities but there are also issues to monitor as well like the quality of repo collateral some of these banks that the leverage ratio is actually affecting potentially that could impose additional risks. I also say that US institutions in particular actually seem to be benefiting from some of the reforms compared to their foreign counterparts. City group actually bought hundreds of billions of dollars in unclear CDS contracts from Credit Suisse and Deutsche Bank because they have the capital and the balance sheet to actually handle some of these activities. So some of the reforms are actually creating a competitive advantage for the US as opposed to their international counterparts. Another potential area of vulnerability that we saw was the difference between the rules the banks are subject to and the rules that non banks that are subject to SEC and CFTC regulation are subject to on things like margin and capital. I mean regulatory arbitrage was a central part of the crisis before and you don't wanna create initial situation where you can move activities around to different registered entities to take advantage of some of those mismatches. So it's something that we need to be we need to keep an eye on both in Congress and at the agencies that the water is not going through some of the holes in the dam. So let me just say that OFR has been has a critical role to play by informing the debate particularly on Capitol Hill and the FSOC has a responsibility to direct that work to heat it and to act either as a council or through its members when necessary. The same is true with the CFPB in the consumer space they need to look out for this stuff and they need to take appropriate action because that's what they're there for that's why we put them there. And it's the job of Congress not to interfere in that mission as they do it. I'll also say Senator Brown has proposed some additional legislative proposals. He hasn't introduced any bills at this time but he's sort of floated some ideas about shadow banking. One of which is to provide the SEC and CFTC with a direct funding source. I think some folks were lauding the fact that FHFA and CFPB are not appropriated. We think that's largely that's appropriate for those agencies as well. Starving them of resources is a good way to prevent them from doing their job in a lot of these spaces. From using that data in an appropriate way in a way to protect the economy and the financial system. He proposed that all the agencies have some sort of financial stability mandate if they're a member of the FSOC. That needs to be part of their mission now as well and incorporate in their day-to-day thinking in a lot of these issues. And then finally we proposed an idea somewhat between the FSOCs to authorities. They can designate entities. They can go after activities. We tried to think of something in the middle. We call it a sort of market authority to recommend regulation of large actors in particular markets where you're seeing some harmful attributes of shadow banking. There's growing up that's growth, that's leverage, that's illiquidity, things like that. That's not exactly a transformational agenda, those three things, but it doesn't need to be because we put in place a lot of things in 2010 that are really, really important, that are transformational and they're just beginning to work. And those things should drive this issue for years to come. So it's important for lawmakers to listen to those experts and to follow the data wherever it leads them, wherever it leads them, whether they like that destination or not. I just wanna emphasize one thing that Marisa Bell said as part of her presentation, which is we're here to talk about data, but for members in particular, it's important to remember that there's a human side to all of those numbers. That one foreclosure might be one number in a mortgage database, but that's a whole family, that somebody who potentially lost their job, that's a kid having to move to a different school district that has health effects that are very human. So like Chair Yellen once said about unemployment numbers, members of Congress always need to keep in mind and they do to the best of their ability that these are more than just statistics that we're talking about with a lot of these policies. So I'm gonna warm up the panel with a couple quick questions then open it up to all of you. So let me start with Marisa Bell. So you laid out a range of, I think pretty brutal facts about the market for minorities, particularly Hispanics in this country and the credit market. But I'm gonna give you a chance to talk about one more. And that's the small business market. So we think that there are a bunch of problems, I think there are a bunch of problems in the small business market in terms of consumer protections and access to credit for minority business owners in this country. But one of the things we've always been hampered with is lack of data. The CFPB now is the authority under those of you who are not in the odds of love when we throw out these references, section 1071, to collect data on small business, credit access. So I'm wondering, what are you experiencing? What are you saying at La Raza? What are the problems and do we have the tools to address them? So given the nature of employment that people tend to seek out when they come to this country, a lot of times they end up being self-employed and access to credit has been a big issue for them. A lot of times people will piece together money from family members, friends, because there is that whole. CDFIs have stepped into this space a lot, but they alone cannot carry it. It continues to be a huge issue for minority owners. We know that that's like the number one growth rate in business for Hispanics is actually women owned small businesses. So this is something that, I think that it has actually been a bright spot in the employment numbers for Latinos, but there definitely needs to be a lot more on the part of major financial institutions, major lending institutions to step into that space. So there's, it's not always the worst part of a jobs report for Latinos, but it definitely could use a lot of support. And this is maybe for Tom and Kabir to reflect on for us. So we talked a little bit about consumer ownership, but both of you said that's probably not enough to move the ball forward in many ways. So the kinds of other things I think about are reforming our creaky old antiquated payment system and good funds availability and policy on overdraft. How do we get our fractured regulatory system to address the set of policy issues that might matter in making this data access point work for everybody? Well, so on data access and setting aside the broader issues that you mentioned, there are a number of different constituents for whom this matters, right? So you have developers, you have people who are currently providing that connective link to underlying accounts and you have financial institutions and consumers. The bureau obviously has the ability to issue a rule. I think they're unlikely to take that step in the relatively near term. And I worry a little bit just given how they've used that rule making authority to this point that they would err on the side of complexity as opposed to simplicity. So I think the first step is sort of forcing a conversation and seeing the extent to which through shaming and other devices we can get financial institutions, particularly larger financial institutions to adopt the relatively simple technology steps to live in a world where consumers can provide the access that they want to today. I think it's possible to issue a rule that would have the same effect, but looking at the rule writing process as it's been exercised to this point, I have some concerns about whether we'd be content with the outcome, even in the relatively near term and more broadly the extent to which it would become rapidly outmoded. I think with respect to the other issues that you, Marissa Bell and Graham and Cabira pointed to, if I had to pick one single issue, it would be to have an informed conversation about a consistent, not even just a portable financial ID, just a consistent ID that consumers could use across the many places where they interact with people who want that information, employment, insurance, financial services. I recognize that the politics of a national ID are such that a technologist is afraid to utter it even in an academic setting. So we need to rebrand it in some way. And we have other, you know, they're- We ask our business colleagues- Well, and we have, I mean, I like to work with stuff that exists, right? So I have a known travel ID. Why can't I use that as a way of validating my identification to a financial institution? That's a relatively simple connection to make. So looking for things that are sort of consistent with the broader objective, but practically achievable in the near term. Yeah, your question, I second that on the ID stuff. I mean, in the UK, there's this sort of gov.uk.verifier, which is a federated system. That's an interesting model. But that's more for verification. So it doesn't really solve that foundational ID. Your question made me think of something else that we've been exploring, which is how do we improve this, how do we address this sort of Balkanization of the financial regulatory environment? And so you have CFPB, you know, there's a number of sort of perhaps forward-looking things really gets ahead. But in reality, there are multiple agencies that innovators are interacting with. And ultimately that is not enough. So how do we address that? One idea that we are exploring is sort of model on these regulatory sandboxes that have become sort of being discussed a lot lately. The UK, one is the oldest, as in it's under a year old. And there are a number of others that are out there. In the US, it would be important to make it truly interagency. And one idea is to create a federally funded research and development centers. Talk a little bit about that. So FFRDC, like the MITRE corporate, similar to that, I think. They are models in the defense and energy sectors. And it's a lab environment. It allows regulators to learn. And it creates an environment which innovators can expose exactly what they're doing with this data in ways that it can enhance consumer interests. And so that's one potential solution, specifically that we are working on with Joanne. There you mention it. So let me use that just as a jumpy point for a quick question for Graham. And then I'll open it up to all of you. So Graham, the policy world sort of intersects uncomfortably with the technology space. It's hard for policy to play ball in this space. Is there, do you think there's openness on Capitol Hill to be embracing of things like a regulatory sandbox or other techniques designed to be more friendly towards using data and technology to solve these kinds of problems? I think yes, but as I said, sort of the way that folks come to these issues with preconceived notions, there's a burden, there's a hurdle you have to clear on either side. I think for the more consumer minded members, they wanna hear this isn't going to be a redux of preemption of a particular kinds of anti-predatory lending laws. They wanna hear this is gonna be done in a way that respect consumers. And I think the folks on the right need to be convinced that some of those that you can't just have a space where a thousand flowers bloom completely unfettered, that there needs to be a balance between sort of letting the free enterprise develop and ensuring that everybody is respected and their financial protections are in place. So I think there's a space for that. Again, not a great environment to have one of those conversations though, you know, because issues are very balkanized right now. And yeah, in an ideal world, everyone would sort of come to the table with an openness to give a little bit on either side so that we could see some of these benefits and try some of these things out. But, you know, I'm hopeful, you know, it'll be a new Congress next year, there'll be potentially either way, there'll be new members in charge of our committee. So you one can always hope for sort of a new beginning when we get there. So let's, now that we have a new beginning, let's open it up to some questions from all of you. Yes, down here. And there's a mic heading your way. Hi, my name's Fanny from Davis Polk. I just have a question on the data access point, which is, so one of the concerns at a lot of large financial institutions site with respect to allowing access to third parties to gain access to their customers financial data. And one of the reasons why Jamie Diamond, for example, says they would like to push data instead of allowing companies to pull data is the sort of cybersecurity concerns. And this comes in two ways. One is that, for example, if the third party is, you know, suffers a breach of some sort, the financial institution is concerned not just about the liability, but also about the reputational risk. And another way I've heard this concerned voice is that currently when third parties like data aggregators paying banks for access to consumers data, they get so many requests that it overwhelms the banks security system and sort of the IT system so that it sort of mimics what appears to be a cyber attack and it shuts down certain of the systems and it diverts a lot of resources that would otherwise be used to maintain cybersecurity elsewhere. And so my question is, how do you balance the need to allow consumers to be able to delegate access to their financial data with concerns around system resiliency and maintaining the security of the underlying infrastructure? Let me, I'm gonna say a word or two and then I'm gonna let Tom jump in because I know he's anxious. So I think there's an aspect of the bank's argument that is true, which is you have to worry about security and privacy. Those are important values and the resiliency of the system is important value. And I think it's also true that in the current technological environment that the banks have chosen, those issues are real issues. That is the particular technologies that they're permitting to the extent they are not as secure as one would like. But the more fundamental point is that that's just a choice that the banks are making to keep their customers data from being used in ways that would benefit their customers. So it's fundamentally, the technology is there. It's not a complicated, it's not a technological problem in the sense that we know what technology would fix this and be resilient, secure and private. We're just not using it. If I could just jump in with something that's not a legal point, it's a political point, probably the loudest institution about this issue that was trying to protect their consumers' data the most, at least on Capitol Hill, opened two million unauthorized checking accounts and credit card accounts on behalf of its customers. So this issue, at least in the political sphere, has suffered a little bit of a blow to its credibility just because they weren't even watching what was going on in-house. So they're gonna struggle on that front, I think, at least around the halls of Congress for the near term. So it's so wonderful to be an advocate with such wonderful witnesses. You might even think it was planned and it wasn't. So, but let me give you an example, I think of a way to think about it to demonstrate the feasibility. So I have a credit card and there's a legal and technology dimension of this. This is my card, you can all take a picture. I don't really care, because if it gets breached, they'll just send me a new one, which is awesome. But this is a token for an account. And when I present it at a point of sale, I am providing the merchant with the ability to do, read only access into the account to which it's attached to get confirmation that I have the funds to cover the transaction. It's something that we all do millions and millions and millions of times a day in the United States and on a global basis. It is, I think, we don't necessarily think of it in that function, but that is in fact the function that it provides. And I think what the world that I would like to see emerge with consumer permission to access is essentially a counterpoint to the bank permission to access that we associate with the credit card system, right? So credit card system works by banks providing permission to one another to provide that visibility into the account. And the suggestion is that a similar infrastructure should exist to enable consumers to provide third parties into visibility into that account. And the underlying resiliency and infrastructure to support it should exist to support consumer access as well as bank permission to access. Now, I recognize that that's not a choice that financial institutions are going to want to make. And I'm deeply sympathetic to the arguments and constraints that they face with respect to upgrading existing technology systems. And, but, right, like if I wanted to motivate that choice, particularly in a political climate which I hope will exist 10 days from now, like maybe a way of facing that choice is okay, right? Like we can create the infrastructure to support consumer permission to access or we're gonna move to a world of free account portability between the world's, the 10 largest deposit-taking institutions in the United States. And you can pick. I mean, there's just no reason from a technology standpoint why it's easier for me to move my phone number from one device and carrier to another than it is to move the full panoply of routing information associated with a DDA account. This is not a technology problem. The problem is that we have, you know, to go 30 more seconds, we have a financial regulatory structure in the United States for banks, insurance companies, and others that exist to protect those institutions for good and sensible reasons from disruptive competition, right? And so if we want that, right, we want to enjoy the benefits of that, some private and some public, then, you know, then I think we have to make some concessions when people observe that there are inconsistencies in how people are being treated that competition behind sort of a Rawlsian veil of ignorance would solve in five seconds if we had a more competitive ecosystem to support the exercise of consumer choice, i.e. exit. You mentioned both Hobbes and Rawls, so there's no covering all the grounds here. The bottom line is that the banks wanted to come together to address this with the new players, they can. In fact, the Center for Financial Services Innovation has been conducting a group of industry actors. They've invited the banks. In fact, banks are members of CFSI, but only one bank, I think, I showed up, it's BBVA, that could be a bank on your third column. And they just earlier this week released a set of principles around data sharing that address that particular concern. I think if they wanted to, they could address this. In fact, there are technological solutions to address that. Yes, Steve, in the back. Hello, this is Steve Linder from Columbia University. Thank you so much for your valuable insights. My question is, does anyone on the panel have an opinion as to how the European Union's PSD-2, which can be implemented in 2018, will affect how banks are gonna deal with the sharing of their customers' account information? So one, if you've seen me talk before, you know that one consistent refrain is that it's embarrassing that we have to point to Europe as a model for regulatory innovation. But why is that? You know, because of that whole Freedom Fries incident. But, and Brexit. Oh well. But the answer to your question is that it is an element of PSD-2 that financial institutions have to provide for that access. Now, there is a regulatory component as well, which is interesting, which is that information service providers who gather access to that will themselves be regulated under a member state regulatory regime that allows passporting across the entire European Union. And, you know, among the list of things that would be awesome to cure in the United States, I talked about ID. The second is the state-by-state fragmentation of financial services regulation for everything other than banks and securities, right? So, money transmission and insurance, like, you know. But this is not not on the list of priorities I don't think. So basically it's a welcome intervention and it's paired with the general data protection rules that also came out that talk about unambiguous and informed consent that drives that. So those are actually powerful interventions and good models to consider. And they're, you know, they're consistent with the framework, the CFSI framework that Kabir mentioned, and with the Dodd-Frank law and the integration of the ability of consumers to get access to that data. So there is potentially a set of consistent frameworks that could be deployed if we can get the regulation done on them. So let me open it up for another question. Yes, Mr. Lawrence. Federal regulation of consumer information, unlike Europe. To what extent do you see any possibility that we could have a thoroughgoing review and rationalization of federal regulation of consumer financial and consumer data? So let me say a word about that. And again, I know Tom would like to say the opposite. So, what? Yeah. So there are certainly, there are costs to state-by-state regulation in terms of efficiency. But there are also some gains to having state-by-state regulation as well. And I think they're often, we go through these cycles of remembering and forgetting. And I think that's one of them. So for example, on the lead up to the financial crisis, some states actually got consumer protection regulation a lot better than the federal government. And it helps to have some experimentation at the state level, so that you make it maybe less likely that the federal government will get it wrong. And I've spent a lot of time in the federal government. I would be the last person to say the federal government always gets things right. So I kind of think in that trade-off that the efficiency loss is worth the gain of experimentation and additional protection in letting states save for themselves like what is the good life in our state? Yeah, so I love the Brandeisian notion of states acting as laboratories for experimentation with respect to legal and economic policy. That's not the experience I have in practice in dealing with them. And the way, the sort of thought experiment that I use is that, and this has been true of every entrepreneur and company I've ever worked with, they rail against the state by state regulatory regime until they have scaled to pay the costs to comply with it, and then they're content. And so what that suggests to me is that there's an important unrepresented interest in the regime that we now have. And again, I'd sort of point to some regulatory developments in Europe. We don't have a constituency that represents the future in the United States. And it seems sort of Star Trekian, but this idea of a ministry for the future to sort of participate in regulatory debates to support review of existing regulatory regimes, I think has some value. Again, I think not any time soon, but like it's helpful to sort of articulate that there is an aspiration, that we aspire to something better than the current fractiousness and rent seeking that emerges from our existing regulatory regime, that there is a place that we can see that is a better policy and political environment than the one that we currently live in. And you know, and you have to marry the practical with the poetic, but you know, like we shouldn't forget the poetry. I think this isn't about privacy and customer privacy agencies. This is about financial regulatory agencies more generally. They tried to do that in 2009. The Chairman of the Bank Committee put out a proposal that would have consolidated all the financial regulators that blew up in his face. He ran away from that one about as fast as he could. We got rid of the OTS and now it's about it. You can argue that, I mean, the system we have right now doesn't make sense if you're going to design it from scratch right now. I do think there are some benefits to it. You know, the OCC is being very forward looking about some of these issues and thinking about them. One could argue because they want to get more chartered institutions, that's more funding for the agency, and that's a benefit to them. But then what happens if some of the companies say that they try to crack down on certain practices and the companies say to them, well, now we're just going to switch our charter to a state or to some other agency. Well, then you've got a potential problem. So there are benefits and there are costs to the way we do things right now. And it's complicated, but yeah, I don't think there are a whole, there aren't a whole lot of non-entrenched interests who see this system as the ideal one, but it that way. Say just one more word about poetry and then I think we have time for one more question, which is just reminded of Mario Cuomo famously said, we campaign in poetry and then we govern in prose and thinking about this last election cycle. I mean, I guess we're campaigning in doggerel. I'm not sure what that means we're going to govern in, but Dick has the answer. Is applicable to this session because I learned a lot from it. So I thought it was quite good. And his quote is that reason may be the lever but sentiment gives you the fulcrum and the place to stand on if you want to move the world. And we've heard a lot of good sentiment here so that we can change the world. We're going to leave it at home. And we're going to take a 15 minute break. We will reconvene at five of for a introduction of our keynote speaker, which will begin promptly at four o'clock. Sendle Moulinathan will be joining us then if he's not already somewhere out here.