Democrats in the House of Representatives voted last week against an amendment to a proposed bill that would prevent the Consumer Financial Protection Bureau (CFPB) from forcing credit reporting agencies to evaluate Americans based on political opinions or religious beliefs.
Without such an amendment, Republicans warn, the powerful CFPB would have the legal authority to make nearly any criteria mandatory for a private credit evaluation company to take into consideration, paving the way for a system in which the federal government has the power to assign numerical scores to individuals based on their loyalty to a certain political party, membership in civil society groups that the government approves or disapproves of, or other private behaviors.
The system, they say, would mirror the newly minted “social credit system” in place in China, which bans citizens from key social services like public transportation if they lose too many points behaving in a way the Communist Party disapproves of.
The CFPB, the brainchild of Senator Elizabeth Warren (D-MA), is an executive agency that does not answer to the presidency, making it unaccountable to anyone but its head. The constitutionality of giving an unelected body the power to impose its demands on private individuals and corporations has been the subject of extensive debate, and the unique power given to a bureau director triggered an aggressive fight for the seat after founding director Richard Cordray, chosen by President Barack Obama, resigned.
Republicans moved on Wednesday to amend the 1970 Fair Credit Reporting Act in light of the existence of the CFPB. The failed amendment would have prevented the Bureau from forcing private credit scoring companies to “make use of information related to political opinions, religious expression, or other expression protected by the First Amendment, whether obtained from a social media account of a consumer or other sources.”
The amendment would have been tacked onto Rep. Ayanna Pressley’s (D-MA) Student Borrower Credit Improvement Act, or Comprehensive CREDIT Act of 2020, which grants the CFPB power to order private credit evaluation companies not to take into account what Pressley and her fellow Democrats consider unfair criteria. Having bad credit could keep an American from buying a car or a home, limiting their economic potential. Pressley’s bill would, in particular, prevent unexpected medical expenses or unpaid student loans from harming a person’s credit.
In this country, our credit scores are our reputations. But too often, credit reporting agencies engage in unfair practices that keep consumers in the dark.
— Congresswoman Ayanna Pressley (@RepPressley) January 29, 2020
The bill, which passed, decrees:
A consumer reporting agency may not furnish any consumer report containing any adverse item of information relating to a delinquent or defaulted private education loan of a borrower if the borrower has rehabilitated the borrower’s credit with respect to such loan by making 9 on-time monthly payments (in accordance with the terms and conditions of the borrower’s original loan agreement or any other repayment agreement that antedates the original agreement) during a period of 10 consecutive months on such loan after the date on which the delinquency or default occurred.
It then tasks the CFPB to implement a “credit rehabilitation” system to help individuals reach the point necessary for the above protection to apply to them.
The amendment banning the CFPB from including First Amendment expressions in its “credit rehabilitation” – in ways such as improving someone’s credit for “good” speech or excluding them from the program for “bad” speech – would not have significantly limited the scope of the Comprehensive CREDIT Act.
Yet Democrats rejected the amendment with 208 votes; only 15 House Democrats voted in favor of the free speech protections. Some, like Rep. Tulsi Gabbard (D-HI), abstained.
House Minority Leader Kevin McCarthy (R-CA) warned following the vote that the CFPB, if the new law passes the Senate without such protections, would now have the power to use any aspect of a person’s life to change their credit score, with significant potential for abuse.
“In keeping with their theme of handing over more control to the government, Democrats now support giving the CFPB unchecked authority on credit score modeling, without any built-in measure to stop potential abuse of power or violation of our Constitutional rights,” McCarthy said in a statement following the vote. “There is a terrifying parallel to the practices of China’s communist regime, which seeks to control the actions of their population with a social credit score. This kind of oppressive practice is antithetical to American freedoms and ideals.”
The Chinese social credit system is political, not financial – the Communist Party assigns a numerical value to every citizen in the country based on “good citizenship,” largely defined as loyalty to the party. China’s expansive surveillance system monitors every action, online and in the real world, every citizen takes and scores a person based on each one. Among the activities known to affect a social credit score are jaywalking, curbing one’s dog, littering, and speaking ill of the government online (“disturbing public order”). Ethnic and religious minorities fear that practicing any religion under communist rule will hurt their social credit scores, particularly Christians and ethnic Uyghur Muslims, millions of which are currently languishing in concentration camps. Among other vulnerable groups are anti-Xi Jinping Marxist activists, human rights attorneys, Communist Party members considered disloyal to Xi, or musicians suspected of using their art to promote non-Communist values.
The Chinese social credit system has “blacklisted” over 13 million people as of May, when Beijing made its latest figures public. It has blocked 23 million attempted purchases of train, public bus, and airplane tickets. The consequences for having a low credit score range from being banned from traveling anywhere or patronize businesses like hotels in the country to being forced to use an “embarrassing” ringtone that immediately identifies one as a “discredited individual.”
The CFPB was nominally created to protect Americans from economic malfeasance in the aftermath of the 2008 economic crisis.
“Every day, the good people at that independent agency crack down on dishonest and deceptive practices like the ones that helped cause the crash,” President Obama said in July 2016, sitting next to Warren, who designed the agency. “The proof is in the more than 27 million consumers who in just five years have gotten refunds and other relief from credit card companies, payday lenders, debt collectors, and others that tried to rip them off.”
Yet the Bureau has faced repeated accusations of abuse of power, particularly under Cordray, its founding director. In perhaps the most absurd example of overreach, the CFPB attempted in 2015 to punish a land development company for not maintaining roads in Tennessee at the standard the Bureau deemed appropriate. Industries or organizations the left disapproves of, like firearms manufacturers or politically conservative religious groups, could similarly find themselves in CFPB crosshairs.
The CFPB’s constitutionality has been controversial given the fact that the president has only limited oversight on the agency through a narrow list of reasons to remove a director. Lawsuits have attempted to bring the constitutionality of the agency to the Supreme Court but have yet to successfully do so. The Supreme Court in October agreed to hear a challenge to the constitutionality of the CFPB.
Democrats’ move to prevent free speech safeguards from being added to the CFPB’s credit evaluation powers occurred just as Warren launched a campaign against “disinformation,” a word the Chinese regime often uses to censor anti-communist speech.
“Anyone who seeks to challenge and defeat Donald Trump must be prepared to take on the full array of disinformation that foreign actors and people in and around his campaign will use to divide Democrats, suppress Democratic votes, and erode the standing of the Democratic nominee,” Warren wrote on Twitter on Wednesday. “Campaigns and tech companies can take a number of steps to slow the spread of misinformation right now. And as president, I’ll take a series of actions to further address the spread of disinformation.”
Warren did not define “disinformation” or offer examples of how she would use executive power to silence “disinformation.”
Other Democratic presidential candidates have posited a separate point system for evaluating good citizenship. Andrew Yang has named his social credit system “modern time banking.”
“Volunteer activity and community engagement would be tracked by an app and seeded, initially, by the government. After that, local administrators would oversee the program,” Yang explained on his website, comparing the point system to loyalty programs at chain restaurants.
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