Waters urges regulators to ensure integrity of CRA public comments

WASHINGTON — House Financial Services Committee Chairwoman Maxine Waters sought details on regulators' practices for accepting public comments in light of potential "astroturfing" concerns, as two agencies seek feedback on Community Reinvestment Act reform.

Astroturfing generally refers to a coordinated campaign of template-designed comments that imply grassroots support for a given policy. Certain groups can portray broad support for their position with form letters for senders to submit on a large scale.

In letters to the heads of the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., Waters cited reports suggesting that some parties went further in prior campaigns by fabricating comments.

"The Committee is concerned by reports alleging that certain special interest groups have submitted comments in other rulemakings while posing as consumers, small business owners, and other stakeholders," Waters said Wednesday in letters to Comptroller of the Currency Joseph Otting and FDIC Chairman Jelena McWilliams. "These fraudulent comments undermine legitimate debate on proposed rules by creating the false appearance that a position has widespread, grassroots support."

Rep. Maxine Waters
Representative Maxine Waters, a Democrat from California and chairwoman of the House Financial Services Committee, listens during a hearing with Steven Mnuchin, U.S. Treasury secretary, not pictured, in Washington, D.C., U.S., on Thursday, Dec. 5, 2019. Mnuchin said he and the Federal Reserve Chairman dont expect the U.S. to create a digital currency. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg

A 60-day comment period began Jan. 9 for the OCC and FDIC's CRA proposal. Waters' letter did not allege astroturfing efforts related to CRA reform comments.

Submitting form comment letters on behalf of individuals is relatively common among both industry and consumer groups for rulemakings that draw a lot of interest. But Waters noted a case from last year when she said "Securities and Exchange Commission Chairman Jay Clayton quoted comments that were submitted under suspicious circumstances in a recent rulemaking."

"In 2016, the Consumer Financial Protection Bureau’s efforts to receive comments regarding its payday lending rule were frustrated by an influx of over a million comments, many of which were allegedly created by trade groups to appear as if they came from concerned consumers," she added.

Consumer groups have also alleged that comment letters were potentially fabricated in support of the 2015 merger between OneWest Bank — where Otting was the CEO — and CIT Bank.

"Given the critical importance of CRA to low- and moderate-income communities, the Committee is interested in ensuring any amendments to the CRA are made with full and accurate input from all interested parties," Waters said.

Waters' letter asked the two agency heads what steps they take to ensure comment letters are genuine, including information on the protocol for reviewing comments and whether the agencies have any procedure for detecting whether comments have been submitted under false identities.

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CRA Regulatory reform Joseph Otting Maxine Waters OCC FDIC House Financial Services Committee
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