WASHINGTON – Today U.S. Sens. Mark R. Warner (D-VA) and John Kennedy (R-LA), members of the Senate Banking Committee, introduced the Securities Fraud Enforcement and Investor Compensation Act, bipartisan legislation that would give the Securities and Exchange Commission (SEC) power to seek restitution for Main Street investors harmed by securities fraud.

The bill would give the SEC a broader range of tools to seek compensation for investors who’ve lost money to Ponzi schemes and other investment scams. It also extends the window of time for which the SEC can pursue a claim on an investor’s behalf from five years to ten.

“As Bernie Madoff demonstrated, financial fraudsters can sometimes go on for years, even decades, before they finally get caught. They shouldn’t be able to rip off investors just because some arbitrary five-year window has expired,” said Sen. Warner. “This bill will give the Securities and Exchange Commission more time and additional tools to seek restitution for everyday Americans who fall victim to investment scams.”

 “Investors who are scammed by con artists like Bernie Madoff and Allen Stanford lose their life savings. All too often, the victims of financial fraud aren’t wealthy people,” Sen. Kennedy said. “They’re middle class Americans who lose every penny they set aside for their retirements. Because of a narrow window of time for recouping stolen investment dollars, fraudsters are actually incentivized to keep the shell game going for decades. This bill addresses that problem.”

Background:

On June 5, 2017, the Supreme Court in Kokesh v. Securities Exchange Commission ruled that the SEC only has five years to bring disgorgement claims against bad actors to try to compensate harmed Main Street investors. Although the SEC strives to bring cases as soon as possible, sometimes well-concealed frauds are not discovered for many years. (As an example, Bernie Madoff was able to defraud investors for decades before his investment fund was revealed as Ponzi scheme in 2009.) Under the Kokeshprecedent, clever fraudsters can manage to retain any ill-gotten gains from outside the five-year window.  

The implications of the Kokesh ruling limiting the SEC’s enforcement window to five years have been significant. The SEC’s 2018 enforcement report noted that “the court’s ruling in Kokesh may cause the Commission to forgo up to approximately $900 million in disgorgement, of which a substantial amount likely could have been returned to retail investors.” The Securities Fraud Enforcement and Investor Compensation Act addresses this problem by expanding the range of tools available to the SEC to pursue compensation for scammed investors, subject to a 10-year statute of limitations.

Today, the SEC typically compensates harmed investors by bringing disgorgement claims, which allow the SEC to recoup any ill-gotten profits from the perpetrator and turn them over to the investor. Sometimes, the profits are small, and the compensation can represent just a small fraction of the overall loss to the investor as a result of the fraud. Under the terms of the bill, the SEC would retain the power to bring disgorgement claims for up to five years, but would also gain the authority to file claims of restitution, which would increase the amount of compensation available to make whole harmed investors. Rather than limiting the compensation to just the profit margin of the perpetrator, as with a disgorgement claim, restitution would allow the SEC to recover from fraudsters and refund investors the full amount of their losses, up to ten years after the fact.

Bill text is available here.

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WASHINGTON – At a Senate Banking Committee hearing today, U.S. Sen. Mark R. Warner (D-VA) pressed the Director of the Consumer Financial Protection Bureau (CFPB), Kathy Kraninger, on the Trump Administration’s decision to rescind a rule that would have protected Virginians from predatory lending practices.  

The CFPB’s payday lending rule would have required payday lenders to determine upfront whether or not a borrower can afford to pay back a loan without having to take out another loan – an important step in reining in predatory business practices by payday lenders nationwide that are designed to exploit the financial hardships facing millions of hardworking families. The payday lending rule was first proposed under the Obama Administration and finalized in 2017 after more than five years of study and reviewing 1 million public comments. However, last month, Kraninger – President Trump’s choice to lead the CFPB – proposed changes that would effectively gut the rule, leaving consumers exposed to predatory, high interest rate loans. Warner pressed Kraninger to explain that decision.

“I think you made a dreadful error in rescinding the payday lending rule. What I am trying to also understand is that the agency spent five years doing research into this rule. And I can remember when the CFPB issued this rule back in 2017, and opponents of the rule at that moment in time, said ‘Oh my God!’ I think it was, 1690 pages, ‘This is way too much information! Way too much data!’ Now, when you rescind [the rule], you are basically throwing all that data and all that information out, for this new approach. What has factually changed that undermined the five years of data and research that went into the original payday lending rule that has allowed you to make this determination?” Warner pressed Kraninger.

Payday lenders typically offer small loans to borrowers who are required to pay them back in a short amount of time. The loans can come with annual interest rates of 300 percent or more, according to the CFPB’s own data. More than 80 percent of those loans are rolled over into another loan within two weeks, meaning the borrower is adding to their debt before they’ve paid off the initial loan.

Warner told Kraninger at today’s hearing, “I respectfully remember how long this rule took to put in place. We remember how much research was done. I don’t believe you’ve got a factual basis. I think this was a politically-driven decision. And I’m deeply concerned by your decision” to rescind the payday lending rule.  

Congress created the CFPB to protect Americans from unfair, deceptive and abusive lending practices. Predatory lenders often target hardworking borrowers who find themselves in need of quick cash – often for things like necessary car repairs or medical emergencies – by charging them excessive interest rates and hidden fees that trap them in long-term cycles of debt. Nearly 12 million Americans use payday loans each year, incurring more than $9 billion annually in fees.

This is not the first time Warner has raised concerns about the Trump Administration rolling back the payday lending rule. Last April, in a hearing before the Senate Banking Committee, Warner pressed then-Acting Director of the CFPB, Mick Mulvaney, not to undo the rule. Sen. Warner also previously wrote to Mulvaney, urging the Administration not to repeal the payday lending rule.

The full transcript of Sen. Warner’s exchange with Director Kraninger today follows:

Warner: I think you made a dreadful error in rescinding the payday lending rule. And what I’m trying to also understand is that the agency spent five years doing research into this rule. And I can remember when the CFPB issued this rule back in 2017. And opponents of the rule at that moment in time said,  ‘Oh my God!’ I think it was, 1690 pages, ‘This is way too much information! Way too much data!’ Now, when you rescind [the rule], you are basically throwing all that data and all that information out, for this new approach. What has factually changed that undermined the five years of data and research that went into the original payday lending rule that has allowed you to make this determination?

Kraninger: Senator if I could, the full record from the prior rulemaking is absolutely part of the process going forward. So that’s an important thing that I would just note –

Warner: But that full rule making included conclusions that were indicated, based upon the Senator from Maryland’s criteria, that this was a rule that was well-needed to protect a whole host of consumers. The fact that we’re now, all this work is kind of, in a sense, thrown out. What has factually changed in the underlying analysis that has allowed you to, I believe, rather arbitrarily throw out this rule?

Kraninger: The bureau is an active litigation over the very issue that the reconsideration is intended to address. And that is the legal and factual basis, whether is it robust and rigorous enough to warrant the determination of abusive and unfairness in this market without those mandatory underwriting requirements. And so that is the very issue that is being looked at in the reconsideration. 

Warner: I respectfully remember how long this rule took to put in place. We remember how much research was done. I don’t believe you’ve got a factual basis. I think this was a politically-driven decision. And I’m deeply concerned by your decision.

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WASHINGTON – Bipartisan legislation to improve the cybersecurity of Internet-connected devices will be introduced today in the Senate and the House of Representatives. The Internet of Things (IoT) Cybersecurity Improvement Act of 2019 would require that devices purchased by the U.S. government meet certain minimum security requirements. 

The legislation is being introduced in the Senate by U.S. Sens. Mark R. Warner (D-VA) and Cory Gardner(R-CO), co-chairs of the Senate Cybersecurity Caucus, along with Sens. Maggie Hassan (D-NH) and Steve Daines (R-MT), while Reps. Robin Kelly (D-IL) and Will Hurd (R-TX) are introducing companion legislation in the House of Representatives.

“While I’m excited about their life-changing potential, I’m also concerned that many IoT devices are being sold without appropriate safeguards and protections in place, with the device market prioritizing convenience and price over security,” said Sen. Warner, a former technology entrepreneur and executive and Vice Chairman of the Senate Select Committee on Intelligence. “This legislation will use the purchasing power of the federal government to establish some minimum security standards for IoT devices.” 

“The Internet of Things (IoT) landscape continues to expand, with most experts expecting tens of billions of devices to be operating on our networks within the next several years,” Sen. Gardner said. “As these devices continue to transform our society and add countless new entry points into our networks, we need to make sure they are secure, particularly when they are integrated into the federal government’s networks. Agencies like the National Institute of Standards and Technology (NIST), which has a major campus in Boulder, are key players in helping establish guidelines for improved IoT security and our bill builds on those efforts. As co-chairs of the Senate Cybersecurity Caucus, Senator Warner and I remain committed to advancing our nation’s cybersecurity defenses.”

“As the government continues to purchase and use more and more internet-connected devices, we must ensure that these devices are secure. Everything from our national security to the personal information of American citizens could be vulnerable because of security holes in these devices,” said Rep. Kelly. “It’s estimated that by 2020 there will be 30 million internet-connected devices in use. As these devices positively revolutionize communication, we cannot allow them to become a backdoor to hackers or tools for cyberattacks.”

“Internet of Things devices will improve and enhance nearly every aspect of our society, economy and our day-to-day lives. This is groundbreaking work and IoT devices must be built with security in mind, not as an afterthought,” said Rep. Hurd, former computer science major, cybersecurity entrepreneur and Chair of the House Subcommittee on Information Technology. “This bipartisan legislation will make Internet of Things devices more secure and help prevent future attacks on critical technology infrastructure.”

“With everything from LED lights to thermostats connected to the internet, we need to act swiftly to step up security for ‘internet of things’ devices to prevent hackers from disrupting our economy and threatening public safety,” Sen. Hassan said. “By requiring the federal government to only purchase devices that meet certain cybersecurity standards, this bill will help protect federal agencies against hackers who are seeking to exploit internet of things devices in order to steal critical national security information and the private data of Granite Staters and Americans.”

“As the Internet of Things landscape grows – we must ensure that Montanan’s information is safe and the security of our critical infrastructure is protected,” said Sen. Daines. “This bill helps establish proper safeguards that balance the need to protect Montanan’s privacy and our national security with the growing tech economy and high-paying jobs it provides.”

The Internet of Things, the term used to describe the growing network of Internet-connected devices and sensors, is expected to include over 20 billion devices by 2020. While these devices and the data they collect and transmit present enormous benefits to consumers and industry, the relative insecurity of many devices presents enormous challenges. Sometimes shipped with factory-set, hardcoded passwords and oftentimes unable to be updated or patched, IoT devices can represent a weak point in a network’s security, leaving the rest of the network vulnerable to attack. IoT devices have been used by bad actors to launch devastating Distributed Denial of Service (DDoS) attacks against websites, web-hosting servers, and internet infrastructure providers. 

At a hearing of the Senate Armed Services Committee last year, the Director of the Defense Intelligence Agency, Lt. General Robert Ashley, described exploitation of insecure IoT devices as one of the two “most important emerging cyber threats to our national security.” Last May, the Departments of Commerce and Homeland Security published a report highlighting the IoT market forces that reward low-price and convenience at the expense of security. The signature recommendation of the May 2018 report was that the Federal government should “lead by example” by requiring the acquisition of more secure and resilient products and services, particularly IoT. The IoT Cybersecurity Improvement Act will address both this market failure and the supply chain risk to the federal government stemming from insecure IoT devices by establishing light-touch, minimum security requirements for procurements of connected devices by the government. 

Specifically, the Internet of Things (IoT) Cybersecurity Improvement Act of 2019 would:

• Require the National Institute of Standards and Technology (NIST) to issue recommendations addressing, at a minimum, secure development, identity management, patching, and configuration management for IoT devices.

• Direct the Office of Management and Budget (OMB) to issue guidelines for each agency that are consistent with the NIST recommendations, and charge OMB with reviewing these policies at least every five years.

• Require any Internet-connected devices purchased by the federal government to comply with those recommendations.

• Direct NIST to work with cybersecurity researchers and industry experts to publish guidance on coordinated vulnerability disclosure to ensure that vulnerabilities related to agency devices are addressed.

• Require contractors and vendors providing IoT devices to the U.S. government to adopt coordinated vulnerability disclosure policies, so that if a vulnerability is uncovered, that information is disseminated.

“BSA applauds Senators Warner and Gardner for their leadership in securing the IoT, and calls on Congress to act swiftly to advance this important legislation,” said Tommy Ross, Senior Policy Director, BSA | The Software Alliance. “As IoT devices increasingly bring greater productivity and quality of life to consumers and businesses across sectors, we must be proactive in addressing the unique security considerations they bring.” 

“Internet-aware devices raise deep and novel security issues, with problems that could arise months or years after purchase, and spill over to people who aren't the purchasers. This bill leverages the government procurement market, rather than direct regulation, to encourage Internet-aware device makers to employ basic security measures in their products,” said Jonathan Zittrain, Co-Founder of Harvard University’s Berkman Klein Center for Internet & Society.

“Insecure and unsecured IoT devices are a risk we must address, and it will only happen if the government and the private sector both step up. I'm glad that Senators Warner and Gardner and Representatives Kelly and Hurd are continuing to push this issue,” said Jeff Greene, Vice President of Global Government Affairs & Policy at Symantec.

“Weak IoT security with little oversight puts the American public at risk, particularly as these devices become more and more common in our offices and in our homes. We need a coordinated approach. Empowering NIST to set standards for the development and management of these devices, as the IoT Cybersecurity Improvement Act of 2019 proposes, will help secure the sensitive data held by the government and the private information shared within our homes,” said Alan Davidson, Vice President of Global Policy, Trust, and Security at Mozilla. 

“The proliferation of insecure Internet-connected devices presents an enormous security challenge. The risks are no longer solely about data; they affect flesh and steel. The market is not going to provide security on its own, because there is no incentive for buyers or sellers to act in anything but their self-interests. I applaud Senator Warner and his cosponsors for nudging the market in the right direction by establishing thorough, yet flexible, security requirements for connected devices purchased by the government,” said Bruce Schneier, Fellow and Lecturer at Harvard Kennedy School of Government. 

“Cloudflare applauds Senators Warner and Gardner, Representatives Kelly and Hurd, and their cosponsors for their continued efforts to address the risks posed by improperly secured IoT devices with the introduction of this latest bill. Using the government procurement process to encourage security research and innovation will make the U.S. Government a leader in this area, and should open up a robust discussion of these issues. Cloudflare looks forward to continuing to work with them as this bill moves forward,” said Doug Kramer, General Counsel, Cloudflare Inc. 

“IoT device insecurity is a serious problem that needs to be addressed. Although much must be done to address this problem, the longest journey begins with a single step—and this bill is just such a step in moving the ball forward on IoT security for government procurements,” said Dr. Herb Lin, senior research scholar for cyber policy and security at the Center for International Security and Cooperation and Hank J. Holland Fellow in Cyber Policy and Security at the Hoover Institution, both at Stanford University.

"Billions of devices connect our world and in the coming years we will see billions more. Each device adds to an expanding and elastic attack surface that creates a massive gap in the ability to truly understand cyber risk at any given time. The Internet of Things (IoT) Cybersecurity Improvement Act, introduced by Representatives Robyn Kelly (D-IL) and Will Hurd (R-TX), tasks NIST with developing security guidelines to address critical vulnerabilities in the development of IoT devices that the federal government purchases. This legislation will help the government better manage its cyber risks, and provide a strong example for other organizations.  We also strongly support the call for NIST to develop a report that addresses Cyber Exposure considerations related to the increasing convergence of IT, IoT, and OT devices, networks and systems, as the modern enterprise must manage risk across all these environments," said James Hayes, Vice President of Global Government Affairs at Tenable.

“We applaud Senators Warner and Gardner and Representatives Kelly and Hurd for introducing the Internet of Things (IoT) Cybersecurity Improvement Act of 2019. The wireless industry is committed to ensuring the security of IoT devices and we look forward to working with the sponsors of the legislation on policies that will help protect consumers,” said Kelly Cole, Senior Vice President for Government Affairs at CTIA.

Similar legislation was previously introduced in the 115^th Congress.

Sen. Warner wrote to the Federal Trade Commission (FTC) in July 2016 raising concerns about the security of children’s data collected by Internet-connected “Smart Toys.” In May 2017, the Senator wrote a follow-up letter to Acting FTC Chairwoman Maureen Ohlhausen reiterating his concerns following comments by the Chairwoman that the risks of IoT devices are merely speculative. In response to the Senator’s concerns, the FTC issued updated guidance on protecting children’s personal data in connected toys. Immediately in wake of October’s devastating DDoS attack on the nation’s internet infrastructure by the Mirai botnet, Sen. Warner wrote the FCC, FTC, and NCCIC to raise concerns about the proliferation of botnets composed of insecure devices. Sen. Warner also wrote to Office of Management and Budget Director Mick Mulvaney and Secretary of Homeland Security John Kelly in May 2017 asking what steps the Federal Government had taken to defend against WannaCry ransomware.

Sen. Warner, the Vice Chairman of the Senate Select Committee on Intelligence and former technology executive, is the co-founder and co-chair of the bipartisan Senate Cybersecurity Caucus and a leader in Congress on security issues related to the Internet of Things (IoT).

Bill text is available here.

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Washington – U.S. Sens. Mark R. Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence, Dianne Feinstein (D-CA), Ranking Member of the Senate Committee on the Judiciary, Bob Menendez (D-NJ), Ranking Member of the Senate Committee on Foreign Relations, and Jack Reed (D-RI), Ranking Member of the Senate Committee on Armed Services, wrote today to the Director of National Intelligence (DNI) and the Inspector General of the Intelligence Community, requesting areview of the Trump administration’s compliance with security clearance policies and procedures. This request comes on the heels of alarming reports that detail how President Trump ignored objections from White House Counsel Donald McGahn and Chief of Staff John F. Kelly, and granted security clearances to his daughter, Ivanka Trump, and her husband Jared Kushner.

“We write to request that you review compliance by the Executive Office of the President (EOP) with policies and procedures governing security clearances and access to secure compartmented information (SCI),” the Senators wrote. “We also request that you review the adequacy of policies and procedures to ensure that mitigation measures are implemented when eligibility to access to classified information is granted despite potential security risks. We believe that you have the authority and expertise to conduct this review, including in your role as Security Executive Agent under Executive Order 13467.” 

The improper handling of these clearances is just the latest in a series of allegations that highlight substantial irregularities and questionable decisions by the Trump Administration. Additional reports claim that former White House Staff Secretary Robert Porter was allowed to handle extremely sensitive information for over a year with an interim clearance, despite his record of domestic abuse, and that the White House overturned an unprecedented 30 clearance adjudication recommendations made by career security professionals. 

Noting that the Trump Administration is currently working on transforming the security clearance system to reflect new threats, modern technologies, and the nation’s mobile workforce, the Senators emphasized the need to ensure that today’s system operates with integrity, especially at the White House.

Sen. Warner has been an outspoken critic of the Trump Administration’s abuse of the security clearance process. He also recently reintroduced legislation to modernize the government’s antiquated security clearance system and reduce the background investigation backlog.

Full text of the letter is below and a copy can be found here.

March 8, 2019

The Honorable Daniel Coats

Director of National Intelligence

Office of the Director of National Intelligence

Washington, DC 20511

The Honorable Michael K. Atkinson

Inspector General of the Intelligence Community

Washington, DC 20511

Dear Director Coats and Inspector General Atkinson:

We write to request that you review compliance by the Executive Office of the President (EOP) with policies and procedures governing security clearances and access to secure compartmented information (SCI).  We also request that you review the adequacy of policies and procedures to ensure that mitigation measures are implemented when eligibility to access to classified information is granted despite potential security risks.  We believe that you have the authority and expertise to conduct this review, including in your role as Security Executive Agent under Executive Order 13467.

Public reporting over the last two years has raised serious concerns of alleged irregularities and questionable decisions related to eligibility determinations for EOP personnel access to classified information. These allegations include abuse in granting interim clearances, to include for access to SCI; revoking a former senior intelligence official’s eligibility for access to classified information seemingly for reasons of political retribution; overruling unfavorable adjudications made by career security professionals in some 30 cases; and the President’s decision himself to grant his daughter and son-in-law clearances despite the documented concerns from the White House Counsel and Chief of Staff.

The Administration is undertaking an important transformation of the security clearance system to reflect today’s threats, today’s mobile workforce, and modern technologies.  While we must stay focused on that larger reform effort, we must ensure that today’s system operates with integrity, particularly at the White House.

We look forward to your attention to this matter and request you brief us on the results of your reviews within 60 days.

Sincerely,

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U.S. Sens. Mark R. Warner and Tim Kaine (both D-VA) along with Sens. Dianne Feinstein and Kamala Harris (both D-CA) today introduced the Ensuring Safe Housing for our Military Act, a bill to address health, safety and environmental hazards in private military housing.

The legislation is in response to a recent Reuters investigation that found hazardous living conditions in privatized military housing throughout the United States, including service members and their families living in homes with persistent mold blooms, water leaks and rodent and insect infestations.

“Military families deserve first-rate housing, but I have heard from many servicemembers stationed in Virginia that companies providing private housing consistently fail to resolve health and safety problems in a timely fashion,” said Sen. Warner. “That’s unacceptable. Our legislation will give military officials and families more power to hold these companies accountable and make sure that they don’t get paid if they fail to fulfill their basic obligations.”

“The military must act quickly to address these dangerous housing conditions, and Congress should pass legislation to protect military families from ever having to go through this again,” Sen. Kaine said. “Our bill would help improve military oversight and increase accountability. This is about making sure service members can feel safe in their own homes, and I’ll be pushing for legislation like this to be included in this year’s national defense bill.”

“Service members shouldn’t have to worry about the health and safety of their families while protecting our country,” said Sen. Feinstein. “Unfortunately, many living in private military housing are dealing with hazardous conditions with little or no recourse and a military chain of command that has failed them. Our legislation would fix that. It would withhold rent from contractors until hazards are properly fixed, require military officials to ensure all private housing is up to code and empower service members to leave any home that is unsafe without fear of financial penalty.” 

“Our nation’s service members and their families make daily sacrifices to protect the nation, and they deserve fair treatment and comfortable living conditions back at home. I was extraordinarily troubled by reports last year of inadequate housing conditions at Camp Pendleton and visited with families living there in order to learn more about their housing needs,” Sen. Harris said. This legislation is an important step forward ensuring that we’re doing everything we can to provide quality housing for our service members and their families across the country.”

The Reuters investigation and military advocacy groups report that the companies that operate military housing are often non-responsive, provide only superficial fixes or blame the service member for the problems. In some instances, service members have been charged fees associated with the remediation of their own homes, including fees for leaving homes with persistent hazards. A recent survey conducted by the Military Family Advisory Network showed that more than 55 percent of respondents had a negative or very negative experience with privatized military housing.

The legislation would create stronger oversight mechanisms, allow the military to withhold payments to contractors until issues are resolved and prohibit contractors from charging certain fees. It would also require the military to withhold incentive fees to poorly performing contractors.

Provisions of the bill include:

• Basic allowance for housing: The installation commander shall withhold payment of a service member’s housing allowance until a military housing official has inspected an environmental, safety or health hazard, verified that appropriate remediation has taken place, and the service member concurs that the remediation is satisfactory. In the case that the hazard requires the service member to leave the housing unit, the housing company will pay all relocation costs. 
• Housing costs: Ensures service members don’t have to pay a deposit, and any fee or penalty related to ending a lease early, except for normal wear and tear. The bill also requires contractors to reimburse service members for damage to their private property caused by a hazard.
• Withholding incentive fees: Requires the Secretary of Defense to withhold incentive fees to any contractor who persistently fails to remedy hazards.
• Common credentials: Creates standard credentials for health, safety and environmental inspectors across services, and including contractors, to ensure consistent inspection practices. 
• Additional transparency for service members: Requires the Defense Department to establish an electronic system so that service members can track and oversee their work orders.

Sens. Warner and Kaine have been outspoken advocates for service members and their families, pressing the Defense Department to address the health and safety hazards on military bases across Virginia. In August, Sens. Warner and Kaine asked the Army for a plan to address the dangerous conditions found on its bases, including Fort Belvoir in Virginia. In February, Sen. Warner met with Secretary of the Army Mark Esper, pressing for steps the Department plans to take to resolve serious health hazards in military housing.

Last week, the Senators wrote to the Secretaries of the U.S. Navy, Air Force, and Army, urging each branch to make improving military housing conditions a priority and requesting more information on the existing contracts with several private companies that manage thousands of family housing units at military bases across Virginia. In November, Sen. Warner also wrote to then-Secretary of Defense James Mattis addressing what the Senator termed “unacceptable conditions” in the homes, and demanded a briefing from the Defense Department on the situation as well as a plan from the Defense Department to ensure the safety of military families residing in private housing moving forward.  

Today in a Senate Armed Services Committee hearing, Sen. Kaine called on military leaders to take immediate action to address the horrific conditions that have been found in military family housing. Tomorrow, Kaine will tour housing for military families in Hampton Roads and hear from residents about their experiences with privatized military housing.

On Monday, March 11, Sen. Warner plans to meet with Virginia military families in Newport News to hear firsthand about the hazardous living conditions they have experienced living in privatized military housing. Sen. Warner previously intervened in 2011 on behalf of military families stationed in Norfolk who described persistent problems with Lincoln Military Housing, one of the contractors identified in the recent Reuters report alleging hazardous living conditions.

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WASHINGTON – U.S. Sens. Mark R. Warner and Tim Kaine (both D-VA) joined Sen. Jack Reed (D-RI) and the entire Senate Democratic Caucus in calling for the Consumer Financial Protection Bureau (CFPB) to protect U.S. military personnel and their families from predatory lenders. In a letter addressed to CFPB Director Kathleen Kraninger, the Senators urged CFPB not to cease checking for compliance with the Military Lending Act (MLA) in the Bureau’s routine lender examinations.

“When the CFPB was making every effort to protect servicemembers and their families, its own routine examination of one payday lender uncovered a violation of the MLA, where loans at rates higher than 36% were being extended to more than 300 active-duty servicemembers or their dependents,” the Senators wrote. “We urge you to continue these examinations in order to pursue the clear bipartisan goals of supporting military readiness, saving taxpayer money, and protecting our servicemembers and their families from predatory lenders.”

They concluded, “The CFPB should not have to be persuaded to stand up for consumers, especially military consumers and their families who simply do what’s right when asked to protect and defend our nation.  We urge you to do your duty and carry out the CFPB’s mission by standing with servicemembers and their families and ensuring that they receive all of the MLA protections they have earned.”

The MLA was passed in 2006 with bipartisan support to help safeguard active-duty military members and their families from financial fraud, predatory loans, and credit gouging. The law caps at 36% the annual interest rate for an extension of consumer credit to a servicemember or their dependents. It also strengthens military readiness by helping to preventing unnecessary servicemember separations caused by predatory lending. According to the Department of Defense (DOD), losing a servicemember due to personal issues, such as financial instability, costs taxpayers and DOD more than $58,000 per separated servicemember. In their letter, the Senators also requested that the bureau provide a full justification of its decision put servicemembers at risk. 

Sens. Warner and Kaine have previously pressed the administration on this issue, and have been outspoken advocates for Virginia’s active duty military personnel, veterans, and their families. In February, they wrote to the Secretaries of the U.S. Navy, Army, and Air Force, requesting information about military housing contracts with private companies after allegations surfaced of health hazards for military families. They also called on the VA in November to resolve payment issues that threatened to displace veterans from their homes.

Full text of the letter is below and a copy can be found here.

Hon. Kathleen Kraninger

Director

Consumer Financial Protection Bureau

1700 G St. N.W.

Washington, D.C. 20552

Dear Director Kraninger:

We write to request that you fulfill the Consumer Financial Protection Bureau’s (CFPB) mission by including compliance with the Military Lending Act (MLA) in the Bureau’s routine lender examinations, as was its practice prior to November 2018.  In short, we urge you to stand up to predatory lenders and stand with servicemembers and their families.

In 2006, Republicans and Democrats set aside partisanship and worked across the aisle to enact the MLA, which not only caps at 36% the annual interest rate for an extension of consumer credit to a servicemember or his or her dependents, but also strengthens military readiness by preventing unnecessary servicemember separations caused by predatory lending.  According to DOD, losing a servicemember due to personal issues, such as financial instability, costs taxpayers and DOD more than $58,000 for each separated servicemember.

Indeed, when the CFPB was making every effort to protect servicemembers and their families, its own routine examination of one payday lender uncovered a violation of the MLA, where loans at rates higher than 36% were being extended to more than 300 active-duty servicemembers or their dependents.  We urge you to continue these examinations in order to pursue the clear bipartisan goals of supporting military readiness, saving taxpayer money, and protecting our servicemembers and their families from predatory lenders.

The CFPB’s existing statutory authorities are more than sufficient to justify including MLA compliance in routine examinations, and to our knowledge, the CFPB’s authority in this regard has never been challenged.

As explained by the Consumer Federation of America in its November 1, 2018 legal analysis - Missing in Action? Consumer Financial Protection Bureau Supervision and the Military Lending Act - the relevant statutory provisions give the CFPB more than one basis for including the MLA in CFPB examinations.

For instance, one such provision, Section 1024(b)(1)(C) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, explicitly states that the CFPB “shall require reports and conduct examinations on a periodic basis…for purposes of…detecting and assessing risks to consumers and to markets for consumer financial products and services.”  Charging servicemembers and their families more than 36% interest for loans is clearly a risk to consumers and indeed, DOD has stated that “high-cost debt can detract from mission focus, reduce productivity, and require the attention of supervisors and commanders.”  Therefore, the CFPB is authorized under Section 1024(b)(1)(C) to conduct examinations for this purpose. 

When Office of Management and Budget Director Mick Mulvaney removed MLA compliance from CFPB examinations, he argued that “such a broad statutory reading offers little to restrain the Bureau from supervising for compliance with a wide variety of other laws.”  To be clear, based on the plain text of Section 1024(b)(1)(C), Congress specifically intended this broad statutory reading.  In the aftermath of the worst financial crisis in decades where safety and soundness regulators failed to keep a watchful eye over Wall Street and predatory lenders, Congress provided the CFPB with broad powers to protect consumers – with an explicit focus on servicemembers and their families – so that risks could be spotted before they caused irreparable harm.  In short, the CFPB continues to have all the authority it needs to include the MLA as part of its routine lender examinations.  There is no law that prevents you from doing so.  

The CFPB should not have to be persuaded to stand up for consumers, especially military consumers and their families who simply do what’s right when asked to protect and defend our nation.  We urge you to do your duty and carry out the CFPB’s mission by standing with servicemembers and their families and ensuring that they receive all of the MLA protections they have earned.  Please provide a full justification of the current CFPB leadership’s decision to put servicemembers at risk by failing to do its duty no later than Friday, March 8, 2019.

Sincerely,

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WASHINGTON, DC – In an effort to better protect customers, increase transparency for investors, and ensure public companies are prioritizing cybersecurity and data privacy, U.S. Senators Jack Reed (D-RI), Susan Collins (R-ME), Mark Warner (D-VA), John Kennedy (R-LA), and Doug Jones (D-AL) are introducing S. 592, the Cybersecurity Disclosure Act of 2019.  Congressman Jim Himes (D-CT), who serves on the House Financial Services Committee and the House Permanent Select Committee on Intelligence, will be introducing the companion legislation in the House of Representatives.  

The Reed-Collins-Warner-Kennedy-Jones legislation would require publicly traded companies to include in its Securities and Exchange Commission (SEC) disclosures to investors information on whether any member of the company’s Board of Directors is a cybersecurity expert, and if not, why having this expertise on the Board of Directors is not necessary because of other cybersecurity steps taken by the company.  The legislation does not require companies to take any actions other than to provide this disclosure.

Cyberattacks on companies and business continue to increase in their sophistication, exposing customers and data to risk.  Indeed, according to the Identity Theft Resource Center, the number of records, containing personally identifiable information, exposed by data breaches in the business industry grew from 181,630,520 in 2017 to 415,233,143 in 2018, and in the medical and health care industry from 5,302,846 in 2017 to 9,927,798 last year.  Across all industries, the number of records containing personally identifiable information exposed by data breaches rose 126%, from 197,612,748 in 2017 to 446,515,334 in 2018. 

Deloitte’s 11th Global risk management survey of financial institutions found that “sixty-seven percent of respondents named cybersecurity as one of the three risks that would increase the most in importance for their business over the next two years, far more than for any other risk. Yet, only about one-half of the respondents felt their institutions were extremely or very effective in managing this risk.” And according to the 2018-2019 National Association of Corporate Directors Public Company Governance Survey, only 52 percent of directors “are confident that they sufficiently understand cyber risks to provide effective cyber-risk oversight,” and 58 percent “believe their boards collectively know enough about cyber risk to provide effective oversight.”

“Cybersecurity is one of the most significant and enduring challenges that all businesses, across industries, face and should be accounted for as part of the corporate risk management process.  With growing cyber threats, we must be proactive in bolstering our nation’s cybersecurity.   This legislation advances that goal by encouraging publicly traded companies to be more transparent about whether and how their Boards of Directors and senior management are prioritizing cybersecurity,” said Senator Reed, the Ranking Member of the Senate Armed Services Committee and a senior member of the Senate Banking Committee.  “As our economy becomes ever more dependent on technology and the Internet, our economic security is indeed a matter of national security.  Through the simple disclosure called for by this bipartisan legislation, we can strengthen cybersecurity oversight.”

“As cyberattacks become increasingly common, Congress must take action to better protect Americans from hackers attempting to steal sensitive data and personal information,” said Senator Collins, a member of the Senate Intelligence Committee.  “This bipartisan bill strengthens our nation’s cybersecurity by requiring companies to disclose to the public the basic steps they are taking to prevent cyberattacks.”

“Every day, determined cyberattackers target publicly traded companies in attempts to steal data. When successful, these attacks can be extremely damaging, which is why consumers and shareholders deserve to know whether companies’ boards have cyber expertise,” said Senator Warner, Vice Chairman of the Senate Select Committee on Intelligence and Ranking Member of the Senate Banking Subcommittee on National Security and International Trade and Finance. “This legislation will help inform consumers and shareholders by increasing transparency, and will serve as a tool to urge more reliable strategies to counter cyberattacks.”

“As our society increasingly relies on technology, businesses across all sectors of the economy must prioritize cybersecurity. A single cyberattack can cripple even the most sophisticated firms, and the public has a right to know whether companies are focused on preventing cybersecurity threats.  This bipartisan legislation will greatly increase transparency and accountability, and will ultimately help cybersecurity resilience across our economy,” said Senator Jones. 

The bipartisan Cybersecurity Disclosure Act of 2019 is supported by consumer advocates, investors, and securities law experts, including the North American Securities Administrators Association; the Council of Institutional Investors; the National Association of State Treasurers; the California Public Employees’ Retirement System; the Bipartisan Policy Center; Massachusetts Institute of Technology Professor Simon Johnson; Harvard Law Professor John Coates; Columbia Law Professor Jack Coffee; K&L Gates LLP; and the Consumer Federation of America.

Washington – U.S. Sens. Mark R. Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence, and Marco Rubio (R-FL), a member of the Senate Select Committee on Intelligence, urged Director of National Intelligence Dan Coats to issue a comprehensive and unclassified report on China’s participation in the international standard-setting bodies (ISSBs) for fifth-generation wireless telecommunications technologies (5G). This report would allow companies in the U.S. to fully assess any existing threats to fair competition and push back against them.

“In 2012, the House Permanent Select Committee on Intelligence’s study on Huawei and ZTE drew attention globally to the security concerns associated with certain Chinese telecommunication and information technology companies,” wrote the Senators.“Similarly, we believe Chinese influence in our ISSBs is not fully appreciated, and the IC can play an essential role in filling the publicly available information gap—a necessary first step to countering this trend.”

American companies do not currently have access to crucial information regarding China’s alleged use of political influence in ISSBs or other anti-competitive practices, such as the state-directed coordination of large Chinese telecommunications firms. These practices can undermine fair competition, hinder the ability of us companies to sell and scale their technologies, and raise serious economic and security concerns for U.S. networks and future generations of wireless technologies.

Prompted by a series of anecdotal concerns raised to the Senate Select Committee on Intelligence (SSCI) regarding China’s attempt to politically influence the ISSBs, the Senators urged Director Coats to issue a report detailing: 

1.             Overall trends in the ISSBs over the past decade and the implications of politicization of ISSBs;

2.             Specific examples of attempts by China and other foreign adversaries to exert pressure or political influence within the ISSBs or at major telecommunication conferences to secure standards that are favorable to Chinese companies and patent holders, or that might introduce deficiencies into 5G networks; and,

3.             How Chinese-led standards for 5G technologies will affect U.S. economic and security interests, including efforts by U.S. companies to sell and scale its technologies, the ability of the U.S. to position itself for future generations of wireless technology, and to protect against cyber intrusions and security vulnerabilities.

They concluded, “We hope that this report will be part of an ongoing effort to share more timely and relevant information with U.S. companies and our allies. The U.S. cannot tackle this issue alone and must work closely with our international partners—including the European Union, Great Britain, Korea, Japan, Australia, New Zealand, and Canada—on how we may collectively strengthen security standards, supply chain management, and market share of critical technologies. To the greatest extent possible, we urge the IC to declassify relevant information.”

Sens. Warner and Rubio are the lead sponsors of bipartisan legislation to help combat tech-specific threats to national security posed by foreign actors like China. Sen. Warner, a former telecommunications executive and entrepreneur, has long expressed concerns about the risks to our national security posed by Chinese-controlled telecom companies. On October 12, 2018, Sen. Warner and Sen. Rubio sent a letter to Canadian Prime Minister Justin Trudeau urging his country to reconsider Huawei’s inclusion in any aspect of Canada’s 5G development, introduction, and maintenance. Warner has also urged the Administration to work with our allies to combat these technology threats. Sens. Warner and Rubio are also the authors of bipartisan legislation to enforce full compliance by ZTE with all probationary conditions of a U.S. Commerce Department’s deal struck with the company last year that ended U.S. imposed sanctions.

Full text of the letter is below and a copy can be found here.

Director Dan Coats

Director of National Intelligence

1500 Tysons McLean Drive

McLean, VA 22102

Dear Director Coats:

We are writing to request an unclassified report on the participation of China and other adversarial nations in the international standard-setting bodies (“ISSBs”)  for fifth-generation wireless telecommunications technologies (“5G”). Over the past year, the Senate Select Committee on Intelligence (“SSCI”) has heard anecdotal concerns that China is attempting to exert pressure or political influence in the ISSBs, which have historically functioned as technological meritocracies. Not only does political influence undermine fair competition, it also raises serious economic and security concerns for 5G and future generations of wireless technologies.

Currently, U.S. companies do not have access to critical information about the nature of this threat, and the degree of state-directed coordination amongst large Chinese telecommunication firms seeking to gain a critical edge in wireless technologies. Without adequate information, U.S. companies cannot effectively push back against this behavior, nor can the United States coordinate with our allies to deter anticompetitive practices in the ISSBs. 

Specifically, we request a detailed and unclassified report, to the extent possible, from the Intelligence Community (“IC”) on the following items:

1.                  Overall trends in the ISSBs over the past decade and the implications of politicization of ISSBs, if there is evidence of such trends;

2.                  Specific examples and case studies of attempts by China and other foreign adversaries to exert pressure or political influence within the ISSBs or at major telecommunication conferences to secure standards that are favorable to Chinese companies and patent holders, or that might introduce deficiencies into 5G networks; and,

3.                  Implications of Chinese-led standards for 5G technologies and how that will affect U.S. economic and security interests, including efforts by U.S. companies to sell and scale its technologies, the ability of the U.S. to position itself for future generations of wireless technology, and to protect against cyber intrusions and security vulnerabilities.

In 2012, the House Permanent Select Committee on Intelligence’s study on Huawei and ZTE drew attention globally to the security concerns associated with certain Chinese telecommunication and information technology companies. Similarly, we believe Chinese influence in our ISSBs is not fully appreciated, and the IC can play an essential role in filling the publicly available information gap—a necessary first step to countering this trend. 

We hope that this report will be part of an ongoing effort to share more timely and relevant information with U.S. companies and our allies. The U.S. cannot tackle this issue alone and must work closely with our international partners—including the European Union, Great Britain, Korea, Japan, Australia, New Zealand, and Canada—on how we may collectively strengthen security standards, supply chain management, and market share of critical technologies. To the greatest extent possible, we urge the IC to declassify relevant information.

We appreciate your attention to this important matter.

Sincerely,

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WASHINGTON – U.S. Sens. Mark R. Warner and Tim Kaine (both D-VA) wrote today to the Secretaries of the U.S. Navy, Army and Air Force, asking for detailed information regarding the military’s contracts with private companies to provide on-base housing for military families in Virginia. Prompted by pervasive allegations of health hazards – including lead poisoning, cockroaches, mice, mold blooms and water leaks – the Senators raised concerns about existing contracts with several private companies that manage thousands of family housing units at military bases across Virginia, and asked each of the services to provide copies of any existing policies and operating procedures meant to hold companies accountable for health and safety failures.  

“Military families make great sacrifices for our nation and they deserve housing that is safe and healthy,” said the Senators. “It is crucial that military leaders prioritize the well-being of military families and hold private housing companies accountable for anyhealth hazards or issues.” 

The specific contracts and locations for which the Senators requested information include:

• Lincoln Military Housing, a residential real estate management company that provides 36,000 housing units for military families nationwide, including 5,700 units for Navy and Marine Corps servicemembers stationed at Dahlgren, Wallops, Quantico, and throughout Hampton Roads; 
• Balfour Beatty Communities, Clark Realty Capital and Hunt Military Communities, which manage military homes for families stationed at Fort Belvoir, Fort Story, Fort Eustis, and Fort Lee; and
• Hunt Military Communities, which manages approximately 1,430 units at Joint Base Langley-Eustis.  

In letters addressed to Secretary of the Navy Richard Spencer, Secretary of the Army Mark T. Esper, and Secretary of the Air Force Heather Wilson, the Senators asked for: 

• Copies of housing contracts with private companies;
• Copies of any service- or department-level guidance and policy documents that relate directly to contracting for on-base privatized housing;
• Any information about any cure notices that may have been sent to contractors regarding failures to adhere to contractual obligations at Virginia installations; and
• Copies of standard operating procedures to responding to and rectifying problems in government-owned housing, such as mold, mildew, lead paint,  and other habitability, safety, and health complaints in government-owned housing. 

This is not the first time that Sens. Warner and Kaine have taken actions to address concerns with military housing conditions. In August of 2018, both Senators pressed Secretary Esper to address lead poisoning concerns at a number of Army installations, including Fort Belvoir. Additionally, last November, Sen. Warner asked the Department of Defense to provide a detailed briefing outlining the Defense Department’s plan to ensure the safety of military families residing in both public and private housing. He alsomet with Secretary Esper earlier this month to emphasize the importance of prioritizing improvements to military housing conditions. In the Armed Services Committee, Sen. Kaine has called on military leaders and private companies charged with maintaining housing to work together to quickly address these problems.

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WASHINGTON – Today, U.S. Sens. Mark R. Warner (D-VA) and John Cornyn (R-TX), co-chairs of the bipartisan Senate India Caucus, released the following statement on rising tensions in the Kashmir Region, following the reported downing by Pakistan of an Indian military plane and a terrorist attack that killed 40 Indian military police earlier this month:

“We condemn the horrific attack on Indian security forces by a known terrorist group based in Pakistan. For too long Pakistan has harbored terrorist groups that have threatened stability in Asia and around the world. At the same time, it is critical that both India and Pakistan take immediate measures to deescalate the volatile situation along their border. We urge the governments of both nuclear-armed neighbors to step back and avoid further provocative actions while keeping open lines of communication and working to reduce tensions.”

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WASHINGTON, D.C. – U.S. Senators Mark R. Warner and Tim Kaine joined 44 of their Senate colleagues to introduce the Voting Rights Advancement Act of 2019 to restore and strengthen the landmark Voting Rights Act. 

“There is no more sacred right as an American than the right to vote. Unfortunately, more than 50 years after the enactment of the landmark Voting Rights Act, and particularly after the Shelby County decision, many Americans still face barriers to fair participation in our elections,” said Warner. “This bill would restore the vital voter protections to ensure that all Americans have the unfettered access to the ballot box.”

“The right to vote is at the heart of American democracy, but hundreds of thousands of people are still denied that right today,” said Kaine. “More than 50 years after the original Voting Rights Act, Congress must not allow systematic disenfranchisement to continue to plague our elections. I’m proud to join my colleagues in this effort to protect voting rights and ensure voting is no longer treated as a privilege.”

In 2013, the Supreme Court’s Shelby County v. Holder decision gutted Section 5 of the landmark Voting Rights Act, consequently crippling the federal government’s ability to prevent discriminatory changes to state voting laws and procedures. In the wake of Shelby County, states across the country unleashed a torrent of voting restrictions that have made voting more difficult and systematically disenfranchised communities of color. The Voting Rights Advancement Act would restore and modernize Section 5 of the Voting Rights Act, improve and modernize the landmark legislation, and provide the federal government with other critical tools to combat what has become a full-fledged assault on Americans’ right to vote.

Sponsored by Senator Patrick Leahy (D-VT), the Voting Rights Advancement Act of 2019 is also cosponsored by Senators Dick Durbin (D-IL), Dianne Feinstein (D-CA), Doug Jones (D-AL), Chuck Schumer (D-NY), Chris Coons (D-DE), Kamala Harris (D-CA), Sheldon Whitehouse (D-RI), Bob Casey (D-PA), Richard Blumenthal (D-CT), Jack Reed (D-RI), Sherrod Brown (D-OH), Tina Smith (D-MN), Jeff Merkley (D-OR), Ed Markey (D-MA), Maria Cantwell (D-WA), Chris Murphy (D-CT), Tammy Baldwin (D-WI), Maggie Hassan (D-NH), Patty Murray (D-WA), Martin Heinrich (D-NM), Ron Wyden (D-OR), Cory Booker (D-NJ), Mazie Hirono (D-HI), Angus King (I-ME), Jeanne Shaheen (D-NH), Bernie Sanders (I-VT), Chris Van Hollen (D-MD), Catherine Cortez Masto (D-NV), Debbie Stabenow (D-MI), Tom Carper (D-DE), Ben Cardin (D-MD), Bob Menendez (D-NJ), Tom Udall (D-NM), Michael Bennet (D-CO), Brian Schatz (D-HI), Kirsten Gillibrand (D-NY), Elizabeth Warren (D-MA), Tammy Duckworth (D-IL), Amy Klobuchar (D-MN), Jacky Rosen (D-NV), Jon Tester (D-MT), Gary Peters (D-MI), and Kyrsten Sinema (D-AZ).

The legislation is also supported by The Leadership Conference on Civil and Human Rights, Lawyers’ Committee for Civil Rights Under Law, NAACP Legal Defense and Educational Fund, Brennan Center For Justice, Mexican American Legal Defense and Educational Fund, Asian Americans Advancing Justice, and the Human Rights Campaign.

The full text of the Voting Rights Advancement Act of 2019 can be found here.

An outline of the Voting Rights Advancement Act of 2019 can be found here.

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