Grand Canyon Times

Patrick Brenner, founder and president of the Southwest Public Policy Institute (SPPI), joins the Grand Canyon Times Podcast to discuss public records law, school choice, and the Consumer Financial Protection Bureau. In this episode, he covers the institute's pending lawsuits against the city of Scottsdale and Mesa Public Schools related to Arizona's public records law.

SPPI is a research organization focused on formulating, promoting, and defending public policy solutions. It operates in eight U.S. states: Oklahoma, Texas, Colorado, New Mexico, Utah, Arizona, Nevada, and California.

This episode can be found on Apple Podcasts, Spotify, and YouTube.

Full, unedited transcript of this episode:

Leyla Gulen: [00:00:00] Welcome to the Grand Canyon Times podcast. I'm your host, Leyla Gulen. In this episode, we welcome our guest, Patrick Brenner. Patrick is the founder and president of the Southwest Public Policy Institute. His organization is responsible for formulating, promoting, and defending sound public policy solutions.

And is a leading public policy think tank dedicated to promoting better living through better policy in the American Southwest. Patrick, welcome.

Patrick Brenner: Leyla, thank you so much for having us. I don't think I could have said it much better myself.

Leyla Gulen: I know all the accolades go to you. You're doing great work there.

And the last time we spoke, we were talking about the CFPB, the Consumer Finance Protection Bureau, and I want you to catch us up on that front eventually. First, you've got two pending lawsuits, one against the city of Scottsdale, Arizona, and the other against Mesa Public Schools in Arizona, [00:01:00] and both are related to the state's public records law.

So let's start with Mesa Public Schools, shall we? You made a request for information and were denied. So before you tell us on what grounds, what were you requesting and why?

Patrick Brenner: Well, this is. A really interesting case. And these two cases are interesting cases as part of a series of strategically placed litigation that the Southwest Public Policy Institute is lodging in the state of Arizona, specifically with the intention of challenging and overturning something that's referred to as the Carlson Balancing Test.

In our opinion, this Parleson balancing test is something that exists and that is leveraged by Parleson. The public records custodians, these custodians are the individuals who are responsible for interpreting public [00:02:00] records requests, finding the relevant documentation that is being requested, the responsive documents, and then providing those documents back to the individual who made the initial request.

Now this Carlson balancing test is really interesting. It is a public interest test where a records custodian is empowered with some certain authority Make arbitrary determination as to whether the release of certain records is in the best interest of the state or would violate potentially the privacy interests of individual citizens.

So what this is, let's say I submit a public records request to the city of Phoenix. And the city of Phoenix records custodian makes a determination that my request would be violating the privacy rights of the citizens of Phoenix, or at least the citizens that may have some interest in the documents being requested.

[00:03:00] This records custodian in Phoenix could outright deny the request citing the Carlson balancing tests, implying that. The release of these records is not in the best interests of the public or the in the best interests of the privacy of the citizens and then just deny the request and that's it. It's dead.

Request is is effectively denied and there is no recourse and that's unacceptable. I mean, from the perspective of just government transparency, good open governance, that is not acceptable. It is often used by these records custodians to hide records that would otherwise be lawfully Subjects to inspection by the public, but it's abused.

This test is abused. So these two cases, SPPI being the city of Scottsdale and SPPI meaning Mesa Public Schools are strategically lodged in two different appellate court districts with the [00:04:00] intention of the Southwest Public Policy Institute being able to challenge and overturn the Carlson balancing bill.

Yes, which would empower if we were able to overturn this test, we would empower embolden the public records act as it exists in the state of Arizona, which in turn would empower the citizens and the public's right to know. So that background out of the way, I mean, you had specific questions about Mesa public schools and what we were requesting.

There's more background on this specific one. Now, Arizona passed. Comprehensive school choice reform in recent years. What this is, the voucher system, essentially, where parents can choose where to send their children to school and the money, the funding for those children follows the children instead of going straight to whatever school district that their zip code determines that they need to go to.

In [00:05:00] light of this new, uh, Well, choice program is one of the most comprehensive, most universal school choice programs in the entire country. And you have former governor, do you seek to think for that? It's an amazing program. The problem is that you have to opt in, you have to apply for the program. And there's, at this point, there's limited funding as they work to expand access to the program.

And yet the current governor in Arizona is certainly attacking the program because the, uh, Transcribed Assumption that it's targeting government schools, sorry, public schools. I like to call them government schools. So this new school choice program is in effect and the parents are needing to apply for the new school choice program in order to qualify for those educational dollars.

The problem is that most of these parents don't know about the existence of the new school choice program. Sure, there's been several thousand parents that have applied for the program, but there's hundreds of thousands [00:06:00] of parents and hundreds of thousands of families in Arizona that could benefit from the program.

This funding and could choose better schools for their children if they knew about the program. And that's where we come in. Southwest Public Policy Institute was seeking to inform the parents of Mesa Public Schools about the existence of the school choice program. And was hoping to educate these parents and encourage these parents to sign up for the new school choice program.

So, we requested access to the Mesa Public Schools parental life checklist. It's just a, it's white pages. I mean, this is, it's not private in any way, shape, or form. It's, it's no different than having your name and address and phone number printed in the white paper. So, so essentially,

Leyla Gulen: so, so what you're requesting though contains PII, or personal identifiable information.

Patrick Brenner: That's subject to interpretation. I mean, nothing that we're requesting is sensitive. All we're requesting is names and phone number. Is that protected [00:07:00] information?

Leyla Gulen: I don't know. Is it?

Patrick Brenner: I don't think so. Really? Because it exists in the white pages. I can go to white pages and find your phone number there.

Leyla Gulen: If you choose to list yourself.

But what if people are unlisted a lot? Because a lot of people these days, they don't want their personal information out there. They're very deliberate in whether or not they put their information out there. So, so is there any credence to the state In

Patrick Brenner: this particular case, I would assert that no, specifically because public dollars are being used to educate the children of these families.

And with the expense of these public dollars being used by Mesa Public Schools to educate these children, leveraged in this case. The information contained within these records, it's not like we're asking for sensitive educational records. I'm not asking for disciplinary information from [00:08:00] students. All we're asking for is contact information from parents.

But because those parents have a contract between their families, their children, the parents, and the schools, and public dollars are being spent to educate those parents, certain privacy obligations of the state No longer have to be met. It's no different than a plumber having a contract with the city of Phoenix and me requesting a copy of that contract.

Leyla Gulen: But then they're a business owner, they're a professional in their field, they're not a private citizen.

Patrick Brenner: They certainly are a private citizen. What makes them not a private citizen just because they're a business owner?

Leyla Gulen: Because they're doing work with the state or the city or the municipality. And the family.

They've got a, they've got a business contract, whereas. Parents of children. Those are private citizens who are utilizing a public service. [00:09:00] However, isn't there a difference there?

Patrick Brenner: No, there's no difference at all, because these parents have a contract with the public school for the education of their children and public dollars are being spent to educate those children.

Ergo, it is just as subject to public records requests as a plumber's contract with the city of Phoenix.

Leyla Gulen: I see. Okay. Have you received any pushback just from some of these parents? Have they caught wind of the litigation and what you're doing? Does anybody have an opinion either way to whom this may or may not benefit?

Patrick Brenner: We have received no pushback. From parents. However, we have received considerable pushback from Mesa Public School directly, which is why litigation was necessary.

Leyla Gulen: Right. And what was their argument exactly?

Patrick Brenner: They cited the Carlson balancing test and declared that it was not in the best interest of the state to release that information.

Leyla Gulen: Well, in the best interest of the [00:10:00] state. But did they go further than that? I know you mentioned the Carlson balancing test, but did they go any further in explaining why they were invoking the Carlson balancing test?

Patrick Brenner: I mean, all they have to do is invoke the Carlson Balancing Test and declare that it's not in the best interest of the state to release these records, which is why the Carlson Balancing Test is one, so powerful, and two, needs to go away.

Leyla Gulen: Mm, I see.

Patrick Brenner: Okay. It's because it is so broad and gives these records custodians so much power and authority to just outright deny requests. And all they have to do is invoke the Carlson Balancing Test and say it's not in the best interest of the state. I mean, to me, that sounds like something you'd see out of Soviet Russia.

Leyla Gulen: Mm. Right. And then how would this benefit, uh, the average citizen? So by, by doing, if you were to succeed in this litigation, what then becomes, uh, to the benefit of the private citizen or the parent who wishes to take part in this program? [00:11:00]

Patrick Brenner: Well, there's two questions there. The, the private citizen would benefit in the removal of the Carlson balancing test because that would in turn empower and give more power and authority.

Back to the requesters, the people who are requesting certain public record sets, certain public documents. It removes the government's ability to invoke an overly broad reason to deny a request. That being the case, it gives so much more power back to people who are requesting public records who are just generally ordinary citizens.

It removes another excuse for the government to not comply with the law.

Leyla Gulen: Or the media, because what we're talking about, you say is the state analog to the FOIA or the Freedom of Information Act. So as a member of the media, you want information, you have to file a FOIA, then they can either Accept or deny.

And then you can push based off of what [00:12:00] the outcome is. So, so yes, that would then give anybody more access to what it is they're seeking. But in the event of the particular particular Uh, I guess reason why all of this kind of came about, what's the, at the crux, the actual information that would then become available for everybody to benefit by.

So is it tax dollars available? Is it access to a certain program? Is it how you qualify? What exactly? If we could just take it a step further. Yeah. Sorry.

Patrick Brenner: Let's take a step back and look at. Government schools and private schools and parents and in the whole big picture in Arizona. Why on earth would a government school notify a parent about their ability to take their children to a non government school?

They have a negative incentive. The government school wants to keep those children safe. [00:13:00] Enrolled in that government school. The more money the government school gets, they have a negative incentive to let parents know about the new school choice program. If we had access to this just very simple basic contact information of these parents and these families, the Southwest Public Policy Institute could run an educational campaign, notifying parents about the new schools choice program, how to apply and direct them to the application page.

All we're doing is letting parents know about a new government program that is available to them that would enable them to move their children to a school that might best fit their needs.

Leyla Gulen: So let me ask you this. Why on earth would the Mesa school system offer a program and not advertise it?

Patrick Brenner: It's not the Mesa public school.

It's not that district that's necessarily advertising the program. It's a state level program. And the reason that Mesa public schools has no interest in advertising that new program is because they're worried about [00:14:00] losing enrollment.

Leyla Gulen: Yeah. So, so, I mean, they have to work hand in glove though with the state.

So how is it that they're able to pick and choose what they want to. Advertise or promote on behalf of the state, or wouldn't the state just override everything any school district within the state of Arizona put out a PSA regularly on the airwaves and in publications to let parents know? Uh, what's available to them.

I

Patrick Brenner: think now you're asking the right questions. No, we can, I gotta

Leyla Gulen: be, I gotta play devil's advocate, Patrick. Yeah, I appreciate

Patrick Brenner: that. Yeah. See, but now you understand why we're running into this problem. We have the same question. Why is Mesa Public School not advertising these new school choice programs to parents?

Why is the state of Arizona not advertising these new school choice programs to parents?

Leyla Gulen: Because I don't understand why you, it's like you own a coffee shop and you offer croissants as [00:15:00] a bite to eat, but then you keep them in the back and you don't let anybody know that you've got them.

Patrick Brenner: Well, it's like, in this instance, let's take a different analogy.

You've got Walmart and you want access, Walmart is collecting food stamps from people as they're shopping for a grocery. You've got the public dollars being used and they're specifically spending it at Walmart. They're not compelled to, which is a little bit different than in the case of government schooling that you've got a bunch of customers that shop at Walmart and that are using public dollars to buy groceries.

I'm not criticizing the program at all here. They're just using this as an analogy. Why does Walmart have any interest in letting these customers of Walmart know? That they could shop using those same coupons at Albertsons.

Leyla Gulen: Okay. I'm following you.

Patrick Brenner: It's a competition issue. And these government schools are now in direct [00:16:00] competition with private schools and charter schools and homeschools.

And we're even throwing homeschooling into the mix here. You've got these government schools that are now at odds with competition, direct competition that they weren't necessarily directly competing with before. They have an incentive to keep their enrollment up by not telling parents about the new school choice program for fear of dropping their declining enrollment.

Why would Mesa Public Schools let parents know that they can homeschool their kids and get money for it? Because Mesa Public Schools will lose that money. It's all about money. I mean, you follow the money, and these are bureaucrats, these are government bureaucrats that are looking out for the best interests of the bottom line of the institutions that they're operating.

Leyla Gulen: When did the program get passed?

Patrick Brenner: It was two years ago. Two years ago. Don't, don't quote me on that.

Leyla Gulen: Okay. Well, two, so within the last several years, so it's, it got signed into law, I mean, it's active. [00:17:00] And, yes,

Patrick Brenner: it is a legitimate government program,

Leyla Gulen: right? So parents, if they keep their ear to the ground, if they're informed individuals, they'll figure it out, they'll find it.

But is that what the state is kind of hoping at this point, as we sit here today, that if you're an uninformed person, then you'll never know about it, therefore, we don't have to worry about money leaving. the public school system and going elsewhere. This way, it's just the, the handful of parents who actually do inform themselves, know the right questions to ask, and get to benefit by

Patrick Brenner: this

Leyla Gulen: program.

Patrick Brenner: The government has no obligation to notify these families about the new school choice program.

Leyla Gulen: Has the media been covering it in Arizona?

Patrick Brenner: It's a huge issue. Okay. It is a huge issue. Well, I mean, from the perspective of the government [00:18:00] school advocates and the teachers unions, I mean, the teachers unions are one of the biggest enemies of the school choice movement and in turn, one of the biggest enemies of students and families.

These teachers unions wants to trap families and students in failing government schools and are one of the biggest enemies. Most comprehensive anti choice movements in the entire country. We love teachers, but the teacher unions are not good. Yeah. The teachers unions. It's been

Leyla Gulen: like that for decades, by the way.

Patrick Brenner: Forever. Yeah.

Leyla Gulen: Yeah. I remember.

Patrick Brenner: These teachers unions have a tremendous amount of power and are able to sway media talking points in a direction that makes. The school choice movement look like we're trying to defund the government school, which I'm not going to lie is part of the beauty of the school choice movement is that by enabling choice, we're actually bolstering government schools by forcing government schools [00:19:00] to compete directly with private schools and charter schools and home schools.

You naturally see public schools have to increase the quality of the product that they're providing, that they're bringing to market. They have to increase the quality of that product in order to continue to be relevant in this in bolstered free market. It is now a free market of education and by enabling a school choice program, you're actually bettering the outcomes of these government schools.

So it's in direct opposition to the talking points of the teachers union say we want government schools to fail. And we're saying no, we don't want government schools to necessarily fail. In fact, school choice would actually make government schools perform better.

Leyla Gulen: Smaller class size for one, which that increases and improves a student's ability to learn.

How overrun are Arizona [00:20:00] schools, public schools? What's the teacher to student ratio?

Patrick Brenner: That is a good looking question, and I don't know the answer to that question off the top of my head.

Leyla Gulen: Anytime you have a classroom of 50 students to one teacher, it was never good. Now you add the element of mobile devices and social media.

I mean, I would think that a teacher Would push back against the teacher unions to make their working conditions better

Patrick Brenner: Teachers unions are not on the side of the teachers. The teachers union is on the side of the teachers union

Leyla Gulen: Yeah, right as I mean, this is all unions I feel like I've been a part of a union myself in the past worst experience ever did nothing

Patrick Brenner: I, I can proudly say that I've never been a member of the union.

Some people like [00:21:00] them, some don't. We don't like the coerced union membership. We don't like seeing working people forced to join a union and have to expend money to become members in order to have a job, and that, that falls into the right to work movement. Um, which there was a huge right to work push in the state of New Mexico several years ago that fails when the governor signed a prohibition of the right to work.

Leyla Gulen: Right.

Patrick Brenner: Right. And anyway, we can, we can talk about the intricacies of unions all day. I want to move to the city of Scottsdale litigation. We'll touch on that really quick and then we'll talk about my favorite punching bag, row heat of the consumer financial protection Bureau.

Leyla Gulen: Yes, let's do that.

Patrick Brenner: Okay.

Similar to SPPI v. Mesa Public Schools, Southwest Public Policy Institute filed some public records requests with the city of Scottsdale. We are specifically, again, [00:22:00] launching this litigation with the intention of overturning the Carlisle balancing test, but here we're in a judgment ballot district. We had initial assumptions that our initial attempt would fail at the district court level in both of these cases, both in SPIB Mesa Public Schools and in SPIB the city of Scottsdale.

So, because of that, that very real, I mean, that's the reality, I mean, we were anticipating that we were at the district court level and we had plans to take these up and appeal. We wanted two cases in two different appellate court districts so that we could find the right judicial bank by which we could essentially guarantee the greatest degree of success.

So we submitted a similar records request from the city of Scottsdale. We asked for contact information from the residents of the city of Scottsdale [00:23:00] in the form of marketing email distribution lists. And the city of Scottsdale responded similarly invoking Carlson balancing test to justify the withholding of these records and SPPI filed suit against the city of Scottsdale to compel the release of these records.

Leyla Gulen: Okay. And. This will pertain really to both litigations, but just going back to the Mesa Public Schools as well, before we move on to the CFPB stuff, I do want to ask, should you succeed in your litigation against both of these entities, what are you hoping that outcome to then evolve into? So what will you do with that victory?

For the people that you're litigating on behalf. So are we now going to see SPPI come out with a campaign. What [00:24:00] will you do to inform the Southwest public about what you've accomplished? And what's to their benefit and what they can take advantage of?

Patrick Brenner: Well, I think this is twofold. One is the establishment of good case law.

Uh, we're in New Mexico, Which is where the Southwest Public Policy Institute was founded and is headquartered, although we do have offices across the Southwest. In New Mexico, we got our inspiration for what we're trying to do from a very particular court case that goes back to 2012. It was the Republican Party of New Mexico v.

the New Mexico Department of Taxation and Revenue. In this case, The Supreme Court of the state of New Mexico ruled that executive privilege was no longer a viable exemption or exception under the state inspection of public records act. So Arizona has the Arizona public records law in New Mexico has the inspection of public records act.

[00:25:00] These are just the state level analogs of oil. These are just like the state versions of the creative health information act. I know a lot of people like to say FOIA requests. I mean, technically it's not correct when you're submitting a request for information to a state entity, but practically speaking, it's the same thing.

Um, however, in New Mexico, the inspection of public records act is almost the gold standard. I mean, it's amazing. The legislation that was asked in New Mexico that favors FOIA. The requester that enables a fee shifting provision so that a requester can bring litigation at no cost if they find the right attorney that understands that fee shifting provision.

The time sensitive nature of obligations to respond, the limited number of exceptions. I mean, IPRA in New Mexico is the gold standard for public records. Empowered. It was bolstered. That was improved with this [00:26:00] 2012 New Mexico case, the Republican Party of New Mexico, the Mexican Department of Taxation and Revenue.

The Inspection of Public Records Act specifically cited something called executive privilege, which is where The executive branch, the governor's office could invoke the executive privilege to specifically bar the release of certain records. It's very similar to the Carlson balancing test. Aim the gavel and say, we're not releasing those records because of executive privilege and there's nothing you can do about it.

There's no recourse. The Supreme Court of the state of New Mexico Challenged or overturned that overturned the executive privilege in addition to overturning a similar balancing test. There was another test in New Mexico under the inspection of public records act where records custodians had the ability to make a determination as to whether the release of certain records was in the best interest of the public or the best interest of the [00:27:00] States and that has to went away in this 2012 case.

SPPI is seeking to export that model. Export that Supreme Court decision, New Mexico Supreme Court decision outside of New Mexico to states like Arizona and Colorado and Texas. Texas public records law is absolutely atrocious and they need some work and some help. But the only way they're going to improve these laws is to challenge existing case law that is antithetical to the principles of government openness and transparency.

So, that 2012 case in New Mexico was our shining light, our guiding example, and we want to export that example to Arizona, strengthen Arizona's public records law. So, one outcome is good case law. The second outcome is, if we're successful, if the institute prevails against Mesa Public Schools, we [00:28:00] will have access to one of the largest databases of parental contact information in the state of Arizona, and we'll continue to collect that information for all of the other school districts in Arizona, and then SPPI is going to launch a comprehensive campaign to notify parents about their new options under Arizona's universal school choice law.

Leyla Gulen: Well, Wow. I'm sure you're gonna have a lot of parents out there very happy to know that someone's looking out for their best interest.

Patrick Brenner: But at the same time, I think we're going to run into some, some of the same problems that you addressed earlier on. I, I have a hunch that there are going to be some parents that are going to be upset that I got their email address by virtue of the inspection of inspecting public records.

Leyla Gulen: I think the idea, though, is that people, once you have that information, people are worried that it's going to get abused. And I'm not saying SPPI would ever abuse private information, but, [00:29:00] and protect it. Is it going to be safe? It, our information's out there for the taking and we've just got one data breach after another and I mean, just things that we have to worry about today that we didn't have to worry about 20 or so years ago.

So yeah, I mean, there, there's credence to people's worries, certainly, but I think you're right.

Patrick Brenner: But that is quality. That is protected. Those are, we're talking about like protected personal information. Health records like medical records like social security numbers. I'm not asking for social security numbers I'm asking for a phone number in an email.

Okay. I mean, that's all we're asking

Leyla Gulen: So there's certainly parameters to what you're asking for. It's not just a blanket. I want everything Yeah, right,

Patrick Brenner: right. We're not asking for everybody's social security numbers. It's not like I have some hidden agenda to go falsely apply for credit using the contact information of every parent at Mesa Public [00:30:00] School.

That's not what we're doing at all. All we want is an ability, a mechanism. We contact parents in bulk, and in order to facilitate that, we need the contact information for those things, whether it's an email address or a phone number, and that's all we're asking.

Leyla Gulen: Yeah. Yeah. Well, very good. So kind of speaks to a question that I wanted to ask just before we move on to the CFPB, but what would be a reasonable exception?

And I think you really kind of stated it, a reasonable exception to providing information would be that particularly sensitive. PII, social security numbers, physical home addresses, anything of that nature, I guess, would be more of a reasonable exception. Would you agree?

Patrick Brenner: No. And that's covered by the law.

A physical address is not necessarily a protected information.

Leyla Gulen: Okay.

Patrick Brenner: But I will say that. In New Mexico, under the Inspection of Public Records Act, [00:31:00] there's a very minimal number of exceptions, and those exceptions are things like dates of birth, all of the important parts of a social security number, I don't have the actual statute in front of me, but also records pertaining to medical treatment of people at medical institutions, letters of reference, are exempt from public records requests.

Letters of memorandum, which are like opinion pieces that are in personnel files of private or public sector employees. Those are all not subject to inspection under the Inspection of Public Records Act. Students, student files are not exempt. I'm sorry, student files are exempt. Under the law, trade secrets are exempt under the law, and by exempt, we mean these are not subjects to inspection under the Public Records Act.

Another exception is, as provided by the Confidential Materials Act, [00:32:00] also emergency tactical response plans prepared by the state. Those are not subject to inspection. I mean, there are reasonable exceptions under the law, reasonable exceptions that we're not seeking to challenge. But what we're challenging in Arizona is just this overly broad mechanism by which records custodians can abuse their authority and abuse their power and hide records that are otherwise or ought to be subjects to inspection.

We're not asking for social security numbers. We're not asking for that is sensitive on that. I agree with you.

Leyla Gulen: Okay. Okay. Well, I appreciate the clarification. All right. Well, moving on. I know you're keeping a close eye on the CFPB. You've been doing so. Tell us what happened with SCOTUS. I know you're not too pleased.

Patrick Brenner: I'm happy, putting it mildly.

Leyla Gulen: Yeah. Yeah.

Patrick Brenner: SCOTUS. The Supreme Court of the United States, in a [00:33:00] 17 ruling, ruled that the funding mechanism of the Consumer Financial Protection Bureau, which is currently led by Director Rogit Gopra, A funding mechanism is not unconstitutional was a huge blow to organizations like mine.

We were hoping that the Supreme Court was going to rule against the CFPB, pitch it back to Congress to develop a more accountable funding mechanism.

Leyla Gulen: And give us just a brief overview of how the CFPB, the Consumer Finance Protection Bureau, is funded.

Patrick Brenner: It's not through appropriations. They get direct access to the treasury.

Leyla Gulen: So they get a budget. every year.

Patrick Brenner: And they can spend up to that amount.

Leyla Gulen: Up to that amount. Okay. And what is their current budget?

Patrick Brenner: Uh, 600 million.

Leyla Gulen: Yeah. 600 million. It's pretty eye popping. Yeah.

Patrick Brenner: Um, a lot of money. 650. [00:34:00] Nope. 684. 9 million as of fiscal year 2024.

Leyla Gulen: So we're looking at almost 700 million. So that was higher than it was in previous years.

Patrick Brenner: And one of the problems that I don't understand is it's the Consumer Financial Protection Bureau. But every other press release that I see from the CFPB is how much they fined Bank of America or Wells Fargo. And the irony behind that is that when the CFPB fined Wells Fargo a whole bunch of millions of dollars for violating CFPB rulemaking.

When Wells Fargo gets fined millions of dollars, who do you think is going to end up paying those fines and fees? It's the customers. The Wells Far customers are the ones that are going to be paying the CFPB. So the ccf PB is actually making it more expensive for Americans to transact and do business with their financial institutions, which is the opposites.

Leyla Gulen: Yeah, there's a number of ways that banks can collect from their consumers without [00:35:00] having to sweat the lawsuit.

Patrick Brenner: Right, right, absolutely. I mean, it's a trickle down economics, but in a bad way.

Leyla Gulen: Yeah, in a very bad way.

Patrick Brenner: All those fees are trickling down into the pocketbooks of the American consumers that choose to bank with Wealthboro or Bank of America.

That irony is eye popping. It's unbelievable now that we made the argument in a piece that we wrote for the Hill that this new SCOTUS ruling was just going to embolden the Consumer Financial Protection Bureau and Layla, like clockwork that same week, the CFPB filed a lawsuit against Solo Funds. Now, Solo Funds actually had the opportunity.

Speak with them recently, I love their business model and I love what they're trying to do.

Leyla Gulen: What

Patrick Brenner: are they? I've never heard of them before. It's really interesting. What they are is like an Uber for [00:36:00] financial services. They connect funders with borrowers and that's the sole purpose of the app. Now the fee mechanism is what was being questioned.

By the CFPB because solo funds allows borrowers to set the terms so they can choose to pay whatever they want to pay for borrowing that money. It's seen as like a public good. So you have wealthier individuals that log into the app and that facilitate the funding of a 500 loan and the borrower can use to tip their lender.

With a person borrowing the money. We can voluntarily offer like a 20 tip on a 500 loan when they borrowed it for 30 days. And that it's that voluntary tipping structure that came under the CFPB scrutiny as soon as that SCOTUS ruling came [00:37:00] out, we had concerns that it was just going to embolden Roshi Chopra and the CFPB to take more action against the CFPB.

Not just the financial services sectors, but beyond the financial services sector. And we see it with Solo Funds. We saw them come out that week with a lawsuit against Solo Funds, which is a African American minority owned FinTech company that is adopting a brand new mechanism for facilitating the transfer of borrowed capital.

Leyla Gulen: When did they start? When did Solo get off the ground?

Patrick Brenner: They're relatively new. I think it's, uh, 2018 was when they were founded. Oh,

Leyla Gulen: 2018. Well, I'm on their website right now and it says they have a million plus users. So this is all for small intermittent loans, is that the idea? So you wouldn't necessarily find a lender that could finance your down payment for [00:38:00] a house.

Patrick Brenner: Correct. These are small loans. So I could go on to Solo Funds and open an account and lend 500 to somebody on the account or somebody on the app. It's like Uber. They just connect borrowers and lenders.

Leyla Gulen: So you get the 500 back plus A precedent term of when I get 25 for giving you 500 for a month.

Patrick Brenner: And that 25 is set by the borrower, right?

It's all volunteering. So they, the lender can agree to those firms or they can negotiate it. It's really a fascinating concept that I had never heard of until last week when I saw the press release from the CFPB picking a target with this minority FinTech company.

Leyla Gulen: It's really interesting.

Patrick Brenner: And at the same time, the CFPB is picking a fight with, with all sorts of other lead generators.

Sobo Funds is [00:39:00] like an Uber and we see these, this really aggressive rulemaking and this really aggressive positioning of the CFPB and attacking. Lean generators, the comparison shopping websites that we talked on the last episode of the podcast, the CFPB is gearing up to attack Uber and gearing up to attack list.

They're gearing up to attack Amazon. All of these lean generators, these facilitators, these connectors, these matchmakers in not with the financial services sector, but. Everywhere. Expedia. Sittercity. com. What are those? Those are the apps. Upwork. Yeah. Fiverr and Upwork are just connectors between people that want to sell a product and people that want to buy a product.

They don't actually provide the product directly, but those are coming under the scrutiny of the CFPB. Rokin Chopra is out of control. And this was an opportunity for SCOTUS to rein him in and pass it through. The Congress, more [00:40:00] authority to set the budget of the CFPB and SCOTUS failed to do so. And now we've got this out of control agency that is ready to crane off a cliff and take the American economy with it.

I have never seen anything more dangerous than a CFPB is behaving right now. It's terrifying.

Leyla Gulen: That's really interesting. And the CFPB being. Fairly new. I mean, we're now almost not quite 20 years into it, but, you know, an institution that came of the Great Recession. People had a lot of hope for this agency because of everything that was happening.

And I know I've lamented to you in the past that I just see it as a receptacle for complaints And requests and nothing ever comes of it. There's never any satisfaction at the end of the there is no rainbow. There is no pot of gold for the consumer. As far as I ever experienced, [00:41:00] maybe there's a few people here and there, but they certainly could do better.

And so to make that connection between litigation that you brought forward, the case you brought forward to SCOTUS and their ultimate ruling, it does just allow them to kind of act as they choose more so than ever. And, yeah, so, so what's next then? What, because usually you see SCOTUS is sort of the end all be all, but what is next for you?

Are you stopping here? Are you going to take another bite at that apple? Can you?

Patrick Brenner: We're going to keep an eye on the Consumer Financial Protection Bureau. Actually, the Southwest Public Policy Institute last year launched the Bureau to Protect Financial Consumers from the Consumer Financial Protection Bureau.

You can find out more about that at BPFCCORG. We're on LinkedIn, um, I'm gonna spin up some Twitter account or a Twitter account. I'll spin up a Facebook account. And this is a, an area you can go as a consumer to file a complaint against Consumer Financial [00:42:00] Protection Bureau. And we're hoping to build a powerful enough case of consumers that are unhappy with the, the inability of the CFPB to act on their behalf where we can make a a case.

And this is strictly just in the court of public opinion.

Leyla Gulen: Yeah. Yeah. Well, you're doing some incredible work over there, Patrick. For people who would like more information on you and your organization's work, where should they go?

Patrick Brenner: Leila, thank you for asking that. You can go to southwestpolicy. com to find out more information about the Southwest Public Policy Institute.

Leyla Gulen: Perfect. And I'm going to go to that, that solo website. Maybe I'll offer a couple hundred dollars that's up for grabs in case anybody needs it and hopefully I'll get a good tip.

Patrick Brenner: Well, let me know how it goes. I'd also like to give it a test run myself. I

Leyla Gulen: mean, when you think about it, if you use that just as sort of a little investment tool, you could make, you could make some money.

Every 25 you [00:43:00] earn from lending out money here and there, you could Keep putting it back in the pot and make more and have a little spending money this Christmas.

Patrick Brenner: Sure. Well, and you get to help people in the process. You get to help the underserved community that doesn't have access to traditional financial institutions for whatever reason.

Leyla Gulen: Yeah. Yeah. I I'm speaking from a very. I guess selfish point of view, but you're absolutely right. There's all these, uh, check cashing places and payday loans and things like that are so predatory. This actually sounds quite fair. It sounds like a much more genteel way of lending a perfect stranger a couple hundred dollars just to get them by.

Patrick Brenner: Well, I'm going to have to disagree with you on the predatory nature of, of, of payday loans or check cashing places. I think that US Bank of America and Wells Fargo are more predatory than it. Agreed. Traditional short term lenders because of the nature of non sufficient fund fees and how surprising those can be.

Leyla Gulen: You're right. [00:44:00] Overdraft

Patrick Brenner: fees or whatever it is. I mean, those are always a surprise. And that is part of the reason why so many people choose not to bank with a traditional financial institution and why they rely on short term loan operators for access to capital and why organizations like Solo Funds

Leyla Gulen: Yeah, that's so true.

Patrick Brenner, thank you so much for joining us. Learned a lot today.

Patrick Brenner: Thank you so much, Layla. It was a pleasure as always.

Leyla Gulen: Yes, likewise. All right, you take care.

Patrick Brenner: You too.