Senate Standing Committee on Rules

[Roll Call]

Quorum has been established. Thank you so much to each of the Committee Members. Also want to say thank you so much for Senator Laird for advancing the Joint Rules Committee right before this. Very grateful to Senator Laird. We're going to welcome our proposed Governor appointees who are going to be appearing today in just a few moments. With deep respect, if it's all right with each of the appointees, we're going to take up some administrative items first.

We'll get through our administrative calendar today, and then we'll jump right back to each and every one of you. And again, we're really grateful that you are here today, and it's just going to take a few moments. Ladies and gentlemen, Committee, we'd like to be able to turn our attention to the calendar. Under Governor and appointees not required to appear. If there are no objections, we'd like to be able to take that up first today, and that would be not required to appear.

Items 2d through k. 2d through k, we have a motion by Madam Vice Chair. We have any conversation. Hearing. Seeing no conversation, Madam Secretary, can you please call the roll?

[Roll Call]

That's 50. Bipartisan vote. Thank you so much. We're now going to be moving on to Bill referrals. We'd like to take up item three in regards to reference bills to committees. Is there a motion? Madam Vice Chair advances the motion. Any conversation from Committee? Heron seen none. Madam Secretary, can you please call the roll?

[Roll Call]

Thank you so much. That is the 5-0 vote, ladies and gentlemen. Committee, we're now going to be moving on to floor acknowledgments. There is one change to our agenda today under floor acknowledgments. Item number four. Request by Senator Durazo. That party is no longer going to be able to make it to the Capitol that day, so we're going to scratch item number four under floor acknowledgements with that change, is there a motion to approve item 5 and 6?

Yes, please. Item 5 and 6 by. Madam Vice Chair has been moved. Any conversation from Committee hearing? Seeing none. Madam Secretary, can you please call the roll.

[Roll Call]

Thank you so much. That motion has been approved. All right, ladies and gentlemen of Committee, we're now going to be moving to Governor appointees for those who are required to appear. We're going to be taking item one a up first. It's really good to see him back here in the Capitol. And that's the Honorable Adrienne Nazarian, Assembly Member. It's wonderful to see you. Thank you so much for being here with us today. Assembly Member. We are going to.

And you're always an Assembly Member, by the way. You are going to have the opportunity to be able to provide one to two minutes for your opening testimony to Committee. We're then going to open it up for Committee Members to be able to ask any questions and advance comments as well in your opening. We welcome any introductions of any guests that you may have here or online today.

We'll give you a time check about 30 seconds from that potential two minutes and give you a prompt letting you know that you're close to time. So remember. It's wonderful to see you. Thank you for your service. The floor is yours, sir.

Thank you very much, Mr. Pro Tem. Wonderful to be here with all of you. Nice to see all the familiar faces. I just want to take a moment and acknowledge Chair Banks and Member Krantz, who are here from the Public Employment Relations board, as well as some of the staff Members who are here. Thank you to them for teaching me over the course of the last 11 months of the do's and don'ts and how this agency works and operates and bringing me up to speed.

And I just want to say thank you to Deanna, my wife, who is, I hope, getting a chance to watch this from her work. And that's it. I'm happy to take questions. Thank you very much for your time.

Really appreciate you being here. We'd like to be able to open it up for any questions or conversation from the Committee. Any comments, please, madam Vice Chair.

Thank you. Mr. Pro Tem. Hi, and welcome back to the building.

Thank you.

It was an honor to serve with you in the Assembly. And it's an honor to be able to ask you a few questions for your potential confirmation coming up.

Today, and on the floor for the full confirmation. I just want to go back. Prior to the pandemic, PERB indicated that it had a significant budget issues that resulted in backlogs in processing adjudication for labor disputes. Have you guys managed to catch that up, or is there still a backlog with labor disputes?

Thank you.

Thank you very much for the question, and thank you for asking that. I'm sure some of the team Members here would be very happy to hear that question because we've actually been successful in reducing the caseload. It is now the backlog. It is now being referred to as caseload because it's been normalized to a ratio where everyone is managing their cases. Thank you for the budget approval, also through the Legislature, for supporting the work that PERB has been able to do.

We're now at a place where it went from a backlog of, for example, 80 at the board level decision making to about mid 20 s at this point. So it's been handled, and I'm sure there's going to be ongoing conversations between the legislative and Executive branches on potential future budgetary items.

Thank you for that. The other, only other question I have is, having worked with you, I know that you are very balanced. Balanced in. We never really agreed 100% on legislation, but balanced in the approach of listening to both sides. You've been very good at that. I wanted to just ask you if you could just share how you're going to bring fairness and balance to the board between the public employee and the public employee community of employers that may have different viewpoints in issues.

I appreciate your question, and I appreciate you prefacing it the way you did. Being impartial lends the credibility that's necessary for this position. So I want to continue providing the credibility to the position that I hope that I brought to my previous position.

And I want to make sure that everyone who comes before PeRB feels the level of comfort and has the awareness that they're going to be heard, their case is going to be heard, their issues and circumstances are going to be heard and listened to. And whatever outcome or decision that's made is going to be based on all the facts that are gathered by the staff and are presented to the board.

Thank you, sir. Thank you, Mr. Pro Tem, for the opportunity to ask questions.

Thank you, madam Vice Chair. Let's go to. Please Senator Laird.

Thank you. And welcome back. As somebody that also sat in that chair for confirmation, you always wonder what you said to somebody over 10 years, and you find yourself in that chair. I think you reflected yourself well in the time, so that's not going to be a threat to you. I had a couple of General questions. One is that if you look at the breakdown, ethnic and gender of Perb, it is basically all white men. So how do you take seriously sort of diversity and dealing with the cases in front of you?

Given that, I appreciate the question and it's something that I know we've been actively working on, and I say we because I'm part of the board, at least up until the confirmation is done. But the last 11 months I've been working and learning, but it's been something that diversity has been something very important to the rest of the board Members as well as the General Counsel.

So there's been progress made, not enough, but there's been ongoing attempts to recruit and bring people in to make sure that there's both a gender and racial as well as ethnic diversity among the ranks. Also, let's not forget this is an agency that's been around for maybe only about 40 years or so. So there's so much that is growing and continuing to change. It's a very niche area that primarily attracts people from this very small space of labor contingency. So I hope to see it continue to grow and change, evolve over time to better reflect California as well.

Thank you. And I'm really glad to hear you can continue to grow after 40 years. That's really inspiring.

That's life.

The other thing I wanted to and.

Thank you for shortening the age. I just celebrated 50, so thank you.

We're not even going to get into that. That's in the rear view mirror. But the other thing that's happened that's interesting is our background information lists sort of what statutes give oversight to PERB. And I'm partially responsible. Five transit systems in the state by legislation have been added to the jurisdiction of perb. How are you seeing that? Are you actually seeing that there are cases coming and that you have to sort of get involved in what normally is more of a local labor issue?

So this is the time when I would ask for a lifeline and have a staff Member come in and respond. But basically what we go through is once the code section or the code area is added, we go through a rulemaking process at the staff level, and that could take some time. I know that we've been actually undergoing some rulemaking right now for the transit space in order to start hearing cases and taking cases on. And if I'm misspeaking anything, I'm sure that I'm going to be corrected eventually.

They'll probably do it in the hallway, and you wish they would do it.

Now, but I know that we are currently actively doing some work on rulemaking in the transit space.

Then the one thing I would say is, it would be good to know over time, because I think that with some of these agencies, the one I'm familiar with and the others, there was this imbalance where management had deep pockets and could really push, and the people that sort of represented the workers didn't have the same deep pockets, and it was uneven. And so these got added to the jurisdiction of PERB to basically allow for equity in dealing with those issues.

And it was my thought that in many cases, it won't lead to cases coming to PERB, it will lead to them being worked out before they could get there. And so that was part the nature of my question, because actually, if you're not seeing many, then it's serving that purpose. But if you're starting to see them, that would be good over time for us to know in case there's anything that might be within the purview of the Legislature.

I've worked with you and before the questions, I knew I was going to vote for you. But I just want to thank you for your willingness to serve and appreciate the answers to the questions.

Thank you, Senator. I appreciate the questions and look forward to working with you as well.

Thank you so much, Senator. We're going to go to Senator Eggman.

Good afternoon, Assembly Member. Nice to see you again. Can you tell me how your past work experience, your cumulative experience, will aid you in carrying out this appointment if you should receive it? And I feel like I have to ask you something because you came up.

Thank you so much. I appreciate it. First of all, I first got to get acquainted with PERB when I served as budget sub chair in 14, 15, 16 period and 2014, 15, 16. And it was part of the purview of Budget Sub four Committee. And as you know, in the Assembly Budget Sub four, there's the big items of transportation, water, healthcare, education, and the other committees. And then everything else falls into sub four, aside from public safety, which is also five.

So that's when I first got better acquainted with the agency and the work it does. But it was only a budget line item. It wasn't until from time to time, hearing from the staff, hearing from requests, that I learned the nature of the work and how it's changing over time. And once I got the appointment, I was already very curious.

And when I applied for the position, it wasn't until I got in that I really learned how much work it is they do and to what extent it's done in a way to protect the clients, everyone involved in the process. I think as an elected official, you're a generalist, and so you learn a little bit about everything.

But when you take on a position like this, you are getting into extreme details, some of which you had never really given too much thought about or you didn't have the opportunity to think about. And now I'm learning a lot of that. So it's been a wonderful opportunity, and I look forward to more conversations with you when I'm continuing to learn a lot of the facets of what this agency does. Thank you.

Thank you, Senator Eggman. Any other questions, comments from the Rules Committee today for Senator Nazarian here and seeing none, ladies and gentlemen, we now would like to be able to go to public comment. We welcome any individual to be able to come forward to the podium. We're going to ask for folks who are in support, in support of Mr. Nazarian if he could please step forward at this time. We're looking for folks who are in support of Mr. Nazarian to please step forward at this time.

Hearing seeing none, all individuals in room 2200 who would like to be able to speak in opposition. If you could please step forward at this time. We're looking for folks who may be in opposition. Step forward at this time. All right, we're going to bring it back to Committee to be able to see if there are any additional questions. Comments, please. We have a motion in support to move the confirmation forward. Thank you so much. Senator Laird, any other items from the Committee hearing? Seeing None. Madam Secretary, if you want to call the roll, please.

[Roll Call]

That is 5-0. Thank you so much. As a Member, we're really grateful. Heading to the Senate Floor for next steps. So thank you and really grateful. And good to see you again, sir.

Likewise. Great seeing all of you. Thank you very much. Always great working with you.

Thank you. Please give our best. All right, ladies and gentlemen, we now would like to be able to move on to item one b. Item one b. We're going to welcome Karin Shine to be able to come forward. Ms. Shine is the General counsel and Deputy Director for the Employment Development Department. Ms. Shine, we welcome you to Committee. It's really good to see you. Thank you so much for being here.

We're going to provide the opportunity to advance one to two minutes for your opening testimony to the Committee. We'll then open it up to the Committee Members to ask any questions, advance any comments in your opening. We, of course, welcome any introductions, acknowledgments of guests who may be with you here in the room or online. And we'll be keeping time. I'll give you a 3o seconds heads up as you get closer to that two minutes. It is a pleasure to have you here. The floor is yours. Thank you so much.

Thank you. Good afternoon, Pro Tem McGuire and Members of the Committee, thank you for considering my confirmation as General counsel for the Employment Development Department. It's an honor to be here and a privilege to work with my fellow public servants to support the valuable resources and services EdD provides to vulnerable Californians. Here with me today is my sister Evelyn and my brother Brian. And watching remotely are my siblings, Arabelle, Yvette, Gregory, and Celeste, and many beloved nieces and nephews, particularly Joe.

I am eternally grateful for their support. I would be remiss if I didn't mention my mother, Grace Perkins, born in. While she's been gone for over 20 years, I still miss her every day. She was born in Alabama in 1933, in the middle of the depression. She grew up in Jim Crow south, in the Jim Crow south. And she marched in the Birmingham bus strikes. And she was a force to be reckoned with.

She was very supportive of my career, and I am blessed to walk in her footsteps. Finally, I'd like to thank the Governor for appointing me to this position. I was humbled to have been considered, and I'm grateful that he entrusted me with this important work. With that, I look forward to taking your questions. Thank you.

Thank you so much. And thank you for acknowledging your mom. She must be. I know she'd be incredibly proud. So grateful that you're here. And thank you for acknowledging your family as well. Ladies and gentlemen, Committee, we'd like to be able to open it up, to be able to see if there's any questions, please. Let's start with Senator Eggman.

Thank you very much. And as somebody whose mother has also been 20 years and misses her every day, thank you for bringing her. And you are certainly the manifestation of her dreams. Thank you. So thank you for taking on a tough thing like the EDd. But I see you came before from water.

I did.

And so you know about conflicts in California, moving from a position on the Department of, Water, which doesn't see as much public facing. Now, the EDD, of course, there's a lot of focus on the public and why you're not responsible for the policies. You are for the legal part of it. So can you talk about how the Department, from your perspective, has continued to evolve and change since the problems that we encountered over the pandemic?

Yes, that's a very important question. Thank you, Senator. The Department learned a lot from the pandemic. And I think one of the main things the Department learned is claimants had a hard time contacting us during the pandemic. And of course, it's because people want to know the status of their claim. Those are very important resources.

And so one of the things that the Department did during the pandemic was instead of having to call us, we created a portal where people could log in and see real time information about their claim so that they wouldn't have to call. We also started instituting text messages so that would provide updates on the status of their claim. So we received your application, we need more information, you've received a payment. And so we're looking at expanding those text messages as part of EDD next.

That being said, the call center is operating on an older platform, and so it's a key priority for EDD next. We are going to be working with Amazon Web Services and intervision, and I believe that's the same contractor that DMV uses.

And so what they will bring is modern technology that will allow for scheduled callbacks so that people don't have to wait on hold, a live chat feature, and they'll also offer analytics that will allow us to figure out why people are calling so we can maybe address those issues so that they don't have to call. And we think with those additional changes, that will improve the customer experience greatly.

And can you also speak as we provide more avenues for communication? How did we put up safeguards against fraud?

Right. So we learned a lot about fraud during the pandemic as well. And one of the things that the Department instituted during the pandemic was an online way to verify identities, IDME. We also work with Thomson Reuters who implement our fraud filters, and we monitor those filters regularly to adjust them as necessary. Moving forward, one of the things that the Department is looking at is making it easier to verify identities. So we're looking at frictionless, so called frictionless ways of verifying identities. And that's software, if you will, used by banks and financial institutions is highly secure and it could create an easier process for claimants.

And then my final question is, speaking of the bank process, how is the transition going from bank of America to a new banking partner.

Thank you for that question. It's an important transition. It's a big transition. And we started working on this a year ago, and we took input from our stakeholders and we took lessons learned from them. Pandemic. And we started communicating about it back in December. We sent letters to claimants with existing accounts to let them know about the change. We worked with media partners and legislative partners to get the word out.

We're also continuing to contact claimants by sending emails and text messages informing them of the change. Our call centers are ready to take calls. We have a debit card webpage that people can go to for further information. Money network has one, b of a has one as well. And the call centers are staffed and informed of the changes so that they can answer any questions that come their way.

Thank you.

Thank you so much, Senator Eggman. Appreciate that. Please Senator Laird,

First, thank you for meeting with me today. And it wasn't just water. I know you had the misfortune of being assigned to Oroville Dam at the time of the crisis, and so just all I can say is thank you for your service, because I know I thought you had to look around for the one thing that might be more complicated, and you landed on EDD, so maybe that's how you got here.

But I thought I would follow up on Senator Eggman's question, maybe a slightly different way. So the pandemic's been going for about three months, and suddenly you get appointed to come into EDD when it's at that point, the department's been blowing up. It's in the newspapers every day. And after all that happened, you're coming into it. What did you find when you got there? What were some of the things that you had to do right of way, just given that situation?

Thank you, Senator. And it was nice meeting you this morning. Thank you for meeting with me. I joined the Department in June of 2021, so by the time I got there, they were well on their way to responding to the fraud for me. As you mentioned, I came from the Department of Water Resources, so it was quite a transition.

And I really focused on sort of putting my head down and learning this new Department and new area of law for me, as well as meeting my coworkers and getting to know them and work well with them and putting my head down and working really hard and making sure that I learned the Department and its programs and helping out where I could. And that was really my focus those first couple of months.

And thank you for that. In your comments, in sort of the prep stuff with the Committee and your statement, you mentioned that one of your goals is to work with claimant advocate groups. And I was just going to ask, what does that mean and just what categories of concerns do they have that you would be working with when you did that?

Yeah. Claimant advocates. Thank you, Senator. Claimant advocates are really important stakeholders and partners with us because a lot of people don't know about our programs, and they really are helpful in getting the word out there to claim it so that they can find out about our programs and figure out if they're eligible. And so we work closely with advocates. They have good community feedback about the changes that we're making and what the community needs, and that's very helpful.

We also work with the advocates on language access. Right now with our language access efforts, we are translating forms to make sure that they're available in the top seven languages and putting those on the website. We have with our call centers dedicated lines for the top seven languages so that if you speak one of the top seven languages, you don't have to call one number to then go press a menu and get the language that you need.

You can just call one number and reach an agent who speaks your language. If you don't speak one of the top seven languages, we do have another language line that you can call, and we have translators there who can speak up to 150 different languages. And so it's very helpful to work with the advocates to make sure that the services that we are providing are responsive to the needs of the community.

I just appreciate your response because that's just sort of the great priority to have just given the situation you find yourself in. And so I appreciate that. Thanks for answering the questions, and I look forward to being able to support you.

Thank you, Senator.

Thank you so much. We're going to turn to the Vice Chair. Do you mind pulling the microphone a little closer to you so that tvs is having a hard time picking up?

Sure. Thank you.

If you don't mind pulling it a little. That's great. Thank you so much. I apologize. Please, madam Vice Chair.

Thank you, Mr. Pro. Tim, it was a pleasure to meet with you yesterday. Thank you for spending time with me. And you had a staffer from my district or his parents live from my district, so that was nice as well.

But he's not a driller. He wants a new high school.

Would you just stop? It's not your turn.

Honored.

I apologize for that. In August of 2023, the State Auditor kind of. Not kind of, but slammed California's unemployment agency as high risk due to the fraud that was perpetrated against taxpayers. Basically, all the money that goes to you guys comes from taxpayers. It's 100% employer funded with the exception of what we got from the Federal Government. But again, that's all taxpayer money that came here. The State Auditor slammed California's unemployment agency, calling it high risk.

There's an estimate out there of 20 billion to $32 billion in fraud. Do you happen to know what that number really is or can you give us your best estimate?

It's my understanding that we have worked on that number and it's 19 billion.

It's 19 billion. Thank you. That is good information. And I know that we talked yesterday about moving forward and the things that the EDD has put in place to make sure that some of that fraud, obviously it was the UI funds that were mostly fraudulent.

Correct.

But the EDD has taken Auditor's recommendations and put things in place. Can you describe what are some of those things that you've put in place to eliminate fraud that was taking place?

Sure. So, like you were saying, 95% of the fraud was in the federal program, and that's federal funds. The remaining 5% was in the traditional UI program. And so some of the things that the Department did to address fraud was making sure that our identity verification process was effective. So we instituted. We started working with IDME, who can verify identities in real time. We also instituted fraud filters with Thomson Reuters, and we adjust those filters as necessary.

We started also cross checking identities with CDCR to make sure that the persons who were applying were not also incarcerated. That was an important step. And again, moving forward, we're working with new vendors, another vendor in addition to IDME, socure, who can Institute frictionless ID verification. That's very secure.

Thank you. Have you noticed with these new programs that you guys at EDD are able to identify fraud that comes in? And if so, is it more or less attempts for fraud, pre pandemic, during pandemic, or currently?

Well, I can say, Senator, I believe that fraud, people who do this type of crime, they're very creative and so we have to be very diligent. And I think with the procedures that we have in place, we are stopping a lot of fraud. I believe we stopped $120,000,000,000 worth of fraud attempts.

Thank you. I do want to ask a couple of follow up questions on the questions that I talked to you about, only because I know there are a lot of employers in the State of California that are probably watching this hearing and expecting these questions to be asked, the UIT Trust Fund is severely in debt, and that is an additional tax on employers every year because of the trust Fund indebtedness to the Federal Government under the Food Attacks Reduction act or the food attack reduction.

We talked about that. I asked you if there was a way that the EDD could mitigate this for employers or address that. Can you please repeat what you said about the legal issue and the law that is in place that requires us to go through this? Will you please restate that for their benefit?

Right.

Thank you.

Thank you. I know that's an important issue. So under the federal Unemployment Tax act, which is the act that we follow for repaying a debt to the Federal Government, and as you know, during the pandemic, the need for unemployment benefits was so high that we went into a deficit there. And so under the federal Unemployment Tax act, normally employers get a credit against their tax rate. So I think in California, the tax rate is like 6%, but they get a credit against that.

So the effective tax rate is 0.6%. And so when there's a debt, that credit reduces, resulting in a higher effective tax rate. So right now, I think it's up to 1.2%. And so that's the federal process in place that we have to follow until the debt is repaid. I do think also, I would say, and I did have a chance to reflect on our conversation yesterday. It was very helpful, and I enjoyed it.

I do think that the work that the tax branch does in finding employers who are misclassifying workers and are not paying their fair share is also important to this, because that hurts everyone. And if we can find employers and make sure that they are paying their fair share, that increases the pot and also helps to reduce that debt.

I don't want employers to misrepresent or misunderstand your comments, but when you talk about employers paying their fair share, you're talking about those employers that take a receptionist or an employee that should be classified as employee, and they put them out there as a subcontractor.

Thank you for that.

And they don't pay any taxes on them.

Thank you for that.

None of us want any of that fraud to take place, and everybody should be classifying employees in the correct fashion.

Correct.

So I just want to make sure that employers are like, I pay enough. And now you're saying this, and I don't pay my. I just want to dilute that if I can. I do want to thank you for meeting with me. And I do want to say, like I said yesterday, you're a very qualified attorney. I do agree. Not very often with my colleague that sits to my left, but he is right.

I mean, you had to search out diligently to find something harder to work on than the Water Board, a State Water Resources Control Board. Congratulations. You found it. So with your background, experience, and the legal precedents that you've set and the legal experience that you have, I think you're very qualified for the job. We may not agree on some things about processing these issues, but you're following the law, and that's what we expect is integrity in that position. So I look forward to your confirmation.

Thank you, Senator.

Thank you so much. We'd like to be able to see if there's any additional comments or questions from the Committee at this time. All right, hearing. See none. Ladies and gentlemen, here in room 2200, we welcome your comment. We're going to ask Members who are here today of the public wishing to be able to testify in support of michine, if you could please step forward to the podium. We welcome you now. Those in support for Ms Shine, please step forward now.

All right, hearing and seeing no one advance, we now would like to be able to see if there's anyone in opposition of Ms Shine, if you could please step forward at this time. Looking for those who are in opposition. All right, we're going to bring it back to be able to see if there are any last minute questions or comments. Thank you so much. We have a motion by Madam Vice Chair Committee.

I'm going to hold here for one moment, be able to see if we want to be able to get Senator Eggman on this vote as well. Ms Shine, if you don't mind holding for 1 minute, let me just check in with Ms. Eggman.

It. All right, ladies and gentlemen, here we go. We're going to be opening up the roll. Madam Secretary, please call the roll on Mr. Shine. [Roll Call] Hey. That is a 5-0. Unanimous vote. Congratulations. The nomination will be heading to the floor. We thank you for your time and again. Next up will be the Senate Floor. Thank you so much for being with us, Ms. Shine. Thank you, Senator.

And thank you for mentioning your family and your mom as well. Thank you so much. All right, ladies and gentlemen, Committee, we're now going to be moving on to our final appointee who's required to appear. We want to welcome Gregory Young, Senior Deputy Commissioner, Division of Corporations and Financial Institutions, from the Department of Financial Protection and Innovation. Madam Secretary, we're going to say that like six times fast today. First and foremost, Mr. Young, we welcome you to Committee today. Thank you so much for taking the time.

You're going to have the opportunity to be able to provide one to two minutes of testimony. Obviously, we would welcome any introductions of family or friends that you have in the audience here today or online. I'll give you a prompt when you hit close to 30 seconds of that two minutes of an opening statement. Again, Ms. Young, thank you so much for being here. Welcome to Committee. The floor is yours.

Thank you. President Pro Tem McGuire and Members of the Committee, I am honored to be here today. Regarding my appointment as senior Deputy Commissioner for corporations and financial institutions at DFPI, I would like to take a moment to thank my lovely wife who is here with me today right behind me.

She is my support and foundation, and I'm thankful to her, as well as I'd like to recognize my DFPI team who is here today for all of their support and guidance, as well as a number of friends and family Members, statewide and nationwide, who are witnessing this today. And while I come before you as just one individual, I represent an embodiment of the bankers, mortgage officers, community leaders, elected officials, advocates, and others who look like me. I stand on their shoulders.

And it is through their guidance, mentorship, support, and tireless commitment that I am before you today. For that, my heart is filled with gratitude and thanks. I've built a successful career intertwining my expertise in financial services, nonprofit work, and community leadership to educate and empower our most undeserved communities. I am excited to have this opportunity to lead in one of the most dynamic and innovative financial ecosystems in the nation.

I will use my regulatory oversight to ensure that all Californians financial lives are protected and to ensure there are financial institutions as well as nonbank entities are operating within a fair market and in a safe and sound manner.

30 seconds.

Thank you for your time and consideration this afternoon, and I look forward to your questions.

Sharon, thank you so much. And again, we are grateful that you're appearing here today. It's good to see you. We'd like to be able to open it up for the Committee for any questions, comments that they'd like to be able to advance. We'll go to Madam Vice Chair first. Madam Vice Chair, the floor is yours.

Thank you, Mr. Pro Tem. Good afternoon and thank you for being here today before us. I just have a few questions that I have concerns with. I'm really concerned about the current market conditions in banking and our local community banks in California. Is there anything that troubles you or that you are concerned about? I know that I've read some articles and they talk about the risk that we have for our community banks, especially with the federal debt. Are there concerns that you have with your vast experience and knowledge in the banking industry?

Thank you, Senator, for your question. As you're aware, the DFPI published last May a very detailed review of DFPI's oversight and regulation of Silicon Valley bank. And the report does a great job of reviewing the circumstances that led to the failure and details, key takeaways and next steps for DFPI, including additional details on how we have developed better systems to promptly remediate the deficiencies from our licensees.

With that said, I believe the events that occurred last spring really reinforces the need to continue to work in partnership with our federal regulators, make the appropriate upgrades in it improve efficiencies, working with regulators in other states and making sure we have the staff trained to meet some of the increasing complexities of our licensees. With that said, I've lived through several crises. I lived through the 2008 banking crisis. I've experienced several mergers and acquisitions throughout my banking career, and those have all been learning opportunities.

I believe our financial system is healthy and strong here in California, and it's a healthy ecosystem that includes large banks, community banks, regional banks, and credit unions. And it's in this role that I'm honored to have the opportunity to really promote the safety and soundness of our financial institutions here in California.

Thank you. I appreciate your confidence in the system. In the real world, I guess I'm a business owner and we just made some major changes in our banking. We wanted to make sure we were with a higher rated bank. We were with a great bank for a lot of years, but there was concern after the situation that we had with bank failures. And I just want to make sure that I believe your response was more than adequate.

And I want people to understand that you are someone who understands this system and that you are very confident that we are not in a situation of dire need in our banking system in California, even with the debt that is incurring on our Federal Government side. And I guess the concern a lot of business owners bring to me is there's a $250,000 guarantee on banking for the FDIC.

And I know that's different than what you guys are doing, but I guess the concern is that if the bank fails like we had last year, will those people be able to retain them? Will they get their money back? That's in the banking system. And I have a lot of people that have huge concerns.

And when they found out you were going to be here, they said, ask him what he thinks about the confidence of California banking, because there are large concerns out there that we will have a problem with the debt that's being incurred and the FDIC backing of the $250,000. Per account or per bank? Per account or per bank. I think it's per bank.

Per bank, yeah.

Per bank.

Per account.

Per account, yeah.

$250,000. Uninsured Per account.

People do have some concerns of that, especially small businesses. I know the average person looking out there might think, zero, she's asking questions about $250,000 in a bank account. But for a small business, that's one week's worth of payroll and workers comp and bills. So I just want to reiterate the fact that you do state with your vast experience that we should have nothing to worry about when it comes to our financial institutions in California.

Thank you, Senator, for your comments. As part of our enhanced supervision, that is one of the areas that we will continue to look at and look at a higher level, and it's the heightened management around uninsured deposits, deposits that do exceed that $250,000 amount, obviously, for those that fall under that, those are FDIC insured. But what we saw from last spring was the uninsured deposits and the impact that that had to our banks.

Thank you, sir. Thank you very much for answering that question.

Thank you so much.

Thank you. Madam Vice Chair. Thank you so much. Commissioner would like to be able to see if there's any additional comments or questions from the Committee. Comments or questions from the Committee, please, sir. Laird.

Thank you. Thank you for your willingness to serve, and I appreciate the fact that you answered so many questions in the form that was sent to you and in meeting with the Rules Committee. One of the things I wanted to ask you about is you commented in your written response on the issue of cannabis banking, and it was interesting because you sort of called out that a bank may be open to risks by taking banking money related to federally illegal drugs, and that there's actually more credit unions engaging in cannabis banking because what they perceive might be different levels of risk. I was wondering if you would just comment on the State of that Now and how it intersects with what you do or what you intend to do.

Thank you, Senator, for your question specifically around cannabis. DFPI realizes that there still exists in the banking and credit union industry a reluctance to fully engage in banking cannabis related businesses to the lack of clarity at the federal level. We continue to closely monitor potential changes at the federal level, and in 2019, we released guidance noting that the Department would not bring any regulatory actions against state chartered banks or credit unions solely for establishing a banking relationship with the licensed cannabis business.

And then last year, in partnership with the Conference of State Bank Supervisors, we released a cannabis job aid to assist state examiners in the examination of financial institutions that may be banking cannabis related businesses. So at the state level, we are not imposing any regulatory restrictions for those state banks or credit unions that want to engage. But the concern is really at the federal level. So we continue, and will continue you to watch and see where and how our Federal Government decides to move on this issue.

I appreciate that, and I was going to ask a follow up question, but you just, in essence, answered it. And I think the thing is that I will just, and I know I have colleagues that will as well, be interested over time in how this plays out, because obviously, if the voters of California do a regulatory scheme that legalizes it, we would want the other agencies to follow.

But if the Federal Government never gets there, then they're in a different place, and it creates situations where people lock money in boxes and do different things, that there are already a disproportionate number of attacks on cannabis businesses. So, sure, I think we'd just be interested over time to monitor that progress.

And then the other question I was going to ask is that actually due to a Bill, there was a reorganization going on in your agency, and I was wondering how that's going and how you monitor whether it's successful or what are your benchmarks for knowing that because that was implemented, that things have improved or operating better or still need to for some reason.

Thank you, Senator. I'm not really sure I'm following your question.

It was a then Assembly Member Limone Bill in 2020. She is now a colleague of ours in the Senate, and it was known as the California Consumer Financial Protection Law. Changed the name of the Department and it changed some of the operations. Maybe it was just before your experience. So it's something that you might get up to speed on over time. But I was sort of curious to have a sense of how that was working and whether it was deemed successful.

Yes. No, thank you. And what I'd like to do is maybe have someone, Senator, on our team to get back to you to address that specifically. It is my understanding there have been a lot of iterations leading up to what is now the Department of Financial Protection and Innovation. But I definitely would like to take your question back to our team and have someone get back to you specifically on that.

I appreciate it. Thank you very much.

Thank you, Senator.

Thank you, Senator Eggman, Senator Jones. Thank you, Mr. Commissioner. Just one comment, and it's piggybacking on where Senator Laird was. I think you hit the nail on the head in regards to cannabis banking right as we come out. I'm from a district that has large amount of cannabis.

If I could be candid, and the biggest challenge, I think, both for the industry that is now legal in the state, and candidly on the safety side is the lack of ability on the federal side to be able to bank. And you have, in particular, some credit unions that have decided to be able to advance banking of those businesses at risk of losing their federal license.

And I know this is something that is beyond your control, but I know a significant frustration, and we are never going to be able to get to the safety that we need with the industry and have the industry succeed without being able to bank securely. So, again, Mr. Commissioner, you answered it really well with Mr. Laird, but I'm just going to chime in here and know that this is an ongoing challenge, I think, for the industry, as you well know.

Yes, no, absolutely. Thank you, Senator Pro, Tem McGuire. And it is something that we are watching very closely in terms of what happens at the federal level.

Good times right there. Yes. Hey, Mr. Commissioner, thank you so much. We're grateful. We're going to have you hang with us here just a bit before we go to public comment. We want to be able to see any further questions, comments here. In seeing none, we would like to be able to advance public comment. Those who would like to be able to speak in support of the Commissioner. We're going to welcome you to be able to come up to this podium. If you could please state your first and last name. Along with your organization, we're welcoming folks who are in support. Good afternoon, sir. Thank you so much for being with us.

Good afternoon. My name is Walter Brown. I'm national chair of the Urban Financial Services Coalition multiple strategies Working Committee. Also run a private mortgage company out of Walnut Creek, California. I've known Greg since 2005. Met him when he was President of the San Francisco Bay Area chapter of the coalition. Found him to be an excellent leader, excellent technically, and he follows through. Him being in this position is a real asset to you.

Thank you, Mr. Brown, thank you for being with us today. It's good to see you. Thank you so much. We're going to welcome our next speaker to please come forward. If you could, please state your first and last name along with the organization. Good afternoon.

Good afternoon. Thank you, Mr. President. Pro Tem McGuire and Members of the Committee. I'm Ezra Garrett. I'm the SVP of Public Affairs and Impact at Oportun!. We are a community based lender founded in California. We've been certified by US treasury as a community development financial institution since 2009 in recognition of our mission to serve families from Low and moderate income communities who have typically been shut out of the mainstream financial system. I also chair the board of the California Financial Services Association.

We represent hundreds of DFPI licensees across the state, and I'll share that in Mr. Young's short time with the agency, we've been very pleased with his openness and proactive engagement with our industry. He's visited our retail locations, met with our employees, talked with our customers to really learn about the issues facing us and the people that we serve. And we've been very impressed with his creative and innovative approach to solving problems. So we respectfully encourage your support for his nomination.

Thank you. It's good to see Mr. Garrett. Thank you so much for being here today. Really grateful that you would take the time. Thank you so much.

Good afternoon, Mr. Chairman, Members. Mike Knutson. I'm with Knutson and associates. I'm here in my personal, individual capacity today. I've known Mr. Young pretty much my whole career. Apologize, Greg, if that gives away too much, but here we are. He is a unique combination of talent acquired knowledge, leadership skills, subject matter, expertise, compassion, and a desire to serve and help others in ways that will improve their lives. He's exactly the kind of person we need in public service.

I was very excited when I heard that he was going to be appointed. And from my perspective, it would be hard to find someone who's better suited for the job, and it's a very difficult job and respectfully urge that he be confirmed.

Thank you so much. Mr. Knutson, good to see you. Let's go to our next speaker. Good afternoon, ma'am. Thank you so much for being here. Thank you.

Good afternoon, Senators. Anamarie Avila Farias I'm here on my personal capacity, but I am also a Gubernatorial appointee to the California Housing Finance Agency Board. And it is with great pleasure and honor that I'm here to support my long term friend over 20 plus years, who I've gotten to see him grow professionally and occupy many spaces in the public and private sector and nonprofit sector. I can't think of anyone more deserving of this appointment to serve the State of California.

And I'm just honored to not only be here, but to also encourage the confirmation of someone who is going to be such a great asset to the State of California. So thank you so much.

Thank you so much. Really grateful for your comments today. Good afternoon, sir. Welcome.

Thank you. I stand in support of a friend and fraternity brother, Greg Young. My name is Jahmal Miller. I have not been to a Senate Rules Committee hearing since July 2, 2014 and I remember it distinctly because that's when I was confirmed by a Committee like this to be California's first ever Deputy Director of the Office of Health Equity and the State Department of Public Health.

And one of the key social determinants of health that I only not only advocated then, but now as a private sector healthcare Executive is that of economic mobility and income security.

And having known his predecessor and knowing that the baton has been handed off to Greg to lead this important part of this institution, I have no doubt in his ability to be an advocate through his professional expertise and acumen, as well as his lived experience and foster in his role a California where from an economic and from a health standpoint, is far more equitable than it is today. So I'm proud to stand in support of Greg's confirmation to this important role.

Ms. Miller, thank you so much. We look forward to hearing some stories offline about the Commissioner. So thank you so much. We're grateful that you're here. All right, we're going to see if there's anyone else in support of the Commissioner. If you could please step forward at this time. Last call for support. We're now going to ask if there's anyone in opposition if you could please advance. At this time, we're going to do last call for opposition hearing. Seeing none, let's bring it back to Committee.

Committee Members, we look for questions, comments or a motion as well.

Just a motion to move to the floor.

All right. We do have a motion by Madam Vice Chair. Thank you so much. Madam Secretary, if you want to, please call the roll. [Roll Call] Five to zero. Congratulations, Commissioner. It's wonderful to have you in front of us today. Thank you. To your family. Grateful that they're here as well. Next up will be the Senate Floor. Thank you so much.

Thank you all so much.

Thank you. It's great to see you. Thank you so much. Ladies and gentlemen, Committee and to all those who are in room 2200, this concludes today's agenda. We want to say thank you so much to all who participated in today's public testimony. Thank you. We're grateful.

We are going to be entering our Executive session, so we're going to give it a couple of minutes, ask folks, if you don't mind, with all due respect, clearing the room and Rules Committee will be going into our Executive session again, thank you all for being here today, taking time out of your busy schedule. It's been wonderful to see you.