Senate Standing Committee on Rules

All right, ladies and gentlemen, happy Wednesday. We are grateful that each and every one of you are here on a busy week in the State Capitol. Thank you all for joining us at the Senate Rules Committee.

We want to welcome the members back after a summer work period, and we are now about to jump into the sprint here between now and mid September. Before we get into today's business, I think it's going to be important that we establish a quorum. Madam Secretary, if you can please do the call.

[roll call].

Quorum has been established. Thank you so much. Before we get into today's hearing, I'd like to be able to welcome Senator Reyes. Senator Reyes is back. We want to welcome her home to the California State Senate. And I think we need to give her a round of applause.

It was a beautiful day yesterday as Senators and assemblymembers came together to be able to welcome the good Senator back. We are so excited, and I don't mean to get choked up, but we are really happy that you're back, and we're going to turn it over to you for some opening comments.

Thank you so much, Mr. PT it's so exciting to be back after almost a year of being away from all of you. It's great to be here. By the grace of God, by the mercy of God, I am here.

And I am excited to join this Committee with my colleagues and was excited about the welcoming that I've received so far, not only from my colleagues from the Senate, but from my old house, from the Assembly, and from the community here in Sacramento. Thank you so much. Thank you, Mr. P.T.

All right, there we go. Thank you so much, Madam Senator. An outstanding lawmaker and an even better human and just so grateful that you are here today. We had such a joyous day yesterday, and we're so excited that you are here where you belong. So thank you so much, Madam Senator.

All right, ladies and gentlemen, we are going to get into today's hearing. As we do, I'm going to welcome Regent Myers. If you want to be able to come forward as we get through some of our housekeeping. What we're going to do, ladies and gentlemen, is we're going to go through the administrative items of today's agenda.

We want to apologize to Mr. Regent because it will just be a few minutes before we get right to you, but let's start out with Governor appointees not required to appear. We're going to take three separate votes. Our first vote under Governor

Appointees not required to appear will be on the following items, items 2, C, E, G and H. We have a motion by Madam Vice Chair. Do we- we have a second. Do we have any discussion or debate? Last call for discussion or debate hearing. Seeing none. Madam Secretary, can you please call the roll?

[roll call]. 5 to 0.

5, 0 vote. Final vote. We're going to close the roll. Thank you so much. On that first item, we're still going to stick with Governor Appointees not required to appear. We now would like to see if there is a motion for item 2D. Senator Laird. We have a motion by Senator Laird on item 2D.

Discussion or debate from Committee. Last call, discussion or debate from Committee. Hearing, seeing none. Madam Secretary, can you please call the roll?

[roll call]. Three to two.

Three, two vote. Final vote. We're going to close the roll. We're now going to be moving on to our final item under Governor Appointees not required to appear. This is item 2F. Senator Reyes, would you like to offer a motion? We have a motion by Senator Reyes. Discussion or debate from Committee? Last call, discussion or debate? Hearing,

seeing none. Madam Secretary, can you please call the roll?

[roll call]. Three to zero vote.

Three, zero vote. Final vote. We're now going to be closing the roll. Thank you so much, ladies and gentlemen of Committee. We're now going to be moving on to the next item on our agenda, and that is item 3, reference of bills to committees. One of, again, one of the most exciting parts of today's hearing.

Is there a motion? Oh, that would be great. All right. We're consistent this week. This is good. This is good. I love you, Jonesy. Let's see if there is any discussion or debate or. We'll also take a motion. We have a motion by Madam Vice Chair. Madam Vice Chair, you have brought some goodies from your district.

I have.

Thanks for sharing. Okay. Thank you so much. There we go. Senator Grove grows wonderful cannabis in her district, so. I'm kidding. It just got really awkward. Okay. Thank you so much. Yeah. There we go. There we go. Exactly. I am getting the ultimate stink eye right now. We got a motion

And I brought it to the Rules Committee.

All right. Hey, See? There we go. I'm kidding. I kid. I kid. You are the best. Oh, boy. Mr. Myers is thinking where the hell am I? So, all right, so we have a motion on the floor. Any additional discussion or debate? Hearing, seeing none. Let's call the roll.

[roll call]. Five to zero.

5, 0 vote. Motion passes. We're going to close the roll. We're now going to be moving forward on floor. Acknowledgments, items 4 through 9 on today's agenda. We have a motion by Madam Vice Chair. Discussion or debate from Committee.

Debating. Separating out number six.

Oh, see, there we go. Watch out. See? All right, we have a last call for discussion or debate? Hearing, seeing none. Can we please call the roll?

[roll call]. Five to zero.

That's a 5, 0 vote. Motion passes. We're now going to close the roll. Before we go on to Mr. Regent, I do want to give folks a heads up. I'm going to have to step out for a meeting in about 10 minutes. No disrespect, Mr. Regent, to any of you.

It's a bit of a busy week here, and do apologize. We're going to be in incredibly capable hands with our Madam Vice Chair. So let's get right into Regent Myers. First of all,

Yes, please.

Mr. Chair.

I'm doubling up on his comments. I also have to leave. Also, no disrespect. Be happy to. As long as you don't blow it in your. In your testimony. I'm happy.

He's a Cal State alum, so you know. That's right. Exactly. Exactly. But first and foremost, Mr. Regent, we're really grateful that you are here into the service of students, the number one University system in the United States of America, and I would say, in all the world.

And what an honor it is for you to be able to sit on the Board of Regents at a very challenging time. And with the new President stepping in also, what a time of opportunity. And we are so grateful for your steady hand and leadership.

What we're going to do is we're going to open it up to you to be able to provide three minutes of testimony. I'll give you a 30 second heads up as you get close to the three minutes. Then we're going to open it up for questions and comments from the Committee.

We'll then open it up for the public to better provide testimony and then move forward on a final vote. So, Regent, it's wonderful to see you. Thank you for your service again. The floor is yours for a three minute opening testimony.

Well, I'm not going to take three minutes because you're all very busy. One, I'm nervous, I'm just going to put that out there. I have spoken to people before, but never like you. So thank you for your time. Thank you for what you do for our state. I grew up in California.

I love this state. I know everybody's opinions are sometimes not the same, but I would not want to live anywhere else in the country. And like you have seen a lot of this country. And I'm proud to be of. Proud be someone that was born here and wants to stay here.

And along with that comes the responsibility of the education, the public education of the UC system. Being a UCLA grad shaped my life. It's afforded me so many great opportunities. As you know, this appointment is a long appointment and I want to preface all of this by saying if any of you have to leave, you can leave.

Because there's a lot I need to learn. And some things you may ask, I may not know. But I will tell you that if I don't, I will learn them. Anything in athletics I probably might know, may or may not be interesting to you, but I'm excited to be here and thank you mostly for your time.

I know that this is a really busy time for you and any minutes you can spare is great and feel free to ask whatever's on your mind. So thank you again.

Do appreciate that. Thank you. What we're going to do is we're going to open up for the Committee to be able to ask any questions, comments. I'll look to our Vice Chair, Deb, to kick us off out of courtesy, please.

Absolutely. Well, welcome. Thank you very much for being here. And you say you've never spoken to people like us. We put our pants on the same way. You're not any different. So thank you very much for that comment that was in your very humbling remarks. I do have a couple of questions.

There's been 11 emergency sessions in the federal court's ruling restoring the UCLA's National Science Foundation, the NSF Fund funding amid federal compliance concerns is an issue I think that we need to all talk about and especially at this hearing because you're going to be on the Board of Regents.

How is the UC system ensuring compliance with the Executive orders? Well, specifically 14188 which mandates accountability on anti Semitic harassment. And the reason I bring that up is because you just recently, you, meaning the UC system, just settled a lawsuit with the Jewish.

The Jewish students that were barred from going to their classes that were harassed, that were locked in a room and the teacher, the instructor as well. So the Professor, I guess I should say, I think that was $6 million that the UC system settled with.

So number one, there's $1.0 billion fine out there that's going to be above the 600 million that the Federal Government and the Administration is charging. You got a $600 million lawsuit that you're settling. And I usually tend to think that settlement may. Some people make decisions about, you know, it could cost more to go to court.

Let's settle early. You know, there's business decisions obviously because you are on a budget, that decisions have to be made. But it's evidence that to me it's evidence that in all the, the video footage that's out there is that it's true.

These Jewish individuals that attend and pay to go to our University system were harassed and locked out of their classrooms. And so I guess my question is, number one, how are you going to come up with that money and where is that coming from?

And number two, what's the plan moving forward so stuff like this does not happen again to not just Jewish students, but any student, but specifically Jewish students because of the climate that we're in the world.

Yeah. Thank you for the questions and comments. I think you're right to care to the degree that you do. I can feel it, how much it matters to you.

It matters the same to, I can tell you, the regents, myself, I was a UCLA student and the last thing you want any student to feel is afraid or denied access to anywhere. I can only tell you that that's not what UCLA represents. It's never what UCLA has represented or I think any UC school.

What can you do? What is being done? It's a position that I believe UCLA has always felt that they wanted to make a campus safe. We have and will continue to have the highest level of care in that area.

Clarifying policies, things that are going on, pointing more resources towards people that are in charge of these areas or things that are going on. And you know, there have been closed sessions like you said.

I can't get into the specific strategy, but what I can tell you is that it's a serious thing and it's something that requires a lot of good thought and fair minded thinking. But with the overlying premise of safety on campus should be paramount for UCLA and any school. And that's something the regents believe.

I think that's what the leadership believes at any of the UC schools. This has highlighted that Certainly. And the fact that the amount that you referenced for a public institution like UCLA, a taxpayer, public place to be asked to pay that, it would be devastating. Right.

So when you ask where would that money come from, that amount, that idea would, like President Milliken said publicly, catastrophic to running the University. So in short, it's something that is evolving, something that's happening right now. And the goal is to get it right. That's it. To get it right.

And most importantly, get it right for the students. That's the goal.

Thank you. I appreciate what you said about the concern that I have with it. My dad was a World War II veteran.

And even though we had a great estranged relationship, mainly because his military service, he actually rescued, he was a medic and he went into the concentration camps first to make sure that he could save as many lives as possible. And he never talked about his military service.

But when he passed away and we went through army trunks and you could see photographs and things that he actually saw, which probably created him to be the discontented man that he ended up being. It is important that we don't relive history. And it is important. And that happened in a foreign country.

And I was very disturbed to watch the news and see that happening. Not that, but seeing that being not allowed to enter buildings, not allowed to go to school, because that's where it all started. You know, the gold stars went up, you couldn't go to a restaurant, you couldn't go to these things.

And that was really disturbing to see, especially on our UC campuses. So I appreciate your heart and I appreciate your thoughtful answer to that question. And I thank you. And I've looked at your resume. You're very well qualified, you're kind, you're, you're humble, you are solution orientated.

I look forward to supporting you, but this really needs to be addressed so this does not happen again specifically on American soil.

Yeah.

Well, thanks for your father's service too. And I think you yourself. Yeah, thank you.

Thank you.

Thank you. Have a. Thank you.

Thank you. Thank you so much. Madam Vice Chair, we'd like to look for any additional discussion, please.

Yeah.

Madam Senator, I'd like to ask a few questions regarding labor relations. In April of last year or April of this year, there was a one day strike by two unions in response to unfair labor practices, installed contract negotiations. But with UC and the UAW there was an agreement, a labor agreement that was bargained and agreed to.

But In May of 25, there was a meeting in San Francisco. A number of labor leaders Specifically from afscme, protested working conditions and called for the University to engage in fair contract negotiations. Demonstrators were arrested at that time and charged with willfully disturbing a meeting and were released after a few hours.

So my question is, what role do you think the regents should play in ensuring harmonious labor relations on UC campuses?

Yeah. Thank you. Well, being new at this, I've seen and heard and experienced some of those protests.

And for me at least, it's eye opening to see the passion of the people represented, the people that support the universities, and to hear them and see them and feel them, to be honest, it's a real thing to support the UC system. And these are the people. We got a firsthand look at who they are.

They're not in positions of power, so they have to find ways to be heard. And I think in that specific case, you have to also be respectful of a process, too.

So I can't speak to why they were arrested or the specifics of that, but I will say that like any union, they are doing what they think is best to improve their position. I'm not sophisticated or qualified enough to say if their position is fair or unfair, if I'm being honest with you.

But I do know that as I sat there and I sat there with my fellow regents, people listen. And it's probably been recently the most vocal group that I've heard in person speak. And so it's something that I know that we take seriously.

And my goal, or my hope is that over the time that I'm there, that that noise can be quieted, not to the detriment of the workers, but for them to actually feel maybe better about their situation. But it is a topic that does get addressed, that does get discussed.

And my hope is that one day they'll feel good about the jobs that they have and the pay that they have and the protection that they have as people that support the UC system.

I'm sure they do appreciate the job they have and the pay that they have. But when there are questions about the pay that they have to be able to protest and to be able to have their voices heard. Just something that I think, for me personally, is extremely important.

But I wanted your thoughts on the arrests of these. Of those who are protesting.

Yeah, again, I mean, if I was, I do have a law degree, but I can't speak to the exact actions of the people that made that choice or the ones that were apprehended. All I can tell you is that since I've.

My short time, I have seen people that have a strong opinion and are vocal afforded an opportunity to do that. Again, not going to weigh in on whether that was the appropriate response or not, because I don't know the specifics.

But I do know that we try, and I do believe try, in a thoughtful and heartfelt way, to hear whether it's people like that or anybody that has something to say about what they don't like about the what's going on at the UC system or anything.

But again, I agree with you in principle that people that have a voice or should be allowed to speak that voice without fear of repercussion. But to that specific case, it's something I can promise that I'll look at, maybe find out more about.

Very good. Thank you. And I'd like to follow up on the questions from my colleague with regard to what was happening during that time and what precipitated the student protests. I know that in addition to the settlement with the Jewish students who were not allowed to go to class, there was also questions against the encampments.

But I understand that there are already rules against encampments, and perhaps there is a question about following those rules that are already in the books, and maybe that's something to look at. And I understand there are also pro Palestinian students who felt they were not protected and have also filed lawsuits against the campus.

What role do you think regents should play in ensuring both free speech and safety on campuses? You talked about how important the safety is, and that is extremely important. And we need to make sure that every student, whether they're a student who's paying to be there or a student who's visiting, that they feel absolutely safe.

But the protection of free speech. How. Do you find that balance?

Well, you'd like to think it was easy, but as you can see across the country in many capacities, not just this one, sometimes laws are written down with good intentions and good thoughts, and then reality steps in, and then it's accountability, it's enforcement, it's leadership. It's all those things that put those laws into the proper place.

But it does come back to what you said is people should be afforded. I mean, this is one of the most integral threads of our country, to speak freely without fear, to go to class. All those things I don't think would ever change.

And again, I have a if it's UCLA, I can speak uniquely because I was there.

And it wasn't these types of protests, but there was always a place for students to be heard, and that's part of going to college for Many of us in this room, whether you were at a UC school or any school, you saw protests and people that were protesting, you'd like them to feel that they were safe.

But you'd also like the people that were not behind that caused to feel safe interacting in that space, too.

But what can happen and what does happen in situations is all you can do is if you had policies in place, you revisit those and see if they were the right policies, were they the right policies and not practiced the right way, or do the policies need to be revisited.

And things like that are evolving and constantly happening, but they're serious. You don't just. You don't just say, hey, no big deal. You focus on those things. Because, again, if people don't feel safe, there's not many things that are worse than that.

But I can tell you there's no one at that University or nobody on the Board of Regents or nobody that I've met in leadership at the UC system that doesn't prioritize that.

Thank you. As a fellow attorney, but fortunately or unfortunately, a Trojan for me, fortunately, my.

Wife'S one of you.

Well, I'm glad you married him.

Yeah. Well, see, so you can be easier on me now.

I do. Thank you. And I thank you for your service. Thank you. As my colleague said, your humble spirit. Thank you. I think the position that you hold and that you withhold is so important to making sure that our students get the best education possible from the best institutions.

I mean, we already know they are the best institutions, and that to have that kind of guidance is extremely important. So I thank you. Thank you.

Thank you, Senator Reyes. And I'm sure it was a compliment when he said his wife was one of you. Absolutely. Senator Laird.

Thank you very much. And thank you for making the time to meet with me. I really enjoyed our conversation, and maybe just a couple of questions, because I think my colleagues got into some of the things I wanted to ask about.

But let me ask a more generic question as to why you want to do this and what you bring to it.

Senator Gross. Laughing I mean, you know, I. Well, I'll tell you what, I have lived my life trying to do a lot of different things, and I find that when I'm uncomfortable, that's a good thing. And this makes.

To be honest, I'm uncomfortable because this is all new, and I'm not an expert in any of what you do or even the UC system. But I have three daughters. Like I said, I love the UC system. I was part of The UC system. I can credit a lot of my life through attending UCLA.

If I had chosen a different school, my life would have been very different. I don't know what it would have been like, but I don't think I would have had the same opportunities that I have had since attending a UC school. I love education. I wanted to be a teacher.

To be honest, I just think teachers have such an impact on us all. And I find that if you can impact somebody at a certain point in their life, they can take that for 50 years or 60 years.

We all probably remember our favorite teacher from elementary school or high school or sometimes college, and that that impact is so profound. And when you leave school, you have bosses and other people you interact with, but it's not the same. So the journey of education, I think is so important.

You see, people from all over the world want to come to college here in this country and specifically UC schools, they're world class institutions. I find when I step on a campus, there's an energy to it, there's a goodness to it.

Not that outside of a University is bad, but there's a. I don't know, it's a feeling that only you can find. It's a yearning for knowledge, it's a growing, it's a curiosity that I think sometimes unfortunately ends after school.

And so if I can be a small voice to sustain that, to improve that, that would mean a lot to me. It's not. It's funny, I was telling somebody, I know this is a really powerful appointment, but a lot of people in my life were like, why are you going to do that?

You know, because I come from a different place. But I find that I did experience some success in a lot of public success. But it's not as important as what I think you guys are doing. Shaping the state, shaping policy.

I just wanted guys to put a leather ball through an iron hoop as many more times than the other team. People cared about that a lot. But this has, there's a fulfillment to this position. It's not, as we all know, it's not a. It's not a. It's not a. It's not compensated. But I like that. I.

The most important thing I have Senator Laird in my life to give is time. It's the thing I cherish the most. I don't just give it. I don't golf, I don't have hobbies. I work and spend time with my wife and kids.

So this has this job, this responsibility rises in my mind to the level of something I will give my time to and try, but there's a lot I don't know and a lot to learn as we spoke about. It's a huge behemoth, this UC system.

I really appreciate your statement and I think the way you're going to learn a lot is to do what you just did, both in your curiosity and admitting you have a lot to learn. That is a good thing to bring to this. Then let me ask the one follow up question.

Once you are grounded, do you feel like you will want to advocate for UC outside of the Board of Regents? Like whether it's in a budget or in a fundraising capacity, or putting a good foot forward, is that something that you would consider part of your role as you move into this?

Yeah, I would do that even if you guys denied me the position. So I'm going to do that anyway. Like I said, there's no bones about it without UCLA even as far as going to what UCSF has done in the medical community for my family, I'm familiar.

We don't want to be familiar with the hospital, but I'm very familiar with UCSF Mission Bay on behalf of my family, my wife's family, even that, you know, I know it's a separate part of the UC. Not separate, but different part.

I can tell you how many times I've told people how great UCSF is as a medical campus, as the faculty, the people I've met there. So yes to your question. If I'm being totally honest, I would have done it anyway. And will I do it more?

I'll keep doing it, even when the 12 years is up, because I believe in the UC system. I love the fact that it's public. I really love that it's a public institution.

There's a lot of wonderful private institutions, Senator Reyes, but I love the fact that it's public because as the country moves in the directions it moves in, providing elite public spaces to learn that are at the level or above private opportunities. You don't see that as much in high schools, if I'm being honest.

But you do see it at higher education. And I think that's great. And I think we have to protect that. And I think that's extremely important. And there's no better place or representative institutions than the UC system.

Thank you. I just appreciate the answers to both. And I thought that in our conversation you exhibited very similar things. So as somebody that has worked on these issues and still will myself look forward to working together.

Be pleased to support your com. Thank you. Confirmation. And appreciate your willingness to serve. I know that. It even said in our thing that you get the municipal reimbursement of travel expenses.

Do we get that? I gotta do that for this trip.

I know being a community college trustee costs me money, so I appreciate your willingness to. Thank you. Thank you. Thanks.

Are you done?

Yes.

You're not going to ask the basketball question?

Can I get something? You can do that.

Thought he was gonna ask a basketball question.

Yeah.

Any other comments from the committees? Let's go to public comment. If there's anybody in the audience that would like to come to the microphone, please come to the microphone. Share your name. And if you're with an organization in a position of support, we're gonna take support first for Mr. Myers. Seeing none. Last call. Any in opposition?

You guys are discussing it. You three in the back row. Anybody coming to the microphone? Last chance. Still talking about it? No. Okay. Anybody else in opposition, come to the microphone? No. Seeing none. I'll bring it back to the dais for a motion. Yes, sir.

I would move that we approve of this nomination and send the confirmation to the Senate Floor for a full vote.

Thank you for that motion. Secretary, please call the roll.

[Roll Call] 3 to 0.

3 to 0 sir. I don't know if my other two colleagues will make it back to cast their vote, but the good news is you have enough votes to go to the Senate Floor for a full confirmation. Congratulations

Thank you. Thanks. For three of you sticking around, I think we needed three. Right? Appreciate it.

We needed three.

Ok. You got it. Okay. Thank you so much. Have a wonderful day.

Yeah. Thank you.

Okay. You too.

So we are going to get ready to switch people out. We are going to bring up Casey Mosheni. Am I saying that correctly? Yeah, is that okay? If I said it wrong, just correct me. I'm easy. We'll bring him up and we'll be in just a. We're just taking a little brief of.

Not a recess, but just a little break. Really quick. So we can. We're good? Are you good? Are you good? Okay. All right. So let's go ahead and start. Thank you. Welcome. Commissioner is. Pronounce your last name for me once. Mosheni. Okay. Commissioner Mosheni. Thank you. Please. We'll just follow the same process that we did earlier.

You'll have a few minutes to talk about your family or whatever you would like to say in your opening remarks, and then we'll bring it back to the dais and start questions.

Thank you, Senator. Good afternoon, Members of the Committee. Thank you for the opportunity to be here today and for your consideration of my appointment as Commissioner of the Department of Financial Protection and Innovation.

I would also like to thank Governor Newsom, who has placed his trust in me to protect California consumers and foster trust and innovation, no worries, in the financial marketplace. And lastly, I would like to thank my wonderful spouse, Araceli Mosheni, who is here today and has been very supportive of my career.

It is my honor to serve as DFPI's Commissioner leading a team of extraordinary public servants committed to advancing the Department's mission. At DFPI, we support a healthy and trusted financial marketplace through regulation, enforcement and consumer education. And as a native California who grew up in Southern California, I understand the importance of financial literacy and economic opportunity.

I'm the son of small business owners and an immigrant father. Our family benefited greatly from the vibrant Californian economy. I joined DFPI as Chief Deputy Commissioner in 2023, and before that I served as the Chief Operating Officer in the California State Comptroller's Office.

Throughout my roles in state service, I have successfully led the fiscal and administrative offices o, several state agencies, including through the COVID-19 pandemic. And that work has deeply informed my leadership here at the DFPI.

I am a proponent of establishing clear organizational goals with metrics to ensure progress is measured toward outcomes and operating through sound fiscal management to ensure a strong future for both the Department and our stakeholders. DFPI's strategic plan is focused on goals that connect and guide our work to deliver on our mission for the people of California.

Those goals include strengthening the financial services ecosystem, driving operational excellence, expanding our reach and impact, and advancing economic security for Californians. DFPI has an exciting future and I feel privileged to lead our efforts to promote safety and soundness in our financial institutions.

Thank you again for your consideration of my nomination and I welcome the opportunity to answer any questions that you may have.

Thank you. Thank you very much for your opening comments. Appreciate your guests. Thank you, ma'am, for being here. That's wonderful. When family gets to be here. We've had a couple of three-year-olds in the room a couple of times. That didn't go very well, but.

We left ours at home.

Okay, so how about I start? Senator Reyes, would you like to kick us off?

I wanted to talk about the Federal Consumer Financial Protection Bureau, which was founded by semester Elizabeth Warren, posed in 2007. But the agency has long faced pushback from the banking industry because they're trying to protect consumers. Recently, HR1 was passed which nearly halves the annual funding for CFPB.

Consumer advocates say the funding will weaken the Bureau's ability to police financial firms and consumer financial laws. My question to you is how has the defunding of Federal Consumer Financial Protection Bureau impacted DFPI?

Thank you for the question. At the outset, I'd like to say that DFPI is in a heavily co regulated space and we share jurisdiction with entities such as the CFPB, the Federal Reserve Board, Federal Deposit Insurance Corporation and others. And the CFPB is one of those issues that we've been monitoring closely.

We have partnered with the CFPB very closely in the past on various investigations, supervisory examinations and enforcement actions. And the developments over the past several months have had an impact on the Bureau's ability to operate.

That said, we have a number of new tools in our toolkit and resources, primarily under the California Consumer Financial Protection Law, which was the law that authorized DFPI to come into existence. And so we're very well positioned to continue our mission and focus on consumer protection for Californians specifically.

Wonderful. I remember when Senator Limon worked so hard to get that passed. How do you work with other states to whatever there are, there's enforcement or any other issues that cross state lines?

So a number of the businesses that we regulate in the financial services sector, of course, are operating in more than just California and we're members of a number of multi state groups, including multi state banking groups with banking regulators, securities regulators and others.

We do partner through various oversight actions, including supervisory examinations, joint examinations with state partners, and enforcement actions that we can bring with other regulators or our own Attorney General or other states Attorneys General as well.

Thank you for that. And regarding student loans, student loan servicers, which is a great concern, we just spoke someone who will be on the Board of Regents and we've talked about the importance of education. But those student loans are something that affect so many of our students.

The Student Loan Empowerment Network is a network you're familiar with with 14 nonprofit organizations and they work in partnership with you or DFPI to provide free and individualized education, case management and assistance on these student loans for Californians. With the changes with the federal government, the Department of Education, suspended student loan forgiveness as we know.

What have these federal changes both under Biden and under Trump, what do they mean for the loan servicers here in California?

Yeah, I'd like to say a couple of things in response. First, the changes at the Department of Education are very much ongoing, and they're something that we're monitoring very closely. There are a number of changes being made to repayment plans, administrative procedures around processing things such as public service loan forgiveness.

We have our own oversight program for student loan servicers and our own ombuds function, as well as the coordination that we have with the groups that you just mentioned.

We have seen a lot of confusion at this time, and that's a lot of the work that we're engaged with, making sure that when we're doing the outreach into the communities, that we're helping people understand how the landscape is changing.

But I would also want to be very candid in saying that the landscape is still changing quite a bit. A lot of the folks that we worked with previously at the Department of Education are not necessarily there anymore or able to collaborate as closely with us as they have in the past.

Well, along those lines, how do you ensure that you provide accurate information for the students who have to go through this process?

We have a student loan ombuds function at the DFPI. So we do stay on top of all of the developments that are happening at the Department of Education. We also have our own separate oversight of student loan servicers that we monitor for compliance for California's laws as well. So those are the ways that we engage.

But at the same time, this is an area that's under active review by the federal administration. And I know that there are a number of changes that have come down the pike that we haven't really seen where things will crystallize.

So it has become a challenge for the Department to provide that level of guidance that we were able to provide in the past. That's something that we're monitoring very closely.

And just generally, since being appointed in February, what have you liked best about what you're doing?

For me, it's really our consumer protection mission. Now, we do track a number of metrics, and we monitor quite a few things at the Department.

Our regulatory purview is quite large, but for me, it's the personal stories that we hear, especially when we're able to bring forward an enforcement action that includes restitution to those consumers that have been harmed.

Wonderful. Thank you. Thank you, Madam Chair.

Thank you, Senator Reyes. Senator Laird.

Thank you very much and once again, thanks for taking the time to meet. I really enjoyed our conversation, and I learned a lot. I had a lot of my questions answered, but just to ask a couple of things, maybe in general, for background, you know, the Department was created in 2021, you're the successor Department to others, you have some new responsibilities.

Means you have to get this up and running and you have to have a revenue system in place. And it's all in transition. How's it going and what are your challenges given that?

Well, I'll say that we're in a very good place today. I can talk through some of the challenges, but you're right. In 2021, under the California Consumer Financial Protection Law, the DFPI was created as the successor organization to the Department of Business Oversight.

We added a number of licensing programs and consumer protection tools in our toolkit at that time. The Department has probably grown about 330% since that point. I'm happy to say that we've done a lot of the hiring work and implementation work. We've achieved a number of critical milestones.

Our vacancy rate is less than 8% today, which we're very proud of our ability to recruit and retain qualified staff that are committed to the mission.

We've also hit a number of regulatory milestones for the programs that we're implementing to ensure that we can bring on revenue streams to support those programs, to make sure that we can get through any other necessary rulemaking to implement those laws.

And then finally, one of the other challenges that has been very high on my priority list to tackle, and I'm happy to get into detail, is around our fiscal sustainability for the Department and our operations.

We did bring on an external vendor, Crow LLP, to help us with what we called our fee study, which was to look at all of our programs holistically and individually to make sure that we could not only forecast what our expenditures would be, but also what our revenues were and where some of the shortcomings were.

And we did have a proposal that we brought to the Legislature last cycle. Happy to say that that was signed into law last month. So we were working on implementation, but we were on sound fiscal footing as well.

Great. Let me ask a follow up on that. That was good, comprehensive answer. But on the revenue streams, you're sort of raising revenues in new ways or with newer fees. Describe that and describe how you are with regard to your fiscal situation and how over time this will get you to sustainability.

I appreciate the question. So on the outset, the Department itself is not reliant on the General Fund for operations. Each of our licensing programs are designed to support themselves. A couple years ago, we were sitting on a very good cash reserve. We had a reserve that could cover about almost a year worth of operational expenditures.

However, the forecast and the trend was not good. We knew that those reserves were dwindling and we had time, but we needed to act to make sure that we could understand the problem and put forward a solution. The Fund itself is the Financial Protection Fund.

In addition to any enforcement, fines, penalties and fees that we bring into the Fund, we are also funded program by program, licensing program by licensing program through revenue streams.

And those vary by program, but they can range from examination fees, which is essentially our reviews or audits of our licensees, as well as annual assessments that are based on the size of the companies in the portfolio and other revenue streams, renewal fees for individuals for those programs that have those things of that nature.

So it depends on the program. And importantly, our programs are designed to support themselves. And so when we brought in Crow LLP to perform this analysis, one of their key findings is that for our long-established programs, those programs are operating at a deficit. And it's because the fees had not been revisited in many cases for decades. And so while operating,

Is this things like chartering financial institutions?

Correct. So that could be chartering banks or credit unions, licensing residential mortgage lenders, CA financing, loss of other lenders not in the residential space, our broker dealer, investment advisor program, money transmitters programs.

Were these originally predicated on the fees sort of paying for the regulation, or is that more true since the Department was established?

That has always been the model. So this is a special fund department that doesn't use general fund money for our operations.

But the problem was, is the fees were not keeping up with this sort of inflation and other things. And you were behind as the Department was established.

Correct.

Okay, just. Just checking that. That was very helpful.

And, and I know that, you know, we do these things where like we meet and so we had a really lengthy discussion about this, but I just thought that was important to have a conversation in public and put on the record because it's, it is at the heart of what you do.

And so, so I really appreciate your long career of service and your willingness to serve and look forward to supporting you. Thank you for responding to the questions.

Thank you.

Thank you, Senator Laird. I just want to follow up a little bit on the fees as well. State charter bank assessments, they rose 27% in 2024, and they rose 18% in 2025 as licenses or licensees declined.

I guess my question is if you shift more cost burden to fewer institutions, and then these large state charter banks go to federal charters to avoid these costs, do those, they'll get out of that cost, does that shift to the smaller banks or how is that going to be addressed?

Is that something that you guys are thinking about in case that does happen? Because it is a trend, you know, as California increases fees. We were just looking at an article with a major outlet leaving the state, opening up 11 locations in a different state, but leaving this state.

And we probably all have shopped there before, but as those fees and things increase and it becomes more difficult to do business in California and that shifts, what happens to those fees? Does it go to those smaller banks or is there going to be some other mechanism to fill that gap?

So this is something that were monitoring very closely, not only in the run-up to working with our bankers to socialize what we were doing and why we were doing it with respect to phasing in those fee increases, but we also compare ourselves to other relevant entities. In this case, there are federal charter.

There is a federal chartering entity for banks that want to seek a federal charter. We are competitively priced. So for those larger institutions, we are substantially cheaper than the Office of the Comptroller of Currency even after these increases. And then our exam rates are also cheaper.

So we're at $120 an hour if we go in and are charging an exam rate. And I believe the last time I checked, the OCC is at $176 an hour. So we're still competitively priced. We also have other advantages that we feel that we have as a state charter.

But that's something that we're in active conversation with our industry groups about. And depending on our workload and the size of our portfolio, that's something that we're always reviewing. So in this case M&A, merger and acquisition activity, is ongoing not only in California, but throughout the country. So there is a broad trend of fewer charters.

And that's not unique to California. But one of the other things that we look at is our assets under review. So if we take all of the assets and all of the state chartered banks and we look at that holistically, are we resourced correctly to make sure that we can adequately supervise those institutions.

And from that perspective, if you go back, you know, a decade or more, as those assets have fluctuated, the resourcing level that we have today is not out of line with the assets under review.

Okay, thank you. Thank you. Very excited. You are very qualified for this position. I just appreciate that very much. I really do. So, any other questions from the dais, sir? No, we're going to open this up to public comment at this time. If you would like to make a, state your position in support.

We're going to take support witnesses first. State your name, your position and brief comments on the nominee. Yes, sir.

Good afternoon, Madam Vice Chair and Members. Good afternoon, Madam Vice Chair and Members. Robert Herrell, Executive Director of the Consumer Federation of California. First of all, can I just take a moment and say how pleased we are to see you, Senator Reyes, back on the dais. We really appreciate it very much.

The Consumer Federation of California is in support of Commissioner Moshaney's confirmation. We've had the opportunity when he was the number two and now moving up to the top position at the Department to interact with him.

We appreciate the interest of and his whole top team, many of whom are in the room today, in interacting with consumer organizations and hearing about some of the challenges and struggles with consumers that we may be seeing to pass that along to the Department. I think it's really important.

And Senator Reyes, you alluded to this in your questioning that given the moment that we're at with a significant change at the Federal Government's position, if you will, or posture when it comes to consumer protection, it's really important that we have a strong, functioning, robust, well resourced Department of Financial Protection and Innovation out there to help protect consumers.

And we look forward to seeing him continue in this role and we support the nomination. Thank you.

Thank you, sir. Yes, sir.

Good afternoon, Chair and Members. Chris Zgraggen with Capital Advocacy on behalf of Affirm and Earn and just wanted to express our support for Commissioner Mosheni and appreciate his past work in state government and look forward to working with you in the future. Thank you.

Thank you. Yes, ma'am.

Good afternoon honorable Senators, Rachel Mueller here on behalf of Cameo Network. It's a small business support ecosystem with over 400 members that provide California's entrepreneurs with access to capital and business coaching. Cameo, along with our other partners and colleagues at Responsible Business Lending Coalition and Small Business Majority, respectfully urge your vote for the acting Commissioner today.

The viability of our local economies and tax base depends in large part on the of DFPI to protect small businesses from dramatic growth of predatory small business lending. Acting Commissioner Mosheni has spoken about his commitment on building on DFPI's record of protecting small businesses. DFPI plays a pivotal role in California's entrepreneurial ecosystem.

It oversees our Truth in Lending framework established by SB 1235, promoting innovation and protecting small businesses and owners from marketplace risks. At a time when small businesses continue to struggle, they need a strong champion. California will be extremely well served by Commissioner Mosheni's commitment to protecting California's small businesses, and we urge your support. Thank you.

Thank you. Yes, ma'. Am.

Hi. Indira McDonald. On behalf of the California Mortgage Bankers Association, we're pleased to support the confirmation of KC Mosheni as Commissioner of the Department of Financial Protection Innovation.

Under his leadership and as Chief Deputy Director since 2023, the Department has provided critical engagement with residential mortgage lenders on state licensing matters and ensuring integrity and competence in the mortgage market.

On a personal note, I had the honor of working with KC at the State Comptroller's office and know him to be very well informed on state issues and very effective. And so we encourage your support today and his confirmation and look forward to continuing work with you. Thank you.

Thank you. Yes, ma'am.

Good afternoon. Lindsay Gullahorn, on behalf of the California. Community Banking Network, in strong support of Commissioner Moshini's confirmation, think that he has the experience and knowledge to effectively run the Department and look forward to working with him. Thank you.

Thank you. Hi. Good afternoon.

Good afternoon. Hi. Melissa Cortez on behalf of the California Association of Collectors, DFPI is currently implementing the Debt Collection Licensing Act. CAC has met with the Commissioner to raise some concerns, specifically about fees. We found him to have a very open door policy, very receptive to hear many of the concerns that we have.

We believe he has that open door policy. We're here in support of his nomination today, but we do ask that DFPI, as they are implementing this, consider that collection agencies are not some of the big businesses that they are typically used to regulating. Many of our Members have 10 or fewer employees.

We look forward to working with him in the office going forward. Thank you.

Thank you. I had questions on that. I should have asked them. Yes, ma'am.

Good afternoon. Sherry McHugh here today on behalf of the California Credit Union League. Representing over 250 credit unions and serving over 13 million members, we strongly support the confirmation of Commissioner Mosheni. Since his time at the Department and Now as Commissioner, Mr. Mosheni has been a collective and accessible partner to credit unions.

We have greatly appreciated his willingness to engage with the League and our member credit unions in an open and collaborative way. Commissioner Mosheni recognizes the importance of a state dual charter system for credit unions. His balanced approach of supporting consumer protection while also ensuring that credit unions continue to serve their members has been invaluable.

For these reasons, we strongly support the confirmation of Mr. Mosheni. Thank you.

Thank you. Thank you. Yes, ma'am.

Good afternoon, Chairs and Members. I'm Juliette Lazard with Tratton Price Consulting, representing the Center for Responsible Lending in strong support of Commissioner Mosheni's confirmation to lead the DFPi. Under Commissioner Mosheni's leadership, the DFPI has proven its commitment to protecting California families and small businesses from financial predators.

With federal consumer protection effectively dismantled and the CFPB shuttered, California needs strong state oversight now more than ever. Commissioner Mosheni fills a critical enforcement gap and protects the pocketbooks of California's 40 million residents. We urge your aye vote to confirm Commissioner Mosheni and reaffirm California's commitment to fair and effective consumer financial protection. Thank you.

Thank you. Yes, ma'am.

Good afternoon, Vice Chair and Members. Dani Kando-Kaiser, here with Kaiser Advocacy on behalf of the California Low Income Consumer Coalition, National Consumer Law Center and Consumer Reports in strong support of the appointment of Mr. Mosheni. This appointment is not happening in a vacuum. The DFPI is already an important player on the state and the national stage.

As others have said, with the near shuttering of the federal CFPB, the Department is now the single most important consumer financial protection agency in the United States. We believe that this illuminate, the appointment of Mr. Mosheni illuminates three critical issues that are facing the Department. And that the Legislature has already acted on.

First, the Department must be adequately funded to take on the job that it needs to do. This year's SB 65 budget Bill, which funds the DFPI through fees on businesses it regulates, will ensure the Department has the resources to do the job of enforcement and supervision that is called for in these times.

Secondly, the Legislature needs to ensure that the Department is equipped with the necessary authority to monitor and, if necessary, rein in all the industries that fall within its jurisdiction. Senator Limon's SB 825 will provide that authority. And finally, the Department needs the best possible leadership and personnel.

It takes a leader with vision and courage to helm this agency in these times, and we believe that Mr. Mosheni is that leader. We hope and believe that he will work closely with the Legislature, ensuring that California is able to step forward when the Federal Government has perilously stepped back.

We look forward to hearing great things about the department's work at a time when the work is needed most. Thank you.

Thank you. Good afternoon.

Good afternoon. My name is Paulina Gonzalez Brito. I am the CEO of Rise Economy, formerly the California Reinvestment Coalition. We're a statewide coalition of over 300 organizational members working to advance racial and economic justice and build an economy that works for all.

I am here to support the appointment of Mr. Mosheni as Commissioner of the DFPI. At Rise Economy we have been impressed by Mr. Mosheni's openness to working with community partners.

Commissioner Mosheni not only works to ensure responsibility and accountability and foster responsible innovation by the financial industry, but he also works with community groups to understand the issues that are important to us.

Rise Economy met with Mr. Mosheni early in his tenure and we're impressed by his knowledge of the issues and the importance he placed in hearing from us. We also attend regular meetings with Mr. Mosheni along with other consumer groups.

This type of partnership and engagement with communities is of extreme importance at a time when federal regulators are less open to public input and as they weaken regulations, thereby putting communities at risk. Lastly, we have been impressed by Commissioner Mosheni's commitment to the lofty goals of the DFPI strategic plan for us.

Goal three, to expand DFPI's reach and impact, including increasing awareness of DFPI among key stakeholders, expanding engagement and partnerships, and goal four, to advance opportunities for Californians to achieve economic security and mobility by promoting increased investment in under resourced communities are of utmost importance.

Commissioner Mosheni is the right leader to implement the Department's strategic plan and move forward on these goals. We are very happy to support his appointment.

Thank you. Good afternoon.

Good afternoon. Thank you. Madam Chair and Members of the Committee. I'm Ezra Garrett with Opportune. We're a California based fintech firm that has been certified as a CDFI since 2009. I'm actually here on behalf of three separate organizations to express our support for Commissioner Mosheti's appointment to lead the DFPI. The first being Opportune.

The second being the California Financial Services Association representing dozens of state licensed lenders with Main street retail locations here across California. The third being the American Fintech Council or AFC, which is the nation's leading trade Association for Responsible Fintech firms. Collectively, we represent over 100 lenders, responsible lenders serving millions of borrowers across the state.

And we support Mr. Mosheni's appointment because in his short time with the agency, he has met with us personally. He and his senior staff have demonstrated an openness to collaboration and innovation while also showing steadfast commitment to implementing the nation's best consumer protections and enforcing them.

So with that, we respectfully encourage your support for Mr. Mosheni's confirmation. Thank you.

Thank you. Thank You. Good afternoon. Welcome.

Good afternoon. I'm Chris Schultz with the California Bankers Association. Banks have a choice about whether to be federally chartered or be chartered by the California DFPI. One of the pluses of being chartered with the California DFPI is when you have challenges, you can get a meeting or a phone call with the Commissioner.

Commissioner Mosheni and his excellent team are always available to meet or take calls and work through difficult issues. We encourage you to support his confirmation.

Thank you, sir. Yes, ma'am.

Good afternoon. I'm Brooke Armour, Executive Vice President, the California Business Roundtable. First, welcome back Senator Reyes, it's lovely to see you on the dais again. We are here in support of Mr. Mosheni, who brings critical consumer protections as well as the ability to manage innovations in the financial marketplace.

And we are in strong support of his confirmation. Thank you.

Thank you. Hi. Welcome.

Madam Chair. Members. Mike Knutson. I'm here in my personal capacity. First, welcome back. It is, I do want to take this opportunity to agree with Mr. Harrell. It really is good to see you. And I don't always get to agree with Mr. Harrell, so this is awesome. You've heard kind of all of the reasons.

You've seen the depth and breadth of the coalition that supports the nomination. I just wanted to second that. I've been working with this issue and commissioners for decades. He's an excellent pick. He has all of the professional qualifications, but he also has. He is a quality human being, and that's really an important part of this.

He's a great listener, and he's really good at trying to figure out solutions that will. That will survive and that actually address the problem, and therefore, very much in support and request that. That you confirm the nomination.

Thank you.

Thank you. Any other witnesses in support? Are you getting up, sir? Are you a witness in opposition? Oh, got nervous for just a second. We'll take witnesses in opposition. Seeing none, I'll bring it back to the dais for a motion or other comments. So moved. Thank you, Senator Reyes, for moving that. Making the motion.

Thank you.

Madam Secretary, please call the roll.

[Roll Call] Three votes.

So the good thing is, is that it only takes three votes to get out of this Committee, and you have that to go to the full Senate Floor. Congratulations. The bad news is our colleagues may not be back to make this vote, but I'm sure they will fulfill that on the Senate Floor. Thank you again.

And I really meant what I said, that you are very much qualified for this position, and that brings great relief to me personally.

Thank you very much.

Thank you. Thank you. Have a wonderful day.

Okay. The Rules Committee is going to take a brief recess, so we'll wait for a few minutes waiting on a response for something, and then if we come back on, we have Executive Session.

If we do, recess completely and we'll ask everybody to leave the room, but give us a few minutes to find out if we're going to have a member come back. Thank you. So welcome back to the Rules Committee.

We are going to open the roll on the first conferee, Bob Myers, a Member of the Regents of the University of California. Secretary, please call the roll for absent Members.

[Roll Call]

That vote is 3-0. We'll close the roll. Let's open item B. Casey Mosheni, the Commissioner for the Department of Financial Protective Protection and Innovation.

Madam Secretary, please call the roll for absent Members.

[Roll Call]

That vote is 3-0. Both conferees will be going to the Senate Floor. Please close the roll. That is the conclusion of our Senate Rules Committee. We are now going to be going to Executive session or closed session.

And so we need everybody to vacate the room that is not supposed to be here.