The behemoth Consumer Financial Protection Bureau (CFPB) played a big role in Tuesday night’s GOP presidential debate on Fox Business, both during the commercials and in the candidate’s answers.
A new ad by American Action Network that made its debut during commercial break correctly linked the CFPB—created by the Dodd-Frank so-called financial reform act rammed through Congress in 2010—to denial of mortgages and car loans due to the CFPB’s costly and paternalistic rules that hit Main Street bank and credit unions. The candidates critical of Dodd-Frank dinged those same policies, but often without naming the CFPB.
Carly Fiorina called out the CFPB directly and for another disturbing policy. She pointed out that the CFPB is an entity with “no congressional oversight that is digging through hundreds of millions of your credit records.”
The “digging” refers to CFPB’s massive database of mortgage and credit card info that rivals that of the National Security Agency in both size and intrusiveness. As former House Speaker Newt Gingrich wrote recently in The Wall Street Journal, “Every month the CFPB … gathers data on 22 million mortgages, 5.5 million student loans, two million bank accounts with overdraft fees, and hundreds of thousands of auto sales, credit scores and deposit advance loans.” My Competitive Enterprise Institute colleague Iain Murray and I have been writing about the troublesome database and its threat to privacy since the CFPB created it more than two years ago.
The CFPB claims it needs this voluminous data to research consumer “patterns.” It also dismisses data security concerns, saying the data is “anonymized.” Recently, the Government Accountability Office criticized the CFPB because it had not “fully implemented a number of privacy control steps and information security practices.” This, the GAO concluded, “could hamper the agency’s ability to identify and monitor privacy risks and protect consumer financial data.” (Hat tip to Justin Sykes of Americans for Tax Reform for highlighting the GAO study at Townhall.com.)
Given the bipartisan criticism—which CEI joined—of the privacy violations of the NSA database, one would think that the CFPB’s data overreach should also be troublesome to politicians regardless of party. A June poll by Zogby on behalf of the U.S. Consumer Coalition found that only 20 percent of American agree with the CFPB’s collection and review of credit card statements without consumers’ knowledge. Yet Democrats critical of the NSA have actually stayed silent or even defended the CFPB on this issue.
Sen. Elizabeth Warren (D-Mass.), for instance, told the Associated Press that Congress must “end the NSA's dragnet surveillance of ordinary Americans.” Yet, why is she silent on the CFPB’s “dragnet surveillance” of Americans’ mortgage and credit card records?
One crucial difference between the CFPB and NSA is that the NSA does have mechanisms of accountability. The NSA gets its appropriations from Congress. By contrast, the CFPB get its funding not from Congress, but from the Federal Reserve. So the people’s representatives have no power of the purse to curb abuses like this massive database. This lack of accountability is why CEI, along with the 60 Plus Association and the tiny Texas State National Bank of Big Spring, continue our constitutional lawsuit against the CFPB’s unaccountable structure that results in so many harmful policies.
CEI Research Associate Rahul Gangan contributed to this post.