by Edward (Ted) W. Somers
Orwellian telescreens have not achieved ubiquity, but the
CFPB's massive data collection efforts in recent months feel little less
intrusive to industry participants. Thanks to an ongoing fishing
expedition, CFPB will soon have amassed one of the largest databases of
consumer financial information in the country. CFPB will soon know in
great detail how millions of Americans spend their cash, use their credit
cards, manage their debt, and use other financial services (and how industry
participants manage those services on a minute level).
According to CFPB director Richard Cordray, the
Bureau hopes to distill this raw data into useful analysis for making
"data-driven" decisions at the Bureau. Cordray believes this research
will assist CFPB in its regulatory efforts and bring unspecified improvement to
the marketplace. While the benefits of the CFPB's data collection efforts
remain illusory, the actual cost of CFPB's efforts are quite real.
CFPB is purchasing some of this data from private
compaines, including Experian--who is being paid up to $8.4 million to for data
on 5 million to 10 million consumers "for use in a wide range of policy
research projects." A significant cost has also been, and will continue to be,
born by banking institutions. By using its broad authority under
Dodd-Frank to issue sweeping demands for records related to credit cards and
other financial products, CFPB is using industry participants to bankroll the
creation of its database-much to the ire of many banking institutions already
saddled with burdensome government oversight. The reams of data demanded
by CFPB have come in addition to audits and data requests from other branches
of the government, and, as per usual, are reported to be unfocused and overly
How far the CFPB's demands for records will stretch
remains to be seen, but its broad authority under Dodd-Frank allows the Bureau
to seek records from any institution under its purview-an authority the CFPB
has demonstrated that it is not shy about exercising. Cordray is expected
to testify about this data collection and other activities of the CFPB at a
hearing before congress on April 23, 2013. Stay tuned to the CFPB-Lawblog
for updates and analysis.
This information is intended as
a general overview and discussion of the subjects dealt with. The information
provided here was accurate as of the day it was posted; however, the law may
have changed since that date. This information is not intended to be, and
should not be used as, a substitute for taking legal advice in any specific
situation. DLA Piper is not responsible for any actions taken or not taken on
the basis of this information.
Copyright © 2013 DLA Piper. All rights reserved.
For more information about LexisNexis
products and solutions connect with us through our corporate site.