Big Brother is Watching. . .Your Bank Account: Cordray to Testify About CFPB’s Data Collection Efforts

Big Brother is Watching. . .Your Bank Account: Cordray to Testify About CFPB’s Data Collection Efforts

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 inclusive.

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.

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