A fight is heating up over whether millions of consumer complaints against financial institutions should be made public.
And consumer advocates are deeply worried about what comes next.
Every month since 2011, the Consumer Financial Protection Bureau has released reports of public grievances made by consumers against institutions including Bank of America, Wells Fargo and Equifax.
Last November, the bureau abruptly stopped releasing them. Now, 10 months later, it’s unclear exactly whether it will resume.
The bureau is considering whether to change how it manages its consumer complaint database, including whether it should permanently halt releasing grievances publicly, according to a government notice. Officials at the agency are now combing through hundreds of comment letters from financial institutions, trade groups and consumers that were due on July 16.
Sam Gilford, a spokesman for the agency, declined to comment on the status of any possible policy changes.
All of these questions come at a time when the agency’s leadership is also in flux.
On Thursday, the Senate Banking Committee voted favorably to advance President Donald Trump’s nominee, Kathy Kraninger, to be the next director of the bureau in a party-line vote, 13-12.
Kraninger, a deputy at the Office of Management and Budget, was nominated to replace Trump’s budget director Mick Mulvaney. She has vowed to follow the statute drafted by Congress – and not go any further.
“Kathy Kraninger has said she doesn’t disagree with anything that Mick Mulvaney has done at the CFPB – they have no incentive to delay this decision,” said Karl Frisch, executive director of Allied Progress, a consumer watchdog agency.
What’s in the database
Inside the database are reports filled with stories of people dealing with piles of medical debt, disputing incorrect information on their credit reports and fighting overzealous debt collectors. Consumer advocates and regulators scrub the complaint files regularly to spot trends of predatory lending and abuses by financial institutions – a core mission of the bureau, which was created as part of the 2010 Dodd-Frank regulatory reform law.
Born out of the 2008 financial crisis, the CFPB is an agency created to protect consumers from companies that may take advantage of them. It’s also served as a strong check on Wall Street since its inception in 2010, rolling out mortgage and payday lender rules and penalizing bad behavior from big banks like Citigroup and Wells Fargo.
The bureau’s database allows anyone to submit a complaint about financial products or services to the CFPB. Each complaint is then sent to the company by the bureau. Once a company replies or the 15-day period lapses, the complaint becomes public on the database.
Financial companies have criticized the database, calling many of the complaints unverified and others inaccurate. Advocates insist the data collections help to spot problems before bigger issues arise.
Behind the change is Mulvaney, Trump’s pick as interim leader of the CFPB and the current director of the Office of Management and Budget. He took the helm in November, the same month the reports stopped.
Earlier this year, Mulvaney reignited the controversial issue by requesting input on potential changes to how the agency manages the consumer complaint database.
“I don’t see anything in here that says I have to run a Yelp for financial services sponsored by the federal government,” Mulvaney said at the American Bankers Association’s annual conference in April, referring to the 2010 Dodd-Frank law. “I don’t see anything in here that says that I have to make all of those (complaints) public.”
The monthly process began under President Barack Obama’s former director, Richard Cordray and Mulvaney has sympathized with arguments made by the industry in calling for a permanent halt in releasing complaints by consumers.
Advocacy groups and consumers point out that Mulvaney is seeking to relax public disclosure of consumer complaints in its database after receiving tens of thousands of dollars in contributions from companies that he’s now charged with overseeing.
Eight of the 10 companies with the most registered complaints in the CFPB’s consumer complaint database made financial contributions to Mulvaney when he was a House lawmaker, according to a report published by Public Citizen, a consumer rights advocacy group, and verified by CNN. Those companies include Wells Fargo, Bank of America, JPMorgan and Citibank, the consumer division of Citigroup, according to CFPB data as of July 27.
Ties to lobbyists
Mulvaney’s ties to lobbyists have been under fresh scrutiny after he announced at the same banking conference that, while in Congress, he was likely to meet with lobbyists who contributed money to his campaign while in Congress.
“We had a hierarchy in my office, if you were a lobbyist who never gave us money, I didn’t talk to you. If you were a lobbyist, who gave us money, I might talk to you. If you came from back home and sat in my lobby, I would talk to you without exception regardless of the financial contributions,” Mulvaney said at the April conference.
Under Mulvaney’s leadership, the CFPB has reversed course on many fronts. The agency has delayed rules to protect consumers from payday lenders, dropped lawsuits and stripped enforcements of fair-lending protections.
“There’s little doubt he came to the CFPB with a pro-industry agenda that mirrored the agenda of the financial industry that support him financially as a candidate,” said Larry Noble, former general counsel of the Federal Election Commission and CNN contributor. “Their investment in a member like Mulvaney still really paid off when he went from being a member of Congress to being the head of the CFPB, where he can change the rules of the game by himself.”
As a congressman, Mulvaney also sponsored legislation that would vet the accuracy of comments by consumers for errors or falsified information before being entered into the database, according to information compiled by the advocacy group American Bridge and reviewed by CNN.
Equifax, the Consumer Bankers Association and the Credit Union National Association all contributed to Mulvaney between 2010 and 2016, and each company also lobbied for Mulvaney’s bill, H.R. 5491, according to the Public Citizen report. H.R. 5491 was introduced in June 2016. The bill was never reintroduced, but Texas GOP Sen. Ted Cruz sponsored and introduced a bill calling to repeal the entire CFPB the following year.
American Bridge, an advocacy group, found that Equifax donated $5,000 to Mulvaney between 2013 and 2016. Then, in 2016, Mulvaney sponsored the bill regarding database comments. Equifax is one of the top 10 companies with the most complaints in the database.
“It should go without saying that it is ludicrous to think that any campaign contribution given to him years ago while serving in a role in another branch of government would somehow influence his job today,” said John Czwartacki, a spokesman for Mulvaney, told CNN.
Attorneys general from 15 states were among several consumer advocates who wrote letters in support of the database.
“We have found the database to be an invaluable resource to identify trends and patterns, and to determine if an issue is widespread or isolated,” wrote Barbara Underwood, the attorney general for the State of New York along with 14 others, in a June 4 letter to the agency. “It also represents an admirable commitment to transparency that benefits all Americans.”
Trade groups like the American Bankers Association and the Consumer Bankers of America, representing thousands of the country’s largest and smallest banks, are hoping to make the case the bureau went beyond its statutory authority established by Congress in publishing unvetted complaints. They also claim that such unverified or inaccurate information could wind up misleading consumers.
“Aside from the lack of legal authority for the bureau to publish the consumer complaints, it is bad policy,” Jonathan Thessin, senior counsel for the Center for Regulatory compliance for the ABA, wrote in a June 4 letter to the bureau. “The deeply flawed process that led to the bureau’s unlawful establishment of the database has resulted in the publication of complaint information that is not reliable and therefore risks harm rather than benefit to consumers.”