The Consumer Financial Protection Bureau (CFPB) came under Congressional spotlight this week for its “big data” collection methods of consumer financial records.
The Bureau’s Acting Deputy Director Steven Antonakes testified before the Financial Institutions and Consumer Credit Subcommittee on Tuesday, fielding questions and addressing concerns raised by panel members regarding the Bureau’s access to consumers’ personally identifiable financial information (PII).
“The American people have the right to know how this government agency is collecting and using their personal financial data,” said Chairman Rep. Shelley Moore Capito (R-WV). “The CFPB has thus far declined to provide concrete answers to questions that have been asked in public forums.”
Recently, the CFPB has garnered criticism for its collection of consumers’ personal financial information from third-party sources, as some believe that personal information such as monthly credit card and mortgage payments will leave consumers even more vulnerable to financial risks.
While a section of the Dodd-Frank Act prohibits the CFPB from using its data-collecting authority to obtain records “for purposes of gathering or analyzing the personally identifiable financial information of consumers,” the Bureau believes that the collection of such data is critical the the agency’s broader mission to protect consumers.
“A deep and thorough understanding of the consumer financial marketplace is essential to accomplish the Bureau’s mission, and that, understanding must be based on data,” said Antonakes.
Additionally, Congress specified one of the Bureau’s primary functions as “collecting, researching, monitoring, and publishing information relevant to the functioning of markets for consumer financial products and services to identify risks to consumers and the proper functioning of such markets.”
“Simply put, no agency can effectively supervise that which it does not understand,” said Antonakes.
The Acting Deputy also assured that the CFPB’s Database would not contain personal identifiers such as names or social security numbers, and that the Bureau will implement safeguards against “potential re-identification of individual borrowers.”
This week, U.S. Senator Mike Crapo (R-Ida.), a ranking member of the Senate Banking, Housing and Urban Affairs Committee, sent a letter to the Government Accountability Office requesting a review of the CFPB’s data collection efforts, regarding the collection of PII.
Through its data collection and analysis on consumer financial information, Antonakes said the CFPB intends to use the data obtained to ensure restitution of approximately $6.5 million to close to 50,000 servicemembers harmed by violations of Federal consumer law.
While the CFPB was created by the Dodd-Frank Act, the agency has often been criticized as it is not controlled by a bipartisan commission and operates outside the normal system of checks and balances that apply to government agencies.
“Many of us feared that the CFPB would eventually limit the ability of consumers to choose the financial product that best suits their individual needs; however, the prospect of the CFPB watching a consumer’s every financial decision is even more troubling,” said Chairman Capito.
Written by Jason Oliva