CFPB Collecting Confidential Financial Information on Millions of Americans
Jul 9, 2013 -
At a time when Washington is awash in scandals over mass surveillance and political targeting, the Consumer Financial Protection Bureau (CFPB) has spent at least $10.3 million to collect confidential financial information on Americans, a Financial Services subcommittee learned today.
But, unfortunately, that is about all that members of the Financial Institutions and Consumer Credit Subcommittee learned today, as the witness from the CFPB could not or would not answer basic questions about the CFPB’s surveillance and data collection efforts – such as what consumer information is being collected, from how many Americans it is being collected, and from which financial institutions.
“The American people have a right to know how this government agency is collecting and using their personal financial data,” said Rep. Shelley Moore Capito (R-WV), who chairs the subcommittee. “The CFPB has thus far declined to provide concrete answers to questions that have been asked in public forums.”
Chairman Capito also questioned the CFPB’s use and storage of personally identifiable information “despite the clear intent of Congress.” The CFPB is prohibited by law from obtaining or using personally identifiable financial information about consumers to inform its market monitoring activities.
“We simply do not know the extent to which the CFPB is collecting, storing or having outside contractors collect and store consumers’ personally identifiable information,” she said.
“Many of my constituents are concerned that our government has their health records, their phone records, their Internet records, their emails, and now the CFPB is monitoring their financial records. And we have a concern about our constituents' right to privacy in regard to the information that the CFPB or others collect in regard to their very private financial transactions,” said Rep. Sean Duffy (R-WI). “Frankly, there has been a veil of secrecy around the collection of data at a time when the agency, as it is ramping up, has made a pledge to Congress and to the American people to be open and transparent.”
Members of the subcommittee also raised concerns about the CFPB’s ability to keep such confidential information secure, especially in light of two government watchdog reports that found deficiencies in the CFPB’s data security. “These issues increase the risk of CFPB not preventing or promptly detecting and correcting…unauthorized access, modification, or both of its data,” the Government Accountability Office said in a May 2012 audit. A March 2013 report from the CFPB’s inspector general likewise found problems with the CFPB’s control of data.
The CFPB, created by the Dodd-Frank Act, operates outside the normal system of checks and balances that apply to government agencies – a fact that heightens worries about the bureau’s gathering of private financial data and its potential for misuse.
Unlike virtually every other federal agency, the CFPB is controlled by a single individual, rather than a bipartisan commission. The CFPB director cannot be fired for poor performance and exercises sole control over the agency, its hiring and its budget.
The CFPB is within the Federal Reserve System, placing it beyond presidential supervision. Yet the Fed is strictly prohibited from involvement in CFPB activities, and the CFPB director can spend hundreds of millions of dollars each year with no accountability to Congress.
“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,” Chairman Capito said.