Report finds flaws at consumer financial bureau

The CFPB issues rules through both the normal regulatory process, which calls for input from the public and regulated industries, and less formal guidance that can be developed on the agency’s own.

Though the normal rule-making process works well, the report criticized the agency for the times when it acts alone.

“The consensus is when the bureau sought comment and considered that comment through a rule-making process, they generally got it right, they did a good job,” Rick Fischer, a partner at the Morrison and Foerster law firm and one of the authors of the report, said on Tuesday. “On the other hand, when they developed things internally, particularly with respect to guidance, and didn’t seek feedback from stakeholders, it was far more problematic.”

The CFPB has also come under fire for the way that it collects and stores data about consumers.

The bureau uses that data to monitor market trends and determine where new oversight might be necessary. 

But Republican lawmakers have been especially vocal about their concerns that the agency collects too much information about Americans’ debt, credit cards and other factors, which might expose consumers to identity theft. 

The report released on Tuesday shared some of those concerns.

“A potential risk of a data breach with respect to consumers, to us, felt like a very, very high risk proposition,” Eric Rodriguez, the vice president of National Council of La Raza and the report's other author, said. “We’ve got to do a lot more there just to make sure that there are assurances around data.”

Some of the worries are rooted in growing pains that are only natural for a relatively new agency, he said, but the breadth of data collected by the CFPB is a sign of a larger flaw.

“Some of the broader issues, the sheer amount of info that’s being collected, not just from regulated entities but from other sources, that’s a much bigger issue,” Rodriguez said.

The Government Accountability Office, which acts as Congress’s investigative arm, is looking into the CFPB’s data collection practices.

That survey is likely to provide a more complete analysis of the practice, the study’s authors said, and could lead to changes in how the agency monitors the market.

In remarks at a symposium on Tuesday, CFPB Director Richard Cordray pledged that the agency will press on.

"The vision we have before us, and that we are working toward every day, is a market where consumer protections and business opportunities work in tandem; where financial institutions lead through responsible business practices; and where educated consumers can make informed decisions," he said, according to prepared remarks.