Woodstock Institute, a nonprofit dedicated to fair lending and financial systems reform, took a stand in defense of the Consumer Financial Protection Bureau’s use of consumer financial data.
The CFPB was forced into the limelight on Tuesday when Sen. Mike Crapo, R-Ida., recently asked the Government Accountability Office to investigate the "big data" collection efforts underway on consumer habits at the CFPB.
The CFPB was created in concordance with Dodd-Frank to protect consumers; however, this main goal is causing the root of its problems.
In attempting to collect data to inform opinions on how to help borrowers, the bureau is creating a privacy concern for government officials and the general public. It's not new. The CFPB is not trying to hide its data collections practices and related partnerships.
In light of this, the Woodstock Institute voiced that it stands with the CFPB progress, claiming that the data could clue regulators in to another emerging mortgage crisis before it occurs and allow them to conclusively detect discriminatory lending practices.
"The financial industry is already using every data tool at its disposal to target consumers with offers for payday loans, credit cards, and high-cost student loans," said Spencer Cowan, vice president of research at Woodstock Institute.
He expanded saying, "In order to monitor a constantly-evolving marketplace and base regulations on clear evidence, the CFPB must be empowered to analyze timely, granular data on the interactions between corporations and consumers."
CFPB Acting Deputy Director Steven Antonakes defended the bureau saying, "Information is essential to properly supervise market participants, regulate markets, protect consumers and honest businesses from unscrupulous activities, and ensure the stability of the financial system and of the economy generally."
Additionally, Cowan said, "Preventing the CFPB from using data to drive its decisions would ensure that the agency—and consumers—are always one step behind the financial industry."
Overall, "No agency can effectively supervise that which it does not understand," Antonakes said. "We have no interest whatsoever in trying to determine who that specific individual is."