#consumer data

7 11, 2022

Karen Petrou: The Data-Rights Dilemma: The Balance Between CFPB Despotism and Democracy

2022-11-07T12:17:49-05:00November 7th, 2022|The Vault|

Last week, I despaired of CFPB edicts because I disapprove on principle of despotism no matter how well intentioned.  But, as shown in our in-depth analysis of the CFPB’s request for views on consumer data rights, democratic process can also be disastrous.  In what purports to be an “outline” of 71 pages and 149 questions often including numerous substantive sub-questions, the Bureau has gone back to its old habit of 1,000-plus page rules sure to do far, far more for lawyers than consumers seeking to better control their own financial destinies.

The outline and Director Chopra’s statements thereon lay out a powerful, persuasive argument about the benefits of data portability to an innovative, competitive, and inclusive retail financial system.  I get it, but after that, I’m at a loss.

Here are just a few questions we couldn’t answer about whether the CFPB’s new standards will do what the Bureau wants or heighten consumer exposure to still more cyber, privacy, and financial risk:

Will the third parties gaining control of our account data be covered by new security standards and, if so, will these be enforceable?  Will the data third parties gain via whatever authorization process the Bureau demands be deployed not just to answer our questions, but also to empower the already awesome network effects at the biggest quasi-financial companies wholly outside the reach of cross-selling and conflict-of-interest restrictions?  Will the products that third parties and their partners select based on our data do us good or ill?  For …

7 11, 2022

M110722

2022-11-07T12:17:31-05:00November 7th, 2022|6- Client Memo|

The Data-Rights Dilemma: The Balance Between CFPB Despotism and Democracy 

Last week, I despaired of CFPB edicts because I disapprove on principle of despotism no matter how well intentioned.  But, as shown in our in-depth analysis of the CFPB’s request for views on consumer data rights, democratic process can also be disastrous.  In what purports to be an “outline” of 71 pages and 149 questions often including numerous substantive sub-questions, the Bureau has gone back to its old habit of 1,000-plus page rules sure to do far, far more for lawyers than consumers seeking to better control their own financial destinies.

m110722.pdf

3 11, 2022

DAILY110322

2022-11-03T17:15:32-04:00November 3rd, 2022|2- Daily Briefing|

Gruenberg Backs Bank On

In remarks late yesterday, FDIC Acting Chairman Gruenberg pointed to the importance of Bank On accounts to retain previously un- or under-banked households brought into the system following large government payments early in the pandemic.

ECB Presses Climate-Risk Capital Regs

Moving far ahead of the Fed, the ECB has announced strict plans to ensure that EU banks not only improve governance and express climate-risk stress testing, but also hold sufficient internal-capital allocations for physical and transition risk.

Data Standard-Setters to Come Under CFPB Regs

In remarks late yesterday updating the CFPB’s open-banking rulemaking efforts, Director Chopra indicated that the new consumer-data rules (see forthcoming in-depth FedFin report) will also address   how best to set public and private-sector standards to ensure industry-wide fairness and access to critical infrastructure.

IMF Climate-Risk Priorities Include GSIB Buffers

The IMF’s Deputy Managing Director Bo Li today set priorities for central banks and bank regulators addressing financial-system climate resilience.

Daily110322.pdf

27 10, 2022

DAILY102722

2022-10-27T16:55:34-04:00October 27th, 2022|2- Daily Briefing|

CFPB Seeks Comment on Consumer Data Rights, Market Power

Following remarks from Director Chopra earlier this week, the CFPB today announced a formal kick-off of its consumer data-rights rulemaking.

Gruenberg Reminds Markets of TLGP Backstops at Time of Liquidity Stress

In remarks today, Acting FDIC Chairman Gruenberg stoutly defended the agency’s final rule hiking DIF premiums (see Client Report DEPOSITINSURANCE115).

Warren Reignites Anti-Zelle Campaign

In another appeal to the CFPB to tackle Zelle, Sen. Warren (D-MA) today sent a letter to Director Chopra calling on the Bureau to increase consumer protections in peer-to-peer lending platforms and curtail what she again describes as “rampant” fraud.

Democratic Pressures Grow Against Fed Rate Hikes

Adding to critiques from Sens. Brown (D-OH) and Warren (D-MA), Sen. Hickenlooper (D-CO) today called on the Fed to halt interest-rate increases.

Fed Study Details QE Alternatives, Expanded Fed Role

A new FRB staff paper explores the past, present, and future as an approach to achieving the Fed’s increasingly-problematic monetary-policy transmission: “funding for lending.”

Daily102722.pdf

25 10, 2022

DAILY102522

2022-10-25T17:08:46-04:00October 25th, 2022|2- Daily Briefing|

Setting Stage for US Action, UK Regulators Target Bigtech Consumer-Finance Market Power

Focusing principally on competition, the UK’s Financial Conduct Authority (FCA) today released a discussion paper investigating bigtech’s entry into payments, deposit, consumer-credit, and insurance.

With Yellen Backing, SEC Central-Clearing NPR Advances

The Federal Register today includes the SEC’s proposal requiring that market clearinghouses submit certain secondary-market transactions for clearing along with the small percentage now already centrally-cleared.

FDIC Reports Significant Financial Inclusion Progress

Showing significant improvements in financial inclusion, the FDIC today released its biennial under- and unbanked household survey.

CFPB to Require Almost-Open Banking

At long last and as recently promised, the CFPB later this week will start a rulemaking process that would ultimately require financial institutions to share personal data with a consumer upon his or her request.

Democrats Get Ready To Blame The Fed

Continuing progressive critiques of the FOMC’s anti-inflation fight, Senate Banking Chairman Brown (D-OH) has written to FRB Chairman Powell sharply protesting current Fed policy.

Daily102522.pdf

6 09, 2022

DAILY090622

2022-12-20T16:15:03-05:00September 6th, 2022|2- Daily Briefing|

BIS Staff: Banks Have Power Over Bigtech, But We’re Not So Sure

A new paper from BIS staff argues that bigtech firms have so much power over small-and-medium sized enterprises (SMEs) using their networks that they must “self-limit” this to continue to grow, leading them to share data with banks that fund loans via cheap deposits.  We find the paper puzzling given its description of the captive ecosystem in which bigtechs can readily exploit data unavailable to banks to set credit terms and also enforce loan agreements by virtue of their power to exclude an SME from a vital source of customers.

CFPB’s Sweeping Data-Protection Standards Now Effective

Today’s Federal Register includes the CFPB’s circular on insufficient data protections and security; the circular is now effective.  As noted (see FSM Report INFOSEC28), the circular states that inadequate consumer-data safeguards may constitute a breach of unfair, deceptive, or abusive acts or practices (UDAAP) protection standards subject to Bureau enforcement.  It notably expands the Bureau’s legal interpretations of UDAAP, its authority over nonbanks, and its broad reading of “service providers.”

OCC Prioritizes Community Banks

The OCC today released its five-year strategic plan.  It focuses on staffing, service, and administrative issues, but also briefly notes policy priorities. These include advancing financial inclusion and literacy, deepening collaboration with other regulators, reinforcing and minimizing the regulatory burden on community banks, and developing guidance to facilitate community banks’ transition to digital banking.

Daily090622.pdf

25 08, 2022

DAILY082522

2023-01-04T10:34:26-05:00August 25th, 2022|2- Daily Briefing|

KC-Fed: Data Aggregation Requires Rules Before Mass Adoption

The Kansas City Fed yesterday released a briefing on data aggregators concluding that they can improve the efficiency and quality of consumer financial services if proper regulation protecting data security and privacy is enacted.

SEC Prioritizes Enforcement, Disclosure, Working-Families and Systemic Risk

The SEC’s new strategic plan through 2026 speaks to Chairman Gensler’s focus on fairness, economic opportunity, and enforcement.  Specifics are sparse, but the plan puts the agency’s enforcement policy in the context of protecting “working families” especially when it comes to enforcement in areas such as cryptoassets.

FSI Report: Bigtech, Third Party Vendors Pose Operational Risk

The BIS Financial Stability Institute today released a study examining operational resiliency through a macroprudential lens, offering recommendations on how to address systemic risks presented by critical third-party service providers and bigtech.

Daily082522.pdf

17 08, 2022

FedFin on: Data-Safeguard Legal/Reputational Risk

2023-01-04T11:55:58-05:00August 17th, 2022|The Vault|

Using another of its tools to set policy without prior public comment, the CFPB has released a circular stating that inadequate consumer-data safeguards may constitute a breach of the unfair, deceptive, or abusive acts or practices (UDAAP) protection standards subject to Bureau enforcement action.   This is the case even if no consumers have been harmed, if only one consumer is adversely affected, …

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

17 08, 2022

INFOSEC28

2023-01-04T11:55:22-05:00August 17th, 2022|1- Financial Services Management|

Data-Safeguard Legal/Reputational Risk

Using another of its tools to set policy without prior public comment, the CFPB has released a circular stating that inadequate consumer-data safeguards may constitute a breach of the unfair, deceptive, or abusive acts or practices (UDAAP) protection standards subject to Bureau enforcement action.   This is the case even if no consumers have been harmed, if only one consumer is adversely affected, or if a small amount of actual or potential damage puts many consumers at risk.  The Bureau also prescribes data-safeguard standards firms and service providers must ensure to comply with CFPB expectations.

INFOSEC28.pdf

23 06, 2022

DAILY062322

2023-01-25T15:46:26-05:00June 23rd, 2022|2- Daily Briefing|

Treasury Tries Transparency

Treasury and its inter-agency working group today advanced its earlier findings (see Client Report TMARKET2) with a public consultation on data transparency.

House Ag Subcommittee Advances CFTC Digital-Asset Authority

Advancing proposals to give the CFTC jurisdiction over aspects of the crypto market as proposed in the Lummis-Gillibrand bill (see FSM Report CRYPTO28), the House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit today advanced statutory changes that not only give the CFTC this authority, but also expand the committee’s jurisdiction.

OCC Targets Macro Risks

The OCC today released its latest analysis of risks to federally-chartered institutions, reiterating longstanding operational-risk concerns now heightened by the challenges facing banks seeking to retain or hire specialized personnel.

House Republicans Craft New Data-Privacy Regime

HFSC Ranking Member McHenry (R-NC) and panel Republicans today released a draft bill establishing consumer-data privacy rights with an eye on emerging financial providers and products.

Daily062322.pdf

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