Pictured above are protestors outside the CFPB following the news of Mulvaney's appointment as director.
Student loan borrowers may lose access to a helpful tool provided by the Consumer Financial Protection Bureau, the Obama-era financial regulator and watchdog. In a recent move by the CFPB, consumer complaint data is no longer being collected because the complaint database will be shut down for some time. Collection of personal information data is also put on hold.
In a “push to secure data,” Interim CFPB Director Mulvaney announced the move in early December. Concerns about data security spurred the decision. Mulvaney referenced concerns about privacy and information access in his statement, and he plans to review over 100 current and pending enforcement actions by the CFPB legal team.
As a longstanding critic of the agency before his appointment, Mulvaney hopes to improve cybersecurity and internal controls before re-launching key CFPB services such as the disclosure program, consumer complaint monitoring, and enforcement against offenders.
In the meantime, the complaint database is removed as an effective source for gathering consumer information regarding potential malpractice in the market.
The CFPB complaint database allowed Americans with student debt to submit complaints about poor treatment and bad business practices regarding lenders, loan servicers, and debt collection agencies directly involved in the student loan industry.
Several legal actions have been taken after analyzing patterns of complaints in the database, so it’s easy to assume that the CFPB will have a diminished capacity in finding and prosecuting faulty loan programs and bad actors in the servicing and student loan industries. Hopefully, the CFPB can quickly restore the data collection programs to get their enforcement regime back on track.
This September, the CFPB put a stop to abuses at two large student loan servicers and audited over 800,000 loans in the process. The fines totaled $21 million dollars and ended a rash of frivolous lawsuits by National Collegiate Student Loan Trusts and Transworld Systems. The complaints system and consumer data collection aided in these actions against the private loan industry.
Despite a freeze on hiring at the CFPB, Mulvaney intends to bring aboard some key senior talent in the form of political appointees. A Republican congressional lawyer named Brian Johnson has already joined the ranks as a senior adviser. In a previous role, Mr. Johnson had a tenure under Rep. Jeb Hensarling, a vocal critic of the CFPB and the Chair of the House Financial Services Committee. In a recent interview on NPR, Rep. Hensarling said, “I want to protect consumers from their government. I want to protect consumers from bureaucrats.”
image copyright Joe Flood