In a memo to state banking associations, the American Bankers Association raises concerns about the costs to industry of the CFPB’s use of its expansive authority to gather information under Section 1022 of the Dodd-Frank Act.
As indicated in the memo, to inform its rulemaking process on overdraft protection services, the CFPB ordered three financial services core processors in November 2014 to provide significant amounts of information and anonymized data about the overdraft services they provide for depository institutions. The ABA states that one of those processors has informed its clients that it may pass on to them the processor’s costs in responding to the CFPB’s order.
While urging the state associations to encourage the CFPB to seek all relevant information before engaging in rulemaking (including with regard to the overdraft programs of community financial institutions), the ABA also wants the associations to insist that the CFPB fund its own data collection efforts. The ABA plans to call on the CFPB to bear the cost of its information gathering, either by conducting the research itself or reimbursing those to whom it has issued information orders (such as the processors). Noting that the CFPB’s FY 2016 budget is estimated to be $605.5 million and will fund 1,690 full-time employees, the ABA observes in the memo that “clearly the Bureau has the resources to reimburse the companies from which it has requested data, or otherwise conduct and pay for its research.”
The ABA also observes that Section 1022 grants the CFPB “sweeping and potentially unconstitutional power,” and asks the state associations to support its efforts to amend Section 1022 or, “at the very least, to ensure that the costs of these information gatherings be borne/reimbursed by the Bureau, and that they be conducted with appropriate due process protections.”
