CFPB, Show Your Work: The Case for Data-Driven Regulation in the Time of COVID-19

In the middle of the military occupation of our capital, the Consumer Financial Protection Bureau opined that the relief consumers needed was the ability to get a new credit card fast — faster than the time it takes to send, receive and open an email to confirm your ability to get disclosures electronically. Because this wasn’t a rulemaking, the CFPB didn’t need to cite any data for its position, and it didn’t.

That failure to cite data was hardly a surprise: The very first announcement by the CFPB on COVID-related relief announced suspension of data collection on mortgages, prepaid and credit card accounts and small business lending, and the CFPB has continued a rapid-fire issuance of guidance relaxing requirements for financial institutions under the guise of helping consumers without citing any data. But if you’d read the lone piece of research that the CFPB has issued on the impact of COVID-19 on consumers, you’d have been even more puzzled as to why the CFPB thought this miniscule speeding up of access to credit was responsive to COVID or the relief consumers need now. 

That research, issued over a month ago, took advantage of the CFPB’s Consumer Credit Panel. The CCP gives the CFPB nearly unparalleled access to real time data on what is happening in the consumer credit markets.  The report found that, from the first week to the last week in March, credit card applications dropped 40 percent. That data doesn’t square with saying that borrowers need faster access to credit or even support the idea that credit card call centers are so jammed with people seeking new extensions of credit that credit card companies need relief. We’re left in the dark as to whether the CFPB’s policy announcement about credit cards was a sensible, pragmatic reaction to an evolving situation or ideological opportunism. Given the reported politicization of research in connection with the payday rulemaking, one might be forgiven for wanting the CFPB to show its work.

The CFPB’s seeming aversion to data collection and publication is a shame. When so much is fluid and evolving, and rhetoric can quickly become overheated, we could use more data. The CFPB is uniquely positioned to provide that data. In addition to the CCP, the CFPB, jointly with the Federal Housing Finance Agency, manages the National Mortgage Database Program. The NMDB was designed to help monitor the health of the mortgage market and consumers. Surely we learned from the Great Recession that consumer mortgage debt, when left unattended by policymakers, can trigger a global economic collapse all on its own, and mortgage delinquencies are climbing again. But aside from that one report and a summary of the coronavirus-related complaints received by the CFPB, the CFPB has been mum as to what the data show. At best, this is an abrogation of the CFPB’s statutory responsibilities to monitor consumer markets for systemic risks and base policy making on data; at worst, this is a deliberate cover-up of the evidence.

The CFPB’s refusal to collect, use and report data hampers our response to COVID. For example, Congress charged the CFPB with collecting and reporting data on small business lending. Acting Director Mulvaney halted that work in 2018, and the work, restarted in response to litigation, was halted again as a COVID accommodation to financial institutions. In consequence, Congress was largely flying blind when it created the Paycheck Protection Program, and the CFPB must share the blame for the resulting failure of the PPP to deliver desperately needed credit to small businesses owned by people of color. 

To take another example, the CFPB announced in early April that it would no longer enforce requirements that mortgage servicers provide timely and accurate information to homeowners seeking help. At that same moment, the CFPB was being bombarded by complaints from homeowners about the information provided by mortgage servicers. Complaints rose even though the director, in her initial statements about COVID, made clear that complaining to the CFPB was only a “backstop.” We don’t know whether the other banking regulators who went along with the CFPB in promising to go easy on mortgage servicers were informed of the complaint data or not.

Instead of churning on with a pre-existing rulemaking agenda, the CFPB could focus its resources on helping us all understand what it is that consumers and the country need now. It’s time for the CFPB to live up to the mandate given it by Congress.

Diane Thompson is an Open Society Foundations Leadership in Government Fellow and previously served as deputy assistant director and acting assistant director of the Office of Regulations in the Consumer Financial Protection Bureau.

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