February 5, 2018 / 10:18 PM / a year ago

Breakingviews - CFPB scores too low on Equifax transparency

Trading information and the company logo are displayed on a screen where the stock is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 8, 2017. REUTERS/Brendan McDermid

WASHINGTON (Reuters Breakingviews) - The U.S. Consumer Financial Protection Bureau is scoring too low on transparency. The watchdog is dialing back its probe of the $15 billion Equifax’s massive data breach last year. Mick Mulvaney, Donald Trump’s CFPB head, says the regulator has “pushed the envelope” too far in the past. Perhaps – but if protecting vital data of the kind hacked at the U.S. credit-scoring firm isn’t its remit, he needs to explain what is.

The CFPB owes its existence to Democratic Senator Elizabeth Warren, who helped create it as part of the 2010 Dodd-Frank financial reforms. The agency was a political football from the start. The new boss put in a quarterly funding request for zero dollars. His predecessor, Richard Cordray, had asked for $217.1 million the quarter before. Democrats have charged that Mulvaney is effectively dismantling the agency – and the Equifax news plays into their fear.

The news comes after the CFPB said last month it would reconsider a new rule to restrict payday lenders and curb high-interest loans. Mulvaney told staff in a memo last month that he would balance consumer-protection efforts against the potential cost to financial institutions. He also said he wants to better align the CFPB’s priorities with what is bothering consumers, suggesting they are more concerned about debt-collection practices, for instance, than payday lending.

Even some Democrats say Cordray may have pursued the agency’s mandate too aggressively. Financial institutions were especially peeved by so-called “enforcement by regulation.” They say the CFPB used investigations and prosecutions, rather than rulemaking, to curb perceived bad behavior.

Mulvaney plans to use his discretion differently. He has the authority to investigate episodes like the cyber attack on Equifax, which potentially exposed confidential information on 143 million Americans. Equally, he can choose not to – and the company is in any case under broader scrutiny. The Federal Trade Commission is conducting an investigation, and state attorneys general may now pick up some of the slack.

Even so, it means Mulvaney is letting go something that seems squarely within his remit. Given he believes in clear rules, he would do well to state in more concrete terms the agency’s priorities – and, by implication, which areas will be left to other regulators and enforcers. A bit more openness could do wonders for the CFPB’s own credit score.


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