CFPB chief freezes data collection; SEC takes first ICO action

Receiving Wide Coverage ...
Frozen: Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, said he has frozen the agency's collection of consumers' personal data due to concerns about cybersecurity. "Critics of the CFPB have long complained about the bureau's efforts to collect consumer data on credit cards and mortgages through its disclosure rules, consumer complaint database and enforcement actions," the Wall Street Journal explained. The freeze means that lenders can continue to gather aggregate data on loans but not information that can trace them back to individual borrowers. Wall Street Journal, New York Times, Washington Post, American Banker here and here

Another wild bitcoin day: Bitcoin futures are now set to trade next week. Cboe Global Markets said its new bitcoin futures will go live on December 10, with the first full day of trading scheduled for the following day. Its crosstown Chicago rival CME Group will launch its own bitcoin futures a week later. Wall Street Journal, Financial Times

While that's going on, the Securities and Exchange Commission announced its first enforcement action against an initial coin offering. The agency said PlexCorps, a Canadian company, violated American securities laws in raising $15 million through an ICO, calling it a "scam" run by a "recidivist Canadian securities law violator."

SEC Chairman Jay Clayton said that may not be the last such enforcement case. "As long as they ignore the securities laws, they'll see more actions," he told reporters following an accounting conference in Washington. However, he stopped short of saying the SEC planned to issue formal guidance on bitcoin and ICOs.

But James Mackintosh, the Wall Street Journal's investment editor, says "cryptocurrencies are getting too big for regulators to ignore much longer," and cites "two decent reasons for them to interfere, both of which would have potentially catastrophic results for the survival of bitcoin and other digital currencies."

"The first and most important is the danger to the financial system as it becomes increasingly entangled with bitcoin," he writes. The other danger is "perhaps even more serious from the point of view of the central banks and regulators: bitcoin might not crash. If the speculative fervor in the cryptocurrency is merely the precursor to it being widely used as an alternative to the dollar, it will threaten the central banks' monopoly on money."

The Post also ran an item titled, "Why you should be worried about the escalating value of Bitcoins."

Wall Street Journal
Victorious again: Credit unions' successful lobbying effort in Washington to preserve their tax-exempt status makes it "a case study on why the tax code is so hard to rewrite," the Journal reports.

"Credit unions' secret weapon is their ability to tap not only credit-union executives but also their roughly 110 million members," the paper says. "The problem for bankers: When they take up a political fight with credit unions, they often lose."

Guidance coming: The Treasury Department's Financial Crimes Enforcement Network plans to release further guidance on a rule requiring banks to identify their customers in order to combat money laundering and other criminal activity. The rule requiring banks to identify the beneficial owners of accounts was finalized last year and due to be implemented next May.

Financial Times
Credit score war: Will Lansing, the CEO of Fico, is dismissing as "Fako" a rival firm's credit score that is making inroads among lenders, including JPMorgan Chase and Capital One. Lansing said VantageScore, which uses nontraditional data to rate consumers' credit, is creating "confusion" in the marketplace. LendingScore accused Lansing of spreading "misinformation aimed at discrediting Fico's only real competitor. Thousands of lenders use VantageScore credit scores in their businesses, including for credit decisions."

Quotable
"I am taking data security very, very seriously. I think we should find ways to have as rigorous a data-security program as possible here before we start expecting that from people who we oversee out in the industry." — Mick Mulvaney, acting director of the Consumer Financial Protection Bureau.