Last month marked the 13th anniversary of the passage of the Dodd-Frank Act, the legislation that sought to make the U.S. financial system safer for consumers after the 2008 financial crisis by creating a bill of rights for consumers' financial data. The Consumer Financial Protection Bureau (CFPB) is finally making good on that promise and is introducing a financial bill of rights. Sadly, those rights won't be extended to all: According to the CFPB's Director Rohit Chopra, low-income consumers will be left out.
Dodd-Frank included the crucial idea that consumers have the right to access their financial data when and how they wish and that the financial institutions that work for them cannot withhold that information. Consumer control of data has given rise to innovative tools that allow consumers to budget and plan with all of their financial data available in one place.
This is a win for consumer rights. It means that consumers will have the legally protected right to view and access their financial data, including their balance information and historical transactions, in whatever way works best for them. It means that consumers can take advantage of technological innovations, such as apps that pull all of their financial accounts into one place and provide a holistic picture of their finances. It also means that consumers will be able to more easily detect and protect themselves from fraud. Easy access to their financial data can help consumers improve their financial health, save time and take advantage of technological innovations that make the budgeting process easier.
Unfortunately, in its efforts to move fast and issue a draft regulation later this year, it seems that the CFPB only seeks to offer these new rights and protections in the narrowest possible fashion and to the narrowest possible group of consumers. In
This approach would inexplicably exclude important financial accounts related to government benefits like the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF). These accounts are vital to lower-income consumers, with over 42 million people relying on them to live.
Right now it's every bank for themselves when it comes to translating financial disclosures into languages other than Spanish. The process comes with a number of challenges, such as ensuring all customers can understand the information despite nuances in the different Chinese dialects.
When Chopra testified before the House Financial Services Committee in June, he
What will this mean in practice?
It will mean that a family living below the poverty line would not have the right to see the cash they receive from TANF alongside the cash they earn from working in the same budgeting platform. The government will force low-income people — and low-income people alone — to waste their time accessing multiple websites and apps to get a holistic picture of their limited financial resources. It means that it will be harder for lower-income consumers to detect and protect themselves from financial fraud.
High-income consumers can use innovative financial tools to bring all their accounts and historical transactions into view in one place, making it as easy as possible for them to manage their finances. Those with the most limited means and the smallest margin of error when it comes to managing their finances, on the other hand, will have the most limited access to their data, and would lack legally guaranteed access to the same kinds of tools for the public benefits that are essential to their household finances. This is unjust.
To be sure, I am a strong advocate for the CFPB and its desire to establish a bill of rights for our financial data in an expeditious manner. However, after 13 years our sudden need for speed should not trump our need for equity. We should ensure that these regulations protect all of us — not just the economically privileged. We should not be codifying income-based discrimination into regulation or creating a two-tiered system.
The CFPB still has time to shape exactly how it will implement section 1033 of the Dodd-Frank Act. It can make this right by expanding the scope of the proposed rule to include more account types, and especially including government benefit accounts in its regulations. For the sake of our democratic values, I hope it does.
