Progressive Coalition Demands Biden CFPB Enact Rule to Curb Wall Street Dominance

A coalition of nearly 20 progressive advocacy organizations on Thursday demanded that the Consumer Financial Protection Bureau swiftly approve a rule allowing bank customers to more readily access their personal financial data, a move the groups said would help curb Wall Street firms' outsized power and anti-competitive practices.

In a letter (pdf) to Acting CFPB Director David Uejio, the coalition argues that Wall Street banks frequently defy the intent of post-2008 financial crisis regulations by "creating obstacles to easy data access," preventing customers from easily transferring to smaller, independent institutions.

"Big banks use this control of data to prevent consumers from switching to different financial institutions. The CFPB should aggressively fight back against this anti-competitive practice."
--Morgan Harper, American Economic Liberties Project

"The massive amount of consumer data that large financial institutions have accumulated gives them a significant built-in advantage over competitors. Many new market entrants rely on a consumer's ability to access and transfer their financial data to provide services, but big banks add unnecessary friction to this process to inhibit competition," reads the letter, which was signed by the American Economic Liberties Project, Public Citizen, and more than a dozen other groups.

"Even services that do not directly compete with large financial institutions are perceived as threats to established big banks that want to control access to their customers and maximize brand loyalty," the letter continues. "This ultimately hurts consumers, who are more likely to find themselves locked into accounts with which they are unsatisfied and unable to access the financial products of their choosing."

To break Wall Street's stranglehold, the progressive coalition is calling on the CFPB to enact a rule that gives bank customers control of their own financial data and enacts privacy protections to ensure that easier access does not undermine data privacy.

Morgan Harper, director of policy and advocacy at the American Economic Liberties Project, said in a statement that "consolidation in the financial services industry has given big banks inordinate power, especially over a huge amount of consumer data."

"Big banks use this control of data to prevent consumers from switching to different financial institutions," said Harper. "The CFPB should aggressively fight back against this anti-competitive practice and implement a rule that clarifies the true intent of Section 1033 of the Dodd-Frank Act: consumers have an explicit right to their data at all times."

Predictably, Wall Street firms have pushed back against calls for robust enforcement of Section 1033, which states that "a consumer financial services provider must make available to a consumer information in the control or possession of the provider concerning the consumer financial product or service that the consumer obtained from the provider."

As HuffPostreported last month, "The Clearing House, whose membership includes JPMorgan Chase, Citigroup, and Bank of America, suggested CFPB should issue guidance on the topic rather than create a formal regulation."

"They've also suggested giving consumers more control over their data could create security risks, a concern consumer advocacy groups have downplayed," HuffPost noted.

The progressive coalition wrote in its letter Thursday that it is "no surprise that large financial institutions, whose bottom lines benefit from reduced competition, as well as trade associations and other organizations that represent them, have cautioned the agency against moving ahead with a formal rulemaking."

"It is crucial that the CFPB refuse to yield to such pressure," the groups wrote.

Despite opposition from powerful Wall Street interests, consumer advocates are cautiously optimistic about the chances of a strong data rule given the record of Rohit Chopra, a longtime corporate critic and President Joe Biden's nominee to lead the CFPB.

During a confirmation hearing in March, Chopra told members of the Senate Banking Committee that he doesn't "want to see a banking system or financial services system where new market entrants cannot get in, cannot compete and win the day."

"Dominant players should not be able to squelch out competition," Chopra continued, "and that's something we always need to be mindful of."

The Senate Banking Committee's vote on whether to approve Chopra's nomination ended in a 12-12 tie, but he will still be allowed to proceed to the full Senate under the chamber's current organizing resolution. It is unclear when the Senate will hold a final confirmation vote.

Mike Litt, a spokesman for the U.S. Public Interest Research Group, told the Los Angeles Times last week that Chopra "is exactly who should be in the driver's seat to not only get the CFPB back on track, but to take it even farther than ever before."