CFPB Report - February 20, 2015

CFPB Issues Report on Free Access to Credit Scores
On Thursday, February 19, 2015, the CFPB released a study on how consumers access their credit scores and credit reports. The study found about 50 million consumers now have free and regular access to their credit scores through their monthly credit cards statements or online. The report also highlighted some difficulties consumers may have in accessing this information, and how this could affect their financial wellbeing.
"Consumers' credit information is the foundation of their financial lives," said CFPB Director Richard Cordray in a press release. "Access to these scores provides an opportunity to engage consumers around their credit reports. Once consumers see their credit scores, they can be motivated to learn more about their credit history, check their full credit report, and take action to improve their financial lives."
Key points of the study indicated that consumers access their reports and scores in multiple ways, find credit reports and scores confusing, and may lack information to improve their credit histories. The study also found consumers who are more engaged in the financial system check their credit reports regularly.
CFPB Consumer Advisory Board Meeting
On Thursday, February 19, 2015, the CFPB Consumer Advisory Board met to discuss credit score updates, medical debt, and financial well-being. In opening remarks, Director Cordray addressed credit reporting, highlighting the CFPB's findings released the same day outlining how consumers access their credit information.
CBA Seeks Response from CFPB on Proxy Methodology
On Wednesday, February 18, 2015, CBA and other trade associations asked the CFPB to respond to the Charles River Associates (CRA) study released in November 2014 analyzing fair lending in the indirect auto sector. In response to the CFPB white paper admitting flaws in its own methodology, the American Financial Services Association commissioned CRA to conduct a study entitled: "Fair Lending: Implications for the Indirect Auto Finance Market."  The CRA study analyzed the CFPB's methodology and found "the Bureau's application of the Bayesian Improved Surname Geocoding (BISG) proxy methodology creates significant measurement error, which results in overestimations of minorities in the population by as much as 41 percent."
CBA asked the CFPB to publicly respond to the following:

  • Portfolio-level analysis of aggregated contracts sourced from dealers with different operating models, cost structures, pricing policies, locations, and competitive landscapes. These factors, along with the seasonality of auto sales and financing, are major factors that must be corrected for an analysis at the portfolio level.
  • Implementation of economic controls to adjust for legitimate business factors such as new, used, trade-in, options, insurance and warranties. Failure to consider business factors for observed disparities increases the potential of reaching erroneous conclusions.
  • Address and adjust for the bias within the BISG methodology and its overestimation of individuals within protected classes.


FDIC Report Reiterates Importance of Bank Branches
Even as mobile banking becomes more prevalent, the FDIC reaffirmed the continued dependence on bank branches in a study released Thursday, February 19, 2015. The FDIC found branches continue to be the primary means of how FDIC-insured institutions serve customers, with 94,725 banking offices in operation as of June 2014 – a mere 4.8 percent decline from the peak of 99,550 in 2009. Chronicling long-term banking trends from 1935 to 2014, the study points to four main factors that have influenced the number and distribution of banking offices over time, including population growth, banking crises, legislative changes to branching laws, and technological innovation.

White House Holds Cybersecurity Summit
On Friday, February 13, 2015, the White House held a "Summit on Cybersecurity and Consumer Protection" at Stanford University. The summit brought together stakeholders on cybersecurity and consumer protection to increase information sharing, public-private partnerships, and the adoption of best practices and secure payment technologies. The event featured remarks from Apple's Tim Cook and multiple panels of experts and industry representatives, including Kenneth Chenault of American Express, Brian Moynihan of Bank of America, and Richard Davis of U.S. Bank, among many others.
President Barack Obama announced he had signed an Executive Order making it easier for the U.S. Department of Homeland Security to share classified information on cyber-attacks with private companies. The summit also was used to broadcast private sector commitments to improve payment technologies. Visa announced it would adopt tokenization for online transactions by the end of Q1 of 2015, and Mastercard announced it will invest $20 million in new cybersecurity tools, such as biometrics. The president also announced the Federal government will accept Apple Pay as a payment method for many transactions, such as admission into national parks and Social Security benefits.
Plans for the summit were announced in October 2014 along with President Obama's BuySecure Initiative, which featured an executive order mandating chip and PIN technology on government cards, increasing government information sharing, and providing resources for victims of cyber theft.

House Financial Services Committee Holds Markup on Budget Estimates
On Thursday, February 12, 2015, the House Financial Services Committee held a markup to adopt the Committee's Budget Views and Estimates for the FY 2016 budget. The estimate could be used to highlight which programs under its jurisdiction are using taxpayers funds effectively, comment on performance, suggest how to strengthen or improve programs, and identify programs in need of reform or elimination. The Committee discussed and voted on a number of amendments, including two with recommendations for how to fund the CFPB, before finalizing the resolution.
"We can do better and we must do better by those who are trying to get ahead. The best way to do that is to build a healthy economy and to build it from Main Street up, not Washington down," said Committee Chairman Jeb Hensarling (R-TX) in his opening remarks. "We have tried that for six years and it has failed."
The Committee considered 14 amendments to the budget estimate, all of which were offered by Democrats. Two of these amendments sought to ensure that the CFPB's funding, which currently comes from the Federal Reserve, remains independent from Congress. Both amendments were rejected by Republicans. Republicans agreed to two amendments related to the Section 8 Housing Choice Voucher Program and ensuring sufficient resources for the Offices of Minority and Women Inclusion.

Trades Call on Congress to Protect Consumers, Avoid Retailer Distractions
On Wednesday, February 11, 2015, the National Association of Convenience Stores and the National Retail Federation sent a letter to Congress highlighting the fraud losses borne by merchants and the number of breaches occurring at financial institutions – a worldwide data point which inaccurately describes the present situation in the United States. The letter also outlined the retailers' argument for chip and PIN technology, which coincided with the creation of a new website sponsored by the Retail Industry Leaders Association.
In response to the letter, CBA and other financial services trade associations sent a letter recommending Congress focus on protecting consumers rather than placing blame on certain industries. Specifically, the trades called for a national data security and breach standard, incorporation of existing standards like Gramm-Leach-Bliley, and shared responsibility in protecting consumers and the costs of fraud.