A trade group led by Minnesota's former governor says the Consumer Finance Protection Bureau's plans to post them would be one-sided and unfair.
WASHINGTON – The digital billboard displayed at the Pentagon Centre shopping mall just outside the nation’s capital carries a simple message: Rumors don’t equal facts.
The billboard, along with others like it and ads on Facebook, Twitter and the online publication Politico, are all part of a new push by the financial industry’s main trade group to stop a government website from posting stories of people aggrieved by the nation’s banks, mortgage lenders and credit card companies.
In July, the U.S. Consumer Finance Protection Bureau (CFPB) announced plans to post such stories on its website. It already lists general descriptions of hundreds of thousands of complaints against financial institutions for such things as hidden fees, late charges and misbegotten debt collection.
As a Sept. 22 deadline approaches for public comments on more detailed disclosures, the financial industry has pushed back through its Financial Services Roundtable trade group, which includes two prominent Minnesota-based companies and is led by the state’s former governor, Tim Pawlenty.
“The CFPB’s plan will feature only one side of the story, and such one-sided accounts will not advance the CFPB’s mission of better informing and helping consumers,” roundtable CEO Pawlenty said in a news release last week.
In blasting what it calls “rumors,” the financial industry ratchets up the political fight over how to regulate the industry and its conduct that contributed to the Great Recession. The industry is confronting a unique use of social media by a government agency, said Don Kettl, dean of the University of Maryland’s public policy school.
Kettl called CFPB’s tactic a “strategy of outrage” designed to change the behavior of businesses, some of which are now paying the federal government billions of dollars in fines over their lending practices. The CFPB, created by Wall Street reform laws passed in 2010, “is on the bleeding edge of challenging industry in ways that industry doesn’t know how to respond,” Kettl said.
A financial industry public relations campaign that calls attention to the very complaints the industry does not want to emphasize “cries out for a Jon Stewart treatment,” Kettl said, referring to the popular TV news satirist.
‘Stick in the eye’
Still, posting consumer narratives could erode industry cooperation that the nation needs to make its financial system work better, warned Richard Painter, a corporate and securities law specialist at the University of Minnesota.
“There is a lot of hostility toward the Consumer Finance Protection Bureau from the banking industry — a lot of it unjustified,” said Painter, a former ethics lawyer in the George W. Bush administration. “But this seems to be an unnecessary stick in the eye.”
Consumer advocates generally praise the government’s attempt to make more detailed complaints available so the public can identify problematic practices among specific companies.
“Americans are rightly jaundiced about the financial system,” said Bart Naylor, a financial policy specialist with the consumer group Public Citizen. Naylor called the Financial Services Roundtable campaign against story posting “a self-interested response that belittles consumers.”
“Adding narratives [to the CFPB website] goes a long way to empowering consumers to decide what services to choose,” he added.
Financial Services Roundtable officials said Pawlenty was not available to speak with the Star Tribune. Minnesota-based Ameriprise Financial and U.S. Bancorp, both members of the Financial Services Roundtable, did not respond to requests to comment on the complaint-posting plan. Neither did state-based TCF National Bank, which is not a roundtable member, but is mentioned in complaints posted on the CFPB site.
In an interview, the Financial Services Roundtable’s director of consumer financial services, Anne Wallace, said posting narratives of consumer complaints could “mislead and confuse.” The government, she said, would be giving credence to information it does not verify.
“There’s bound to be a lot of confusion about what happened,” Wallace said. “We don’t think that will help [other consumers] make sound financial decisions.”