WASHINGTON–Stating the CFPB’s open banking rule would put consumer data at risk, America’s Credit Unions is calling on the Trump Administration to rescind its plan and to reject a call by trade groups representing fintechs to uphold the rule (see related story).
In a letter to President Trump, America’s Credit Unions’ president and CEO, Jim Nussle, said the trade group has numerous concerns, including that it would require financial institutions with more than $850 million in assets to provide access to certain consumer data upon receiving a request from an authorized third party.
The latter is the model for open banking.
‘Justified and Essential’
As the CU Daily reported, in May the CFPB finalized its open banking rule that had been finalized under the Biden administration. The Trump administration has since said it will not enforce it.
“Your Administration’s instinct to question and ultimately vacate and rewrite this rule is not only justified, but also essential for protecting consumers and preserving fair competition,” the letter states. “When the legality of the CFPB’s 1033 rule was challenged in court, your Administration did the right thing by recognizing the rule’s flaws and agreeing it should be vacated and revisited. America’s Credit Unions supports your Administration’s continued position to vacate and rewrite the rule.”
What Rule Would Do
According to Americas Credit Unions, the CFPB rule would:
- Undermine genuine competition and consumer choice, especially in communities served by credit unions and smaller banks
- Impose massive new costs and burdens on “institutions like ours, “far beyond anything Congress intended in Section 1033 of Dodd-Frank.”
- Result in higher costs and less access for consumers due to enormous new technology expenses that cannot be shared with the third-party users of their data.
America’s Credit Unions also signed onto a joint statement with other financial services trade organizations addressing what it called “several falsehoods. Read the joint statement here.
Support for Bill to Limit CFPB
Separately, a bill to ensure the CFPB does not expand its authority under the Consumer Financial Protection Act has received support from America’s Credit Unions and state leagues.
Senate Banking Committee Chairman Tim Scott (R-SC) and Rep. Bryan Steil (R-WI) have introduced the Business of Insurance Regulatory Reform Act (S. 2419/H.R. 4735).
Specifically, it would amend the Consumer Financial Protection Act to revise the authority of the CFPB over activities regulated by a state insurance regulator, exempting the business of insurance from CFPB oversight, America’s Credit Unions said.
In a letter, the trade group said the bill “provide needed clarity to ensure that states’ rights to regulate insurance are explicit” and is necessary “because despite the CFPB exemption, there have been certain instances where the CFPB has seemingly overstepped its jurisdictional authority, which would create immense uncertainty.”