As part of its ongoing effort to destroy the private business of banking in a free market economy and substitute a federal government-directed banking system better serve the consumers it was created to protect, the CFPB has recently proposed to have consumers who submit complaints to the CFPB to also submit a narrative of the complaint, all of which, together with a written response from the financial institution that is the subject of the complaint, would be included in the CFPB's publicly available Consumer Complaint Database. Why? Glad you asked.
These first-hand accounts would make the database more useful by providing more context to the complaints, and allowing the public to see if a problem is an isolated incident or part of a bigger trend in a certain geographic area or a particular company, the bureau contends. Plus, more details about complaints would help consumers who are considering a certain financial product or service make better decisions, according to the bureau.
The bureau also hopes that these narratives would serve as an additional incentive for businesses to address problems with their financial products or services and “more vigorously compete over good customer service.”
“The consumer experience shared in the narrative is the heart and soul of the complaint,” said CFPB Director Richard Cordray. “By publicly voicing their complaint, consumers can stand up for themselves and others who have experienced the same problem. There is power in their stories, and that power can be put in service to strengthen the foundation for consumers, responsible providers, and our economy as a whole.”
In addition, what red-blooded American doesn't love a public bitch-fest, especially one available over the internet? OK, maybe Cardinal Dolan doesn't, but most of us can't wait to hear about how Betty Lou got hosed by Citibank cutting off her credit card solely because she overdrew her credit line five days in a row at "Crunchy Munchie's" pot shop in downtown Denver. She simply forgot she used it yesterday, and yesterday kept turning into today, which turned into tomorrow, and baby, that was one powerful batch of hash marshmallow parfait! And the really amazing part was that they charged her credit card in what is an all-cash business. How rad!
As data wonk Bob Hayes discussed a couple of years ago at a Federal Reserve Bank forum on the CFPB's credit card complaint database, the ABA and other banking mouthpieces aren't crazy about a federally sponsored "gossip column" whose reliability has yet to be proved. While Bob agreed with such critics that more research regarding the validity of complaints is in order, he also contended that "[t]he current analyses, however, suggest that the CFPB credit card complaint database provides clear, reliable and valid information for banks about their credit card practices."
The CFPB's proposal is open for public comment for 30 days. Bank's that have concerns about the issue can, of course, submit their objections to The Adjustment Bureau. However, as The Dallas Business Journal's Kent Hoover dryly notes, "it doesn’t look like industry complaints will have much influence on the bureau." I think that's a safe bet.
What bankers can look forward to once this process takes full flight is what the CFPB and their primary federal bank regulators will do with the "narrative" bashings banks are surely going to suffer. We all know that "reputational risk" is a term the regulators have fallen in love with these days. It's such a squishy term that it can form the basis for a safety and soundness violation any old time a regulator wakes up on the wrong side of the bed. Just wait until the public complaint "narratives" start forming the basis of informal, or even formal, enforcement action. The CFPB will call that "validation."