Piggy-backing on the recent criticisms lodged by the Independent Community Bankers of America, the Credit Union National Association (“CUNA”) and American Banks Association (“ABA”) recently joined the chorus of objections against the CFPB’s burdensome requests to data processors for information regarding bank and credit union overdraft policies. In November 2014, the CFPB ordered Fiserv, FIS Global, and Jack Henry to provide significant amounts of information about the overdraft program services they provide to depository institutions.
Fiserv responded in May 2015, stating: “We are currently assisting the CFPB at their request. They are currently researching overdraft programs and have asked us to provide information about our hosted account processing clients’ system settings pertaining to overdraft programs. We are making clients aware of the CFPB request, and the assistance that we are providing.”
Responding by letter to CFPB Director Richard Cordray, CUNA President and CEO Jim Nussle said: “I urge you to take into consideration the importance of overdraft programs to consumers who do not want to be embarrassed at the point of sale and want the confidence of knowing a purchase or transaction, such as a mortgage payment, will be honored.”
He also expressed concern about imposing an unbudgeted and unplanned financial burden on credit unions.
The ABA was similarly concerned, and even questioned the CFPB’s authority for such a request in a memo to state associations:
The order demonstrates the dangers of the authority provided to the Bureau by Section 1022 of the Dodd-Frank Act. That section grants the Bureau overly broad authority to request virtually any information from any company that offers a financial product or service, or acts as a service provider to financial companies, like Fiserv, FIS and Jack Henry. The Bureau’s order raises serious questions about Section 1022, including issues of due process, appropriate limitations, who bears the costs, and perhaps even constitutional matters. This example certainly makes clear that Congress must reform this provision.
The ABA’s memo further claimed that the data request would require Fiserv to expend thousands of hours of employee time, inevitably passing some of the costs along to its client financial institutions and resulting in higher fees for consumers.