Facts Matter*
From the Consumer Bankers Association
*Regulations can have serious impacts for markets, companies and consumers. Accordingly, it is important for regulators to provide and appropriately analyze relevant facts before acting. This helps reduce the risk of unintended consequences and harm to consumers.
Facts matter when policymakers write regulations.
Over the past few years, the CFPB has justified its rulemakings by publishing press releases, blogs, reports, and other public statements that appear to misconstrue or mischaracterize its own data.
This has raised questions about whether their policy agenda is more focused on political wins than what is empirically best for the public.
In response, CBA launched “Facts Matter” using the Bureau’s own data and analysis to try to reground the policy discussion around objective data.
“You are entitled to your opinion. But you are not entitled to your own facts.”
Former U.S. Senator Daniel Patrick Moynihan
Facts matter on credit cards.
Credit cards are the primary way consumers gain access to and build their credit. They are an essential banking product that provides a buffer for people when they face financial challenges.
Current CFPB proposals would severely impact both cost and access to credit cards and are bolstered by a misrepresentation of the facts.
The CFPB misrepresented their own data on…
Competition in the credit card market
The CFPB has pushed forward major, industry-reshaping policy changes around a policy thesis that there’s a lack of competition for consumer financial products and services. CBA uses the CFPB’s CARD Act Report’s data to show this is not an accurate portrayal of the market.
How consumers fare with credit cards
CBA highlights how the CFPB’s press statements regarding “persistent debt” in the credit card marked differ greatly from the data and conclusions in its own CARD Act Report.
The prevalence of fees in the use of credit cards
Recent CFPB public statements mislead market observers by painting an inaccurate picture of the credit card marketplace. CBA uses data from the CFPB’s CARD Act Report to show the true story on fees.
Basic risk-based pricing and how interest and rewards work
Stunned by the CFPB’s apparent lack of understanding when it comes to the cost of borrowing and risk-based pricing, CBA explains and raises concerns about a divide between experts and politics at the CFPB.
Who pays for credit card rewards
Increasingly cited by critics of credit cards, we dive into a recent Federal Reserve working paper to separate the facts from the fiction. These critics miss a key finding of the author’s research: the vast majority of money paid into rewards cards comes from high-income consumers, with the benefits of rewards cards spread out more evenly across cardholders of all incomes.
The diversification, competition, and value of rewards programs
A report from the CFPB once again mischaracterizes the highly competitive credit card market, specifically rewards programs. We call out these distortions, showing how competition in the market and choice are actually benefiting consumers with diverse and valuable rewards options.
The difference in interest rates between large and small banks
The CFPB’s recent comparison of credit card interest rates between large and small issuers is fundamentally flawed. We highlight errors in their analysis, revealing the CFPB ignored key data and misrepresented the actual rate differences which show large issuers, in fact, are more likely than small issuers to offer products with subprime credit scores consumers with lower credit scores.
Credit card revenue concentration
The CFPB argues that the credit card and commercial banking markets have become dominated by a few major players to try and justify its highly political regulations. In this blog, we use U.S. Economic Census data to show how banking sectors have become more competitive over the past two decades.
Facts matter on overdraft and non-sufficient funds.
Consumer Bankers Association research has shown that overdraft services, like credit cards, act as an buffer during hard times, providing emergency funds for essentials when people need it most. Unlike credit cards, overdraft services provide extra funds for people who lack credit or have been unable to obtain credit.
Despite this, the CFPB fails to acknowledge the value of overdraft for these consumers and how banks are working to reduce costs by…
Failing to account for the nearly 20 percent of Americans who lack credit scores and may rely on overdraft services to make ends meet
We spotlight how overdraft services are essential for consumers without access to traditional credit products, serving as a crucial safety net. By ignoring these consumers, the CFPB’s portrayal is flawed, focusing on outdated data and missing the true value of overdraft protections.
Ignoring data on bank-led fee reductions to score political points
Most major banks have already removed NSF fees without regulatory mandates, saving consumers billions. The CFPB’s reliance on outdated data to justify new rules is a disservice to consumers who are already benefiting from these changes.
Ignoring the impact of bank-led overdraft innovation that has saved consumers billions
Most banks have significantly overhauled their overdraft programs by reducing fees, extending grace periods, and providing payment controls and alerts saving consumers billions of dollars.
Facts matter on scams and fraud.
CFPB seemingly attempts to use blog post to rewrite a decades-old statute
In a recent blog post, the CFPB highlighted an amicus brief in a case regarding the handling of consumer wire transfers that affected consumer accounts. Remarkably, the CFPB asks the court to rewrite the plain language of the Electronic Fund Transfer Act, and effectively reverse decades of settled law. By issuing the blog post, the CFPB presumably would apply this new “rule” to the industry at large. Attempting to stretch electronic payments laws beyond their bounds is not a viable solution to address scams and fraud. Scams and fraud are serious, interdisciplinary problems. The financial services industry is working with stakeholders across other private sector industries, but need the CFPB and other agencies to commit to collaborating thoughtfully and earnestly in order to reduce the risks consumers face from scams and fraud.