fb-pixel Skip to main content

US amasses Big Data on 10 million people; banks protest

WASHINGTON — The new US consumer finance watchdog is gearing up to monitor how millions of Americans use credit cards, take out mortgages, and overdraw their checking accounts. Their bankers aren’t happy about it.

The Consumer Financial Protection Bureau is demanding records from the banks and is buying anonymous information about at least 10 million consumers from companies including Experian.

While the goal is to sharpen enforcement and rule-making, banking executives question why the bureau is collecting so much without being more specific about the benefits.

‘‘Do they need the reams and reams and reams of data we’re having to provide to them?’’ Susan Faulkner, senior vice president at Bank of America, asked in March. ‘‘Don’t we have to find a healthier balance here?’’


Director Richard Cordray has said that the bureau needs raw material to make ‘‘data-driven’’ decisions based on how financial products and services are used or abused. Research will improve regulation and the marketplace, he said.

‘‘The more information there is, the more innovation there can be and the more competition there is among the institutions around customer service,’’ Cordray told consumer groups last year.

The bureau’s approach is part of a trend toward using data analytics, often dubbed Big Data, by Amazon.com, Google, IBM, General Electric, and others. They are mining massive pools of information for insight into areas including consumer behavior, manufacturing, and genetics.

The consumer bureau consolidates and expands US oversight of consumer finance. It supervises banks with assets over $10 billion as well as payday lenders, mortgage originators, debt collectors, and credit bureaus.

The law bars the agency from collecting data ‘‘for purposes of gathering or analyzing the personally identifiable financial information of consumers.’’

Sendhil Mullainathan, the bureau’s assistant director for research, said it is committed to protecting privacy and doesn’t collect personal data such as Social Security numbers.


Bureau researchers are assembling data from across the financial landscape, according to a review of government records. Credit-card information from nine banks will be stored and analyzed by Argus Information & Advisory Services, a consultancy that won a $15 million contract for the work, procurement documents show. The documents don’t name the nine banks.

Banks are also being ordered to provide records of credit-card add-on products, including credit monitoring and debt cancellation, said two people briefed on the matter. Last year, the bureau persuaded banks to submit data on checking-account overdrafts.

The bureau is buying other records from outside the banking industry. Experian, the credit-monitoring company, will be paid up to $8.4 million to provide data on 5 million to 10 million consumers ‘‘for use in a wide range of policy research projects,’’ according to contract documents. The bureau will also buy auto-loan information from Experian.

Clarity Services Inc., a credit reporting agency, will get $443,260 for providing data on short-term credit known as payday loans.

Together with the Federal Housing Finance Agency, the consumer bureau is also building a mortgage database that will integrate consumer credit information with loan and property records. CoreLogic Inc. will be paid $796,000 for loan-level data on mortgages.

‘‘It’s credible to say that within the next year, CFPB will be the best place for consumer finance data,’’ said Mullainathan, who is also a professor of economics at Harvard.