Apparently, the bank lobby has not heard of “the Barbra Streisand effect”

August 18, 2014
August 18, 2014

Want to keep some news from getting out? It’s probably best not to call more attention to it, by, say, launching an advertising blitz around it.

But that’s exactly what the Financial Services Roundtable did today. The group, which advocates for America’s financial services industry, kicked off a week-long campaign against a public complaint portal maintained by the Consumer Financial Protection Bureau (CFPB), a regulatory agency erected in the wake of the financial crisis to prevent, among other things, the kinds of predatory lending that helped drive the housing bubble. The CFPB accepts complaints from people who have problems with everything from home loans to checking accounts, and publishes that data (stripped of customer information but not of the financial institution’s name) to shed light on trends in consumer finance.

Needless to say, the banks don’t like having complaints about them aired publicly. So they’re launching an advertising blitz in Washington, DC, and on the internet to warn that the information may be inaccurate. But it’s a little akin to the now-infamous episode where Barbra Streisand sued photographers for snapping a picture of her Malibu mansion and the publicity around the lawsuit dramatically increased the reach of the photos. Which is to say, if you haven’t heard of this obscure consumer finance complaint database that makes banks look bad before, you have now.

One of FSR’s big concerns is that many of the complaints don’t turn out to be caused by wrongdoing on the companies’ part. Indeed, the CFPB’s annual complaint report noted that 68% of last year’s complaints were closed after the company explained the situation to its customer.

But FSR doesn’t mention that the complaints aren’t published until the banks have responded or 15 days have passed, and those that have been resolved are noted. If a complaint is made up or there is no evidence of a transaction, the complaint is not published. The large share of resolved complaints could be taken as evidence of effective pressure for a consumer response—or, perhaps, poor initial communication. And, of course, there are the 7% of complaints that require monetary compensation or the 11% that require the bank to make changes to how they do business with the customer.

The banks are probably less worried about consumers getting the wrong idea from the database—your average shopper probably won’t be pulling from this API—but because it forces them to invest in responding to consumer complaints directly, within two weeks, rather than just firing off form letters. This, indeed, is the point: Massachusetts Senator Elizabeth Warren, one of the key architects of the CFPB, wrote in her memoir that the database was an attempt to crowd-source regulatory oversight and put the onus on the banks to respond quickly to their customers, since otherwise the small agency doesn’t have the ability to deal with many different complaints—it published 113,200 last year.

FSR’s campaign is characteristic of the fights the banks have led against the implementation of financial reform; while the 2010 Dodd-Frank law requires this database to exist, lobbyists will focus on the process by which it has been implemented in an effort to delay or overturn the rules. It’s not clear yet whether the banks will mount a legal challenge against the database, as it has against other rules, or focus on making its case to the public. Regardless, it’s always a hoot to see a trade organization complain about someone presenting just one side of the story.

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