WASHINGTON, DC – FEBRUARY 10: The exterior of the Consumer Financial Protection Bureau (CFPB) Headquarters is seen on February 10, 2025 in Washington, DC. According to media reports employees of the CFPB were notified that the headquarters would be closed and that employees were to work from home. (Photo by Anna Moneymaker/Getty Images)
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The Trump administration is on the verge of making a big mistake. See reports that its Consumer Financial Protection Bureau (CFPB) intends to merely amend Rule 1033, and in a way that still limits the ability of U.S. banks to charge a market rate for customer data they’ve compiled at great expense.
For now, Rule 1033 requires financial institutions to provide consumer data to authorized third parties and fintechs for free. While the Trump administration apparently plans to yet again amend the errant rule, price controls that were part of the initial Rule will remain. Which requires a brief digression.
Specifically, you can’t cherish savings and despise banks. It’s that simple.
While savings options grow by the day, an overwhelming majority of Americans continue to warehouse their savings in traditional checking and savings accounts provided by large banks. It’s the markets at work.
Furthermore, it’s a reminder of just how much pressure U.S. banks are under. Amid intense competition, they’ve been chosen protect what is precious: the savings fruits of customer work. And the savings placed in the care of banks continue to grow.
Amid this growth, banks continue to spend enormous sums to protect the savings of their customers from all manner of fraudsters intent on devising ways to separate Americans from their savings. In placing an increasingly expensive and impenetrable wall around Americans and their savings, banks have crucially and understandably developed a substantial amount of knowledge about their customers.
This is understandable because learning about customers as a way of meeting and leading their needs is as old as business is. It’s crucial because the more that U.S. banks know their customers, their buying habits, and their tendencies in general, the better they can protect them from scam artists.
Translated, in spending tens of billions on protections of the wealth entrusted to them, banks are investing not just in a better wealth future for customers, they’re also developing much better ways to protect their customers from fraudsters who are unrelenting when it comes to devising ways to shrink their wealth.
Bringing it back to Rule 1033, the Trump administration should be cheered for acknowledging the above truth. By revising the execrable rule that says banks must spend tens of billions to create crucial information that they must give away to third parties for free, the Trump administration is improving on an unfortunate commercial state of play. That’s because price controls are always and everywhere problematic precisely because they raise the cost of providing the market good desired in the first place.
In this case, fintechs and other approved third parties very much desire the customer data produced by banks, they plainly profit from it, and they want more of it. Banks dispute none of this, and in no way are out to restrict the careful dissemination of customer information. They’re simply noting that this data is created expensively, and because it is, they can’t give it away for free.
Which is why it’s such a mistake for the same Trump administration that’s implicitly acknowledging the folly of price controls to let them remain somewhat. See above.
Just as you can’t cherish savings and hate banks, you also can’t treasure customer data and penalize the entities providing the data. Here’s hoping the Trump administration will keep the previous truth well in mind as it comes closer to a much hoped for revision of Rule 1033.