The release of the Consumer Financial Bureau’s federal consumer financial complaints database is little more than the regulator stroking its ego.
Anyone that considers carefully what the regulator achieved through the database is left to wonder why it feels so impressed with itself.
The CFPB created the largest database of financial complaints—and it wants us to recognize its “success.” From that perspective, perhaps, its performance is big stuff—to be touted—and publicized.
But take a closer look.
Consider that from July 21, 2011 through Feb. 28, 2013, the regulator collected, investigated, and responded to around 63,700 mortgage complaints, according to the CFPB’s Consumer Response Annual Report: Jan. 1-Dec. 31, 2012 and released in March 2013.
In addition, the bureau collected and handled 90,000 complaints on mortgages, student loans, bank accounts and services, other consumer loans, and credit cards.
That information was used to create the database spun with great artistry as the largest one in the U.S. But because there is very little, if any, competition for that crown, it’s a dubious distinction at best.
Moreover, considering the total number of payments borrowers make and servicers handle, the volume of loans that are originated, the database suggests that complaints occur in far less than 1% of all the originations or servicing transactions in the U.S.
More importantly, the percentage of transactions the database reflects is too small to be of any consequence. Dissatisfied borrowers are not calling the regulator, at least in meaningful numbers, to gripe. Borrowers have complaints, but the CFPB is not capturing most of those incidents.
It’s possible a reasonable person could argue that the CFPB is off to a good start, and many of us would agree, but no one can consider it worthy of anything more than lukewarm accolades—much less an exercise in inside the beltway chest beating.
To collect that information, the CFPB relied on what it described as cutting-edge technology, including secure company and consumer portals. In addition, 46% of the complaints were collected through the Internet.
The mortgage products included are reverse mortgages, conventional fixed mortgages, conventional adjustable mortgages, and home equity loans or lines of credit.
It appears the CFPB sees the database as a way to remove abusive practices from the marketplace and provide borrowers a purer market in which to do business.
The people’s watchdog has delivered and that’s a story the CFPB wants told. In the wake of the mortgage meltdown and Madoff scam, it has swooped in and protected consumers from unsavory characters.
From its perspective, it expects to be recognized for doing a darn good job of protecting financial consumers from fraud, gathering information on them, handling complaint, and it wants all of us to know about it.
The volume of complaints, truth be told, impressed me when I first read it. Stats don’t lie, I reminded myself, but in the hands of a skilled spinster they often serve to obscure a lack of news.
The CFPB wants us to remember that it is helping to make the financial marketplace safe for average homebuyers again. We all remember them—naive suckers, easily separated from their money, especially in the absence of a powerful regulator.
It makes many of us feel good to know a regulator is watching out for us. Fighting the good fight. Collecting complaints and following up with transgressors. It comforts many people.
The database may one day help preserve a sound, transparent marketplace, but it’s too soon to trumpet the database as anything close to a success.
Matt Strickberger is the managing partner of OnPoint PR and Consulting LLC, a public relations firm that represents lenders, servicers, technology companies and others. He was editor of Mortgage Technology magazine from 1997-2000. If you have comments or suggestions for future columns, email him at mstrickberger@onpoint-pr.com.
