Why?

Officials at the Consumer Financial Protection Bureau are conducting a massive, NSA-esque data-mining project collecting account information on an estimated 991 million American credit card accounts.

It was also learned at a Congressional hearing Tuesday that CFPB officials are working with the Federal Housing Finance Agency on a second data-mining effort, this one focused on the 53 million residential mortgages taken out by Americans since 1998.¹

Once, the sole repository of massive amounts of sensitive data about the citizens of the US was the IRS. That agency, at least historically, accepted responsibility for probity and confidentiality with respect to the information in its computers. Indeed, employees of the IRS were and are subject to criminal penalties for the misuse of the data under their control. The standards to which they are held are much higher than those which are applied to other employees of the federal government. One can argue as to whether or not they might have lost their way a bit, become politicized and thus prone to misuse of the information they possess, but on the whole I think most Americans still view the agency with fear, yes, but also with a certain confidence that the data they yearly turn over to them remains out of reach of for the political class. Moreover, the IRS is subject to oversight by Congress as well as the executive branch and, though rare, breaches of trust when they occurred have tended to be viewed as truly beyond the pale.

The revelations of widespread NSA data mining of phone and internet communications produced an uproar which has led to at least token reforms, thanks to a light being shined on the NSA’s activities as well as Congressional oversight. Though Congress did not itself undertake any legislation limiting the activities of the NSA, their ability to do so forced the hand of the administration. No such pressure can exist to limit the reach of the CFPB. It is part of the Federal Reserve for which, properly neither the executive or legislative branches have oversight. Independence is essential for the functioning of a central bank but inimical to an agency which has the ability to affect the financial affairs of of the populace.

But let’s go back to the word I used to open this post – Why. Why does the CFPB need this information, what do they intend to do with it and perhaps most tellingly why do they need information on 85 – 90 percent of the active credit cards in the country when a smaller sample would suffice for modeling consumer behavior? It’s a simple question but nowhere have I seen an answer. It does seem to be important, really important since in the Congressional hearing CFPB Director Richard Cordray responded to this question in this manner.

“Would you object to getting permission from consumers, those people who you work for, before you collect and monitor their information?” Rep. Sean Duffy, R-Wis., asked Cordray.

“That would make it impossible to get the data,” Cordray replied.

Which is the sort of imperial response one would expect from someone secure in the knowledge that his interlocutors had no power to alter his plans.

This sort of data collection is troubling at any time, more so when it is undertaken by a government entity not subject to control. In a representative democracy an agency like the CFPB has no business existing outside the normal bounds of oversight and control. Frustrating as it may be at times, the US system of governance has served our needs admirably. No other ruling contrivance has guaranteed and delivered the sort of privacy and immunity from governmental intrusion into private affairs as has our system. The CFPB is an outlier born in a period of legislative frenzy. It’s mission may be worthy, but it needs to be conducted under the same sort of control which we demand of all other functions of government. Its overreach in this instance validates that need.

¹ Excerpted from the Washington Examiner.