The U.S. financial services industry generates an ocean of regulatory filings every year, many of which are required under laws meant to keep the industry from cheating, discriminating against, misleading, or otherwise taking advantage of its customers.
Much of that data, which generally contains no information about individual consumers, is at least nominally public. However, the sheer volume of information and the complexity of the files makes it very difficult for individuals and small organizations to process it.
That appears to be changing, however, as a result of policies at the Consumer Financial Protection Bureau, which has increasingly welcomed outside review of regulatory filings as a way to crowdsource information on financial services firms’ compliance with the law.
Last week, CPFB announced that it had upgraded its site to make Home Mortgage Disclosure Act data available with an application programming interface (API) that allows users to build custom applications for analyzing banks’ compliance with laws meant to prevent discrimination in mortgage lending. The agency has also made an online database of consumer complaints available for public research.
“The tool provides a much more user-friendly format and helps provide that information in a way that's more accessible to folks who maybe don't have statistical software and training. People can look at the entire data set, and can do custom queries and understand what's happening in their communities. It’s really going to help consumers and community groups better understand issues around access to credit for their local communities,” said Ren Essene, program manager for HMDA at CFPB.
The concept of crowdsourcing data on consumer protection has been part of the CFPB’s mission since before it was officially created in 2011. In an interview with National Journal in 2010 Elizabeth Warren (now a Democratic Senator from Massachusetts) said the agency would embrace the idea of using outside groups to review data.
"It’s also about how we will receive information about how the world works," Warren said. "It’s about how people will tell us about what is happening.” Warren went on to describe the public’s input as generating “’heat maps' for targeted zip codes where problems are emerging, or among certain demographic groups, or among certain issuers.”
To be sure, one person’s crowdsourced investigation is another’s mob justice, as investigators learned in the wake of the Boston Marathon bombing last year. No official action will be taken by the agency without a full investigation by its own staff.
However, consumer protection advocates believe the trend is very positive.
“Putting data out there, and giving more eyes a chance to look at it is good government, said Ed Mierzwinski consumer program director at the U.S. Public Interest Research Group. USPIRG alone has published four different reports analyzing the customer complaint data that CFPB put online, he said.
Mierzwinski said that while a lot of the data that CFPB is making available has always been technically public, it hasn’t always been within the capabilities of consumer watchdog groups to analyze it. CFPB’s move, he said, helps level the playing field.
“More data disclosure and consumer crowdsourcing, said Mierzwinski, “puts information in the hands of the public to analyze markets and analyze whether the government is doing its job and the banks are obeying the law. Government will work better when people have more data to study the government.”
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