The president of the Southwest Public Policy Institute (SPI) said the CFPB has “gone a little off the rails” since its inception in 2011.
SPPI President Patrick Brenner made his comments during a recent American Legal Record Podcast discussion about the CFPB’s recent circular about price comparison shopping sites.
The full podcast episode can be found at Apple Podcasts and Spotify.
“The intent of the agency's (CFPB) formation, which was authorized in 2010 by the Dodd Frank Wall Street Reform and Consumer Protection Act, was originally meant to be noble and self-evident,” said Brenner. “It was to protect the financial health of American consumers.”
“And since 2010 and the establishment of the CFPB, I think they've gone a little off the rails and they've wandered into regulating areas that I don't even think they mean to wander into,” he said. “And that's where we enter the latest circular that was published by the CFPB earlier this year - it was the CFPB circular that targets specifically comparison shopping.”
The CFPB published a circular on February 29, 2024 asking, “Can operators of digital comparison-shopping tools or lead generators violate the Consumer Financial Protection Act (CFPA) by preferencing products or services based on financial or other benefits to the operator?”
“Yes,” concludes the CFPB circular.
“What that is, these are Expedia, it's Angie's List, it's the shopping tools like Credit Karma that consumers use on a regular basis to compare and contrast the different products available to them in different markets,” said Brenner. “I mean, what would we do without Expedia, and with summer vacations coming up, how are many Americans going to be procuring travel arrangements if the CFPB is planning to outlaw comparison shopping tools like Expedia?”
The CFPB’s circular “hints at a future where the federal government might not just regulate but effectively dominate the consumer lending sector,” wrote Brenner in March 15, 2024 American Banker column.
The CFPB was established in 2011 following the passage of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. It operates as an agency of the United States government with the primary mission to enforce federal consumer financial laws and protect consumers in the financial sector.
The bureau's jurisdiction encompasses banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, and other financial companies operating in the United States. The bureau spent $2.75 billion in FY 2023, according to the Government Accounting Office (GAO).
SPPI is a research organization focused on formulating, promoting, and defending public policy solutions. It operates in eight U.S. states: Oklahoma, Texas, Colorado, New Mexico, Utah, Arizona, Nevada, and California.
Leyla Gulen: [00:00:00] Welcome to the American Legal Record podcast. I'm your host, Leyla Ghulen. In this episode, we welcome our guest, Patrick Brenner. Patrick is the founder and president of the Southwest Public Policy Institute. His organization is responsible for formulating, promoting, and defending sound. Public policy solutions.
He's worked in public relations and marketing and was the vice president of development at the Rio Grande foundation, where he was in charge of the donor engagement and government transparency litigation programs among many of their things, Patrick, welcome.
Patrick Brenner: Well, thank you so much for having me, Leyla.
It's a pleasure to join you today.
Leyla Gulen: Likewise. Let's start here. In the capitalist society which we live, a competitive market is what sets us apart from other socialist and, dare I say, communist nations. But in a recent interview, you talked about That the foundation being shaken by the, of all things, the Consumer Financial Protection [00:01:00] Bureau regarding a new directive aimed at price comparison sites.
Um, certainly want to get into that, but maybe you could just lay out exactly what the CFPB is, what it does. What it was designed to do and when.
Patrick Brenner: Sure. Well, let's take a time machine and head back to 2008. Everybody remembers the financial crisis. I think I was still in high school at the time. But the intent of the agency's formation, which was authorized in 2010 by the Dodd Frank Wall Street Reform and Consumer Protection Act, it was originally meant to be noble and self evident.
It was to protect the financial health of Americans. Consumers. And since 2010 and the establishment of the CFPB, I think they've gone a little off the rails and they've wandered into regulating areas that I don't even think they mean to wander into. And that's where we enter the [00:02:00] latest circular that was published by the CFPB earlier this year.
And it was the CFPB circular that targets specifically comparison shopping And what that is, these are Expedia, it's Angie's List, it's the shopping tools like Credit Karma that consumers use on a regular basis to compare and contrast the different products available to them in different markets.
Segments of industry, the CFPB was specifically targeting comparison shopping tools in the financial services segment. But it is my belief that the language used by the CFPB in that circular that was published earlier this year is actually. inadvertently targeting or intentionally targeting sites like Expedia.
I mean, what would we do without Expedia? And with summer vacations [00:03:00] coming up, how are many Americans going to be procuring travel arrangements if the CFPB is planning to outlaw comparison shopping tools like Expedia?
Leyla Gulen: Right, exactly. And especially now in the market in which we have grown accustomed to living and working with, which everything is online and information is at our fingertips.
Let me just go back decades to the song by the miracles shop around. I mean, it's been instilled in us as Americans. That we need to shop around, that we have competition in this country so that people can make their own decisions as to how much they want to spend for any particular good or service. But, going back, before we really kind of dive into how this threatens, you know, The whole notion of shopping around through these various sites, you had mentioned that the CFPB by [00:04:00] 2010 has kind of gone off the rails and you say not necessarily by design.
So I'm kind of curious. So why you say that, how is it that they're unaware that they're headed down a path that isn't necessarily for the benefit of the consumer?
Patrick Brenner: I think that everything that I'm about to say is incredibly opinionated and please take it as such. I think that under the direction of Rohit Chopra, who has, how long has he been the director of the CFPB?
The CFPB. Do you know? That's a
Leyla Gulen: great question. Well, I think he's been the director now for maybe three years. It's been three years.
Patrick Brenner: I'm looking up on his Wikipedia right now since 2021. You're absolutely right. So he's been the director for those three years and we've seen more fines levied under Rohit Chopra's leadership than the [00:05:00] initial director of the CFPB, Richard Cordray.
Now, fines are One mechanism by which an agency can compel compliance for the entities that it is overseeing, but you and I both know that when a fine is levied against a financial institution, the, those fines get passed on to the end user.
Leyla Gulen: Or
Patrick Brenner: through increased prices in the products that are, we're eventually buying, whether it's increased costs for checking accounts, increased credit card late fees, which the CFPB is now bringing in, um, action to limit credit card late fees to 8, and that's being challenged all over the place.
But if the CFPB is let loose to run amok like this, specifically with overturning the entire concept of a credit card late fee, I mean, we could see credit card benefits go away. I mean, if you like your Southwest Rapid Rewards points and you [00:06:00] use the Chase Southwest Rapid Rewards credit card, you could effectively see those points go away because it is no longer economically feasible for those.
Banks to maintain those reward programs in the aftermath of the CFPB's rulemaking on credit card late fees being limited to eight dollars.
Leyla Gulen: Yeah, I mean, to be fair, we've actually seen that goalposts move in other instances, like around COVID. We've seen that change in the past where now you're, you have to meet these new thresholds in order to qualify for the perks.
Patrick Brenner: Sure. And I think that's a direct result of government meddling in the marketplace. And we, whether or not those goalposts are moving within the banks itself, if you look at what the CFPB is doing by artificially setting a price control on the cost of a end user financial product, like a credit card, that type of [00:07:00] price meddling, um, Well, result in reduced benefit to the end user.
I think it will. I think it's the CFPB gets away with price controls on credit card late fees that you'll see credit card perks go away or be reduced dramatically.
Leyla Gulen: Right, right. A lot of people rely on those for end of year. Christmas shopping and vacations during the summer and all sorts of things that would not have been possible otherwise and also to the tune of consumers who utilize these products in order to build those points more so than they would have had they known that they weren't going to get any benefit out of it.
Patrick Brenner: Sure. Yeah. And I think that is also made available to consumers that knowledge of these credit card perks is made available. By virtue of some of these comparison shopping tools. So there, we've pulled a a, we, we've done a full circle here.
Leyla Gulen: That was beautifully done. . Yes. Great job. I couldn't have done it without your help.
Thank you very much. . So, so here we [00:08:00] are back at Expedia and Auntie's list and all those things. So yeah, so these clearly are used by millions upon millions of users. To the benefit of saving those few dollars on this flight versus that, this hotel versus that, so on and so forth. So now you're saying that CFPB is wanting to hamstring those sites to the point of them ceasing to exist?
Patrick Brenner: Lila, I think that the CFPB doesn't even realize how broad its own language was in its recent circular. It was the first circular of 2024, the CFPB circular 2024 01, and in that circular, the language was so broad that it was Actually encompasses, in my opinion, it encompasses the comparison shopping tools like Expedia, Care.
com, Angie's List, ServiceMaster. com, SitterCity. com even. So, by, by [00:09:00] calling attention to comparison shopping tools in the financial services sector. But doing so with this overly broad language, under the direction of Rohit Chopra, we've all, they've exposed millions of Americans to not being able to find a babysitter.
Way to go.
Leyla Gulen: Yeah, yeah. Yeah, it's rather interesting. I think, um, how long can you be a baby giraffe? In government, because what I mean by that is the CFPB, when it was first launched, as you mentioned, was during the Great Recession as an answer to consumers woes to help them help protect them from financial predators.
Well, It took them a while to find their sea legs to a point where by filing a complaint about this company or that company and then taking action on it or it going in the round file, which I think happened more often [00:10:00] than not because it was staffed with a bunch of people who had never done this before.
They lacked the training. They lacked the experience. And here we are. So many years later, it still feels like they don't quite have a handle on who they are, what they are, and what their policies are supposed to be.
Patrick Brenner: Well, I think that, let's take a step back and really identify why the CFPB exists. And it exists to protect the American consumer.
I think we can both agree that was the original intent behind the creation of the agency. Right. That's
Leyla Gulen: so in
Patrick Brenner: it's title, but. Sure. That was the original intent. Yes. Yeah. Things have changed since then. The, the one, I mean, the funny thing about this particular circular that attacks comparison shopping tools is that.
The whole thing is really ironic. I mean, price comparison websites [00:11:00] are already achieving what the CFPB was fundamentally created to do, which is protect the consumer's pocketbook. By providing a platform for easy access to a lot of this competitive pricing information between different vendors and different products, these comparison pricing tools naturally enhance market transparency.
And drive down prices, they force these organizations, these corporations, these businesses to compete with each other, which drive down costs for the end user, which directly benefits consumers, specifically consumer pocketbooks. So why is the CFPB even exist if the market is already naturally offering a solution to consumers to protect their best interests?
Leyla Gulen: Absolutely. What does this say for sites like Amazon, where you can look at exactly the same product from seller to seller, yet one is marked half the price of the other? I think it's just naturally up to us to choose which one we feel the most comfortable. [00:12:00] Leyla,
Patrick Brenner: I think that I had such tunnel vision when I was looking into this initially, that I didn't even think about Amazon and the implications there.
And you might be right with this latest circular in the broad language, I think the CFPB might be inadvertently, Or advertently targeting corporations like Amazon too. And how many Americans use Amazon? Millions. How many Americans use comparison shopping tools? Actually, I have a number for you. There are, there were almost 37 million United States consumers that had downloaded a price comparison app in just the first 10 months of 2022.
And there's an estimated 29 percent of Americans that still use some form of price comparison tool. So it's clear that these price comparison tools are, they've really transformed from like a niche convenience for Americans into a mainstream necessity. I mean, it's very [00:13:00] clear that one in four Americans put stock in the phrase that a penny saved is a penny earned.
Leyla Gulen: Well, and especially in 2024, when we're still dealing with inflation, shrinkflation, high interest rates. Yeah. Uh, real estate market that has both exorbitant mortgage rates and house prices. I mean, it just, it's, we're not on in safe harbor yet financially as a whole. So I don't understand the timing either of this circular expressing.
This broad, as you put it, overreach by the government. So, I mean, is there a sinister reason? Is there anything behind the curtain that you find strings are being pulled in one direction or the other for a particular reason?
Patrick Brenner: Well, that's a good question. And I think that the [00:14:00] timing for organizations like mine is really good.
And the timing for organizing for the CFPB was just unfortunate. I don't think it was necessarily planned this way. I don't think there's some nefarious behind the scenes, anything going on with this particular move by the CFPB rather, I think the CFPB is intentionally trying to target lead generation Like Expedia, like care, not those, but within the financial services sector, so within consumer finance, there's a mechanism where certain types of financial services providers cannot advertise directly to consumers and in lieu of that regulatory Prohibition, a new middleman has come to the forefront and that middleman is the lead generators.
These comparison shopping tools like Credit Karma, they come up and they compare, they allow [00:15:00] consumers to compare and contrast these different financial services products, whether it's short term, small dollar loans, whether it's credit cards, whether it's mortgages, whatever. But the CFPB was clearly intending to target just those types of comparison shopping tools.
They were specifically targeting the lead generators. And I think that in this move, the CFPB is trying to target the lead generators so that it can supplant the lead generators itself so that the CFPB could become the lead generator for the consumer financial services sector. Now, that's incredibly dangerous when you have a government entity responsible for the pipeline of all consumers in a specific segment of a market like consumer finance.
That's essentially the government controlling everybody who applies for a credit card and the government getting to pick the winners and the losers in that specific industry. That is [00:16:00] outrageous.
Leyla Gulen: So you have to wonder, how are they getting away with it? Why are they? The single
Patrick Brenner: directorship structure of the CFPB is what's put us in this snarl in the first place.
And it's clearly out of control. They'd clearly gone off the rails and they clearly need to be reined in. And I think Congress is now looking at taking a deeper look into the CFPB's funding mechanism, which is a great first step. But I, I think that the single directorship structure of the CFPB needs to change immediately.
Leyla Gulen: Yeah, I was going to say, well, it starts at the top, right? So new leadership,
Patrick Brenner: well, not just new leadership, but maybe multiple leaders.
Leyla Gulen: Oh, sure. Well, yeah, I mean, it's not just doesn't begin and end with just one person. There's a lot of people in that boardroom making decisions, of course, but there was also another article.
And I don't want to stray too much from what we're talking about as far as these price comparison sites are concerned, but [00:17:00] the CFPB had a data breach last year, about a year ago, that compromised the information of hundreds of thousands of consumers, but how do you file a complaint With the CFPB about the CFPB.
Patrick Brenner: It's funny you ask that question because I tried to do just that in a, in an attempt to determine whether my information was compromised by this data breach. I submitted a complaint to the consumer financial protection Bureau about this consumer financial protection Bureau, and it went absolutely nowhere.
Uh, this. The complaint itself is still pending. They haven't done anything with it. I don't even think they know what to do, but in looking into it further, there is a different mechanism by which a consumer can complain against the CFPB, and I escalated it to that level, but when I submitted a complaint by email, I got an automatic reply back saying that inbox was no longer monitored.
It was a regulatory dead end. And, and an accountability [00:18:00] dead end. So for consumers who have been directly harmed by the sea, I don't want to say anything inappropriate, but they're being, what was that movie? Idiocracy. There you go. They're being, I don't
Leyla Gulen: think I saw that. I'm going to have to watch it now.
Patrick Brenner: Oh, that's a beautiful movie. Uh, I woefully. Under, underappreciated, I think. Yeah, yeah. Mediocrity, go watch that movie. But I think that what we've got here is a prime example of a bureaucracy crossing the line into the realm of idiocracy.
Leyla Gulen: Right, right. Yeah, that clearly is an issue. I also wouldn't recommend anybody filing a complaint with the Better Business Bureau because I find that also to be just a.
Patrick Brenner: I'm not going to comment because I think you've already said everything that needs to be said.
Leyla Gulen: Well, I guess personal experience. I mean, [00:19:00] because As a consumer, a member of the public, as a consumer, especially during the Great Recession, when things were just going crazy and there was no up was down and down was up and no one knew their elbows from their knees, it was really difficult to navigate.
And here you felt like there were these established organizations, the CFPB later, but still these organizations that were there as a safety net, as. A sounding board has an advocate, that's the word I should be using, as an actual advocate, that did nothing. Right. Absolutely nothing.
Patrick Brenner: You're absolutely right.
I mean, there are these organizations, these government entities exist to protect the consumer and and they're falling woefully short. I mean, every other press release that the CFPB puts out is about how much they find Bank [00:20:00] of America or Wells Fargo. And I failed to see how finding big. Organizations like that is actually helpful to the end user and the American consumer.
When finds like that actually increase the cost of financial products, specifically of customers using Bank of America or Wells Fargo. I mean, that being said, They're the, it's clear that the CFPB was created to help Americans find recourse in the aftermath of 2008. And I think that they've proven that there is no more recourse now than there was back then.
Leyla Gulen: Right, right. It kind of sounds like they're trying to dip their toes into these other ponds and inserting themselves where really they should just be. Sitting there waiting for consumers to come to them with grievances and finding the best solution to handle those grievances.
Patrick Brenner: I [00:21:00] suppose that's one way to put it.
Absolutely.
Leyla Gulen: I mean, I think at least an arm of it. I think sure if you want to help regulate, but don't we have other government entities that already regulate the banking industry that already regulate just you some of these other businesses kind of you and I and make sure that they're fair and
Patrick Brenner: all that.
Your question prompts another question actually and I think that does do those other Organizations exist that already regulate banking and finance. Yes. Absolutely. So why does the CFPB exist it? I think that you mentioned something earlier. Is there a more sinister? Reason behind a lot of this and specifically with regard to the timing of this circular.
No, I don't think anything is sinister That's going on there in regards to the CFPB as a whole. Yes. I absolutely do and I think that these steps are Revealing the CFPB's approach specifically when it comes [00:22:00] to Consumer finance, um, Saul Alinsky, the famed very leftist advocate of the, uh, the seventies. I think he once said controlled healthcare and you control the people.
And I think that principle alarmingly applies to the broader scope of essential services and needs in finance. And I think that we could apply it. Slightly revised Linsky model here that the CFPB is adopting and it's that control money and you control the people. And I think that behind these ever encroaching moves and this more aggressive behavior by the CFPB in encroaching into more control over consumer finance, I think that you're seeing more control over money.
Specifically, with the intent of controlling money to control the people.
Leyla Gulen: And I think I know the answer to this, but do you think the average person living in America earning their wage and raising [00:23:00] a family realize what's going on?
Patrick Brenner: No, and that's why I'm so grateful to people like you for talking to people like me as we continue to expose these diabolical trends and I don't think it's outrageous or outlandish to refer to them as diabolical.
Leyla Gulen: Yeah, especially not when you're playing with people's livelihoods and that's ultimately I mean we live in this country as opposed to some other place on this planet for the many wonderful things that it affords us. But like you say, as soon as you start. Controlling the purse strings, the collective purse strings, then you do control the people and that's what makes this country so wonderful is our freedom, of course, and our freedom to set a price for whatever we wish and for us to choose whatever product we wish to pay for that item, but just then we start getting ever so closer to becoming that Socialist, communist nation that [00:24:00] we absolutely don't ever want to become.
Patrick Brenner: There's a lot of different factors at play here. I could not agree with you more. One thing you said about paying for products the way you want to. What is the capital one phrase? I think it's capital one. What's in your wallet? Right? I think soon every American in the United States is going to be able to say, What's in your wallet?
And the answer is Uncle Rohit Chopra.
You mentioned some of these scary things that are happening in other countries like China's social credit system and something that comes into play here. I read this in the daily, what was it? The Daily Caller that John Eastman, the famed Trump attorney, I love him, hate him. I don't want to comment on his political speech.
I don't want to comment on anything that he's had to do with the Trump election. And I specifically want to. Point out that in this daily color article, Eastman was de banked by two major United States financial institutions. One was Bank of America and [00:25:00] one was USAA. Now, I personally have a lot of my financial products at USAA and to see Eastman de banked in despite there being well.
At the time this article was written, there was no legal action against Eastman specifically regarding his financial, his choice of financial institutions. The fact that he was debanked by Bank of America and USAA is indicative of the radical trend, not just within banking oversight, but within banking period.
How
Leyla Gulen: scary is that a person can be debanked? It's terrifying. How is he going to pay for his attorneys? Well, exactly. So, so what happened with him? Whatever came of where his money is now? Leyla,
Patrick Brenner: that's a great question. I don't know.
Leyla Gulen: Oh, goodness. Coffee can buried in the backyard?
Patrick Brenner: It's not a Bank of America and it's not a USAA.
Leyla Gulen: Wow. Wow. So, so what is next for you then [00:26:00] with the Southwest Public Policy Institute and further uncovering what's happening over at the CFPB?
Patrick Brenner: We initially founded the Institute as a watchdog for American consumers in the Southwest, and the Southwest we defined as the eight states including Oklahoma, Texas, Colorado, New Mexico, Utah, Arizona, Nevada, and California.
And in representing those eight states, we So we saw an opportunity to bring attention to this national agency that was impacting consumers in those eight states, as well as the other 42. And in so doing, I think we realized that there's a lot more research and reporting that needs to be done specifically with regard to how the CFPB is handling itself.
So we launched the Bureau to protect financial consumers from the. Consumer Financial Protection Bureau, um, you can find out more about the Bureau to Protect Financial Consumers from the [00:27:00] Consumer Financial Protection Bureau at bpfcfpb. org.
Leyla Gulen: L M N O Q. Something like LGBTQ. Yeah. Lots of letters there. Lots of letters.
We, we really appreciate that. Of course, we're going to put that website up for people to click on and they can find out more information and, and for people who want to continue to follow you and what you're doing specifically, how do they find you?
Patrick Brenner: You can find us online at southwestpolicy. com. All the latest research is up there and you can subscribe for updates from the Institute.
Leyla Gulen: Terrific. Well, we're going to be very excited to learn what is coming down the pike and what you have in the pipeline. Patrick Brenner, thank you so much.
Patrick Brenner: It was a pleasure. Thank you so much for having
me.