the staff of the Ridgewood blog
Washington, D.C. — The Consumer Financial Protection Bureau (CFPB), created to safeguard consumers, is under fire for an October 2024 Biden administration rule that forces banks to share customer financial data with third-party financial technology companies — and to do so for free.
The rule’s intent was to make it easier for customers to access their own account balances, transaction history, and other financial data electronically, enabling seamless integration with tax software, budgeting apps, and other digital tools.
However, critics say it has opened the door to massive, unregulated data harvesting. Once a customer grants permission for a specific use, aggregators can continue pulling account data indefinitely — often without the customer’s awareness. This raises serious concerns about privacy, security, and cost burdens for banks.
JPMorgan Chase recently warned that Plaid, the nation’s largest financial technology aggregator, made over 1 billion data requests in June alone — but just 6% were initiated by actual customers. The rest, JPMorgan says, were automated pulls that strain bank systems and shift compliance costs onto financial institutions.
The Trump administration had pledged to repeal the rule outright but now says it will instead rewrite it. In a recent court filing, the CFPB stated:
“In light of recent events in the marketplace, the bureau has now decided to initiate a new rulemaking to reconsider the rule with a view to substantially revising it and providing a robust justification.”
The agency says it will launch an “accelerated” rulemaking process within three weeks.
Industry leaders argue that the simplest solution is to fully repeal the Biden-era regulation and let banks, customers, and fintech firms negotiate their own data-sharing agreements without heavy-handed federal mandates.
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Minnesota nonprofit raided by the Feds — and the FBI claims its records saying it fed 1M children ‘are phony’
FAIR WARNING
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