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Fewer banks visible on federal complaint website

Fred Williams

You can see complaints about a number of banks on the government’s consumer website — a shrinking number.

The U.S. Consumer Financial Protection Bureau publishes consumer complaints about banks with $10 billion in assets or more.

That group fell to 114 this month, down from 116 in September, according to an updated list published on the agency’s website under “depository institutions under CFPB jurisdiction.”

Missing from the previous edition of the list are OneWest Bank, which was swallowed by CIT Group, and Susquehanna Bank, now part of BB&T. Complaints about their operations are now reflected in the new owner’s tally.

The 114 regulated banks have about $13 trillion in assets, accounting for roughly 85 percent of the U.S. banking industry.

Still, about 6,400 banks in the U.S. are exempt from having complaints about them aired publicly in the CFPB’s complaint data. Under the Dodd-Frank Act, complaints about these smaller banks are passed along to their primary federal bank regulator, without public exposure.

The idea behind publishing the complaints is to let researchers, businesses and consumers get insight into problems in financial services. Researchers and companies might see patterns that point to systemic problems. Consumers can get a better idea about the companies they trust to handle their money. Those aims are undermined when thousands of banks are omitted from the data.

If the list of covered banks continued to shrink by two banks per quarter, it would take 14 years for the list to dwindle down to just one. That’s not a likely scenario, given that regulators are unwilling to approve mergers of banks large enough to take down the financial system if they fail. But it does illustrate the point that transparency into bank behavior isn’t increasing.

It isn’t that the CFPB doesn’t want to air the complaints. “They’re not allowed to publish anything about them because they don’t regulate those banks,” said Judith Fox, law professor at Notre Dame and a member of the CFPB’s consumer advisory board.

Fox, stressing that she doesn’t speak for the CFPB, said that agencies that do regulate the smaller banks could publish complaints about them, including the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. “It might be an issue for those agencies to publish [complaints], if they want,” she said.

In the meantime, Fox said it might make sense for the CFPB to put a notice on the complaint website making it clear that smaller banks won’t show up there — and not necessarily because their complaint record is spotless.

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