Consumer Financial Protection Bureau Chief Responds To Equifax Hack
ARI SHAPIRO, HOST:
To talk more about the Equifax breach, we're going to turn now to the federal government's chief consumer advocate. Richard Cordray runs the Consumer Financial Protection Bureau. It was created during the Obama administration to address some of the problems that led to the financial collapse of 2008. He is the first person to hold the job. Welcome to the program.
RICHARD CORDRAY: Glad to be with you.
SHAPIRO: As we've heard, this breach involves personal data for 143 million Americans - Social Security numbers, dates of birth, driver's license numbers. How big a threat is this to consumers?
CORDRAY: It's an enormous threat. These are some of the crown jewels of our personal information, the kind of information we spend all day long, every day of our lives trying to safeguard and keep from people we don't want to have it. And now suddenly they've got hold of it because of Equifax's failure here.
SHAPIRO: I think many people feel especially frustrated by this breach because, you know, when a given store gets hacked, you can avoid that store. But there is no way to avoid the credit rating agencies. They hold huge power over consumers. And when they lose personal data for those consumers, there really doesn't seem to be very severe consequences. As a consumer advocate and regulator, is there anything you can do to shift what seems like a pretty profound imbalance?
CORDRAY: Yeah. I think there's quite a bit we can do. First of all, the other thing you didn't say is that when we go to a store and then we end up having a problem, we tend to somehow feel vaguely it's our fault even when it's not. But here, none of us necessarily signed up to have these big credit reporting companies have our information.
CORDRAY: They have our information for their own purposes. It's a money making business model for them. It behooves them to feel the responsibility to take great care of our information. This is so visible to the public. It's affecting so many of us. I think this is going to be a different situation, and I think that Equifax is finding already that the pressure on them not to handle it like business as usual, not to handle it in ways that are convenient for them but to go out of their way to make it right for the consumer is what everybody is going to expect and demand here, including us.
SHAPIRO: So there's the question of the remedy. But then there's also the question of how to prevent this from happening in the first place. Does your office, the Consumer Financial Protection Bureau, have the authority to force companies like Equifax to do more to protect consumers' information?
CORDRAY: So I'd be the first to say that cybersecurity is a difficult and challenging matter. There are people, as you know, not only around the country but around the world trying to hack into these systems. And when you have particularly valuable information like Equifax has, they're a ripe target. On the other hand, that means that if you're in this business as Equifax is and you're making a lot of money by the way you handle that information, you need to be at the very top rank of having security of this information.
And this story is starting to come out. We're going to learn more about it as it unfolds - that there were security patches that could have been put in place that were not put in place timely. That's inexcusable. They have to be at the very front ranks of making sure that they are secure, securing their information on a prompt and timely basis. And I think that's going to be a basic expectation that consumers have and that regulators have going forward.
SHAPIRO: Banks and credit unions have regulators on site all the time. It seems that companies like Equifax don't. Do you see a problem there?
CORDRAY: I think there has been a problem, and I think that that is changing. I think this incident has brought to the public's attention just how significant these companies are. There are three of them that have about 200 million credit files. Two-hundred million Americans have information with them. Again, it's highly sensitive information. It's often very comprehensive information. And they have the highest responsibility that they bear to keep that information safe and secure. And when they don't do it, there has to be accountability, and that's the process we're all working through at the moment.
SHAPIRO: The question surrounding Equifax enforcement speak directly to the role of your office, the CFPB. Republicans have opposed it since its creation. Do you see any sign of that changing in light of this Equifax breach?
CORDRAY: Well, I think some of the critics of the Consumer Bureau are among the 143 million people who've now had their precious financial information compromised and are going to have to worry about what it means for them and their families. And I would like to think that that will lead them to think again about the importance of having an agency there to protect them and to look out for these kinds of problems and to hold these companies accountable for making these kind of errors and mistakes.
SHAPIRO: I also want to ask you about Wells Fargo. This summer we learned that the company signed up nearly half a million auto loan customers for insurance that they did not need and in many cases didn't even know they had. Tens of thousands of people wound up in default. Thousands had their cars improperly repossessed. After all of the other problems that Wells Fargo had, how does something like that happen?
CORDRAY: That should never have happened. There are other issues that we're looking into as well, such as freezing people's accounts as a way of securing payment from them that we believe may have been improper. And also, there were mortgage rate locks that were extended at cost to consumers based on problems that Wells Fargo had, not problems the consumer had. And yet consumers were charged for those. We're very concerned about that as well. There's an array of issues that we're looking into. They all need to be fixed, and there needs to be close attention to this. And we're making sure that that's happening.
SHAPIRO: Finally I want to ask about your term expiring in July. There is a lot of speculation about your future, whether you might step down sooner to run for Ohio governor. What considerations are you weighing right now?
CORDRAY: No comment on that.
SHAPIRO: (Laughter) Not even a little glimmer of anything?
CORDRAY: No comment.
SHAPIRO: Richard Cordray, thank you very much for speaking with us.
CORDRAY: My pleasure. Thanks, Ari.
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