Rohit Chopra should be more careful about what he blogs about.
Earlier this month, the Consumer Financial Protection Bureau's student loan ombudsman, posted on the agency's website that 10 out of 11 financial institutions with partnerships with some of the largest universities have either not disclosed or only partially disclosed their agreements online.
Banks on the list included Capital One, Wells Fargo, U.S. Bank, Huntington Bank and PNC Bank.
In addition to the banks, the list also called out four credit unions for a lack of transparency: Indiana University CU, Michigan State University FCU, Purdue FCU and University of Wisconsin CU.
But there were a couple of problems with that roster: the two Indiana credit unions shouldn't have been on it. (See related story on page 1.)
After being contacted by executives at Indiana University CU and Purdue FCU, Chopra's blog post was amended and now lists those institutions' financial partners as "unknown."
In addition, a footnote at the bottom of the blog entry noted that "an earlier version of this post noted that Purdue University and Indiana University had established agreements in place with partner financial institutions, but these agreements are related to real estate."
It's never good when a financial regulator makes a mistake like this and many in the credit union community were understandably upset.
"This is absolutely outrageous for a government agency to embarrass an organization and then backpedal and say, 'Ooops,' " commented David G. online after CU Journal reported that the CFPB removed the two Indiana CUs from the list.
"At least the NCUA maintains confidentiality of their findings," wrote David G. "Many in our industry say the NCUA is a rogue federal agency, but compared to the CFPB, the NCUA is a model of transparency and professionalism. The CFPB is truly out of control and scares me more than domestic terrorism and the IRS."
Another online commenter made a literary reference regarding the CFPB.
"Much to do about nothing by children suddenly in a position of unearned power. The plot to one of my favorite books — Lord of the Flies. Now, if we could only get them transferred to that same deserted island and let them play to their heart's content," commented mdillon.
Marvin Umholtz of Umholtz Strategic Planning & Consulting Services had some strong words for the agency as well.
"Shame on the CFPB. Will the NCUA and/or the state credit union supervisors consider this 'public humiliation' to constitute dangerous reputation risk?" asked Umholtz. "What about the FDIC, OCC, FRB, and state bank regulators? It is not appropriate for a federal government agency to actively generate reputation risk based on its partisan ideology rather than based on enforcing a statute or adopted rule. The CFPB's next step is to put the 'offending' institutions' CEOs in pillories on the campus' squares for the students to mock."
It should also be noted that this is not the first time student loan ombudsman Chopra has made headlines.
Speaking before the Federal Reserve Bank of St. Louis last year, Chopra raised red flags about a potential student lending bubble and said it would be "irresponsible for financial regulators" to avoid taking action now to shield the $1.2 trillion student loan debt market from a severe bust.
Well, so far, no student lending bust. Makes you wonder who's the "irresponsible" financial regulator here.
Editor in Chief Marian Raab can be reached at marian.raab@sourcemedia.com.
