The Obama-Dodd bill wants to know everything about your spending habits.
A little noticed section (Section 152, page 63) of the Obama administration’s Financial Reform bill would create a new 1,000-employee office within the Department of the Treasury, the Office of Financial Research, which is raising alarm bells among Senate GOP staff, who say the entity would have broad powers to invade the privacy of American citizens and monitor their finances and financial activity at a level never before allowed by the federal government.
The OFR is a companion entity to the Consumer Financial Protection Bureau (CFPB), which is also proposed in the legislation (section 1001, page 1030).
Under the bill’s current language, according the Senate Banking Committee sources, the OFR under the new federal law would be allowed to collect any financial data it chooses, whether from individual citizens or businesses. Under the language of the bill, the data center can collect and maintain “all data necessary” to monitor the financial system. Wall Street executives are also concerned, because of the kind of “competitive intelligence” such an entity could collect.
“In real time, this office could be monitoring how an investment bank creates sole purpose entities and moves funding around for deal-making, real estate purchases, that kind of thing,” says an executive with J.P. Morgan Chase. “That’s not the kind of information anyone would want to have being shared, particularly if the government could in some way be a competitor. And the way things are going with financial institutions, that’s increasingly a real possibility.”
“As we read this legislation, the CFPB could mine for whatever data they want, bank card activities of a subset of American citizens, credit card debt and payment patterns, who is spending money on whatever,” says a Senate committee source. “And if the business community isn’t already scared out of their minds, they should be.”
In one example the staffer raised, the Obama Administration-created agency might want to track whether U.S. consumers “were spending too much” or cutting into savings rates. “They could, as we read the bill, monitor your spending habits, and it’s not clear what that agency could or could not do with the data,” says the aide.
Under the bill, all Americans would be required to provide the CFPB with written answers, under oath, to any question posed by the agency regarding their personal financial information, and the Office of Financial Research would have subpoena power and funding to mine and monitor those financial transactions it chose to examine.
Under language in the bill, neither entity would be subject to Congressional budget or appropriations processes. The head of the CFPB would be presidentially nominated and confirmed by the Senate.
Perhaps more chilling, the data collected by these new entities would not be protected or necessarily confidential. Rather, Senate staff believe in reading the bill introduced and negotiated by Sen. Chris Dodd, data collected by the offices could be shared with other government agencies, including executive branch agencies such as the IRS.
The Prowler received a document of talking points on the OFR, which is currently circulating among GOP Senators and staff (full text below). Perhaps most outrageous to taxpayers: many of the employees of this agency would be exempt from General Schedule (GS) pay scales, thus ensuring that their salaries could far exceed those of traditional government bureaucrats.
The Office of Financial Research
The Office of Financial Research (OFR) is created in Subtitle B, Section 151, of the “Restoring American Financial Stability Act of 2010. The stated purpose of the OFR is to gather all financial information and data, analyze it, and use it as a basis for policy recommendations to maintain financial stability.
What kind of data can the OFR gather and from whom?
The OFR will gather all information related to all financial transactions in the U.S. In addition the OFR will gather information on the holdings of all financial companies in the U.S. For example, if the OFR existed today, it could gather all loan files from all companies that lend to American consumers. This information could be aggregated to restrict or increase credit availability for certain loans over others depending on political policy objectives.
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