Private markets work well when they are allowed to function free from big government directives. The latest example is in the world of financial data sharing, where Washington tried to dictate prices, warring industry interests warned of disaster, and the free market quietly delivered a solution on its own.
Since the passage of major financial industry reform legislation in 2010, policymakers have debated how to create a regulatory framework within which personal data portability and sharing can occur safely and securely. Unsurprisingly, the Biden Administration sought to finalize rulemaking that was supposed to put an end to some 15 years of speculation on what this framework, under Section 1033 of Dodd-Frank, would look like.
For years, banks were required to provide financial technology companies with customer data for free, with few limits on how that data could be monetized. The Biden Administration embraced that policy, finalizing a rule that required banks to share data with aggregators at no cost. It was a government-mandated price control of zero dollars, delivering a “solution” to a problem that didn’t exist.
President Trump saw the absurdity of the so-called Rule 1033 and acted swiftly to stop it. By forbidding banks from charging for access, the rule would have forced them to absorb the infrastructure, cybersecurity, and compliance costs of data sharing while allowing fintech firms — favored by the Biden Administration — to profit from the very data they received at no charge. The result would have been a system where the costs were socialized, and the profits were privatized.
After a federal court issued an injunction halting enforcement of the Biden-era rule, some claimed that government needed to put its thumb on the scale to negotiate fair compensation for access. Those arguments have already collapsed.
In recent weeks, JPMorgan Chase — the country’s largest bank — reached market-based pricing agreements with 95 percent of the data middlemen in the market. One such actor supporting greater government involvement went so far as to confirm that its updated agreement with the bank “wouldn’t affect current customer deals or pricing.”
The success of these agreements makes one thing clear: market participants can solve complex problems through negotiation and partnership far better than regulators can through compulsion. Voluntary, market-based arrangements have succeeded where central planning failed.
As the Consumer Financial Protection Bureau prepares to issue an updated rule, it should reject the false premise that consumer privacy and innovation can only thrive under government control. Embracing a market-based framework will strengthen consumer protection and foster responsible innovation far more effectively than price mandates ever could.
The best course of action would be to eliminate the agency entirely, and transfer its powers to other areas in the federal bureaucracy. If that is not possible, there is a menu of options to reform the structure to better serve taxpayers. Over the past decade, the agency’s priorities have swung dramatically with each administration, creating instability for consumers and industry alike. Concentrating so much authority in a single director has proven unworkable. A bipartisan commission structure, like the Securities and Exchange Commission (SEC) or Federal Trade Commission (FTC), could restore accountability and consistency.
Congress should also bring the CFPB’s funding under the normal appropriations process, rather than letting it draw money directly from the Federal Reserve. Transparent funding would improve oversight and focus CFPB’s work on real consumer benefit instead of political goals.
Most importantly, CFPB should pursue modern oversight that protects consumers while supporting innovation. Its failure to evaluate the data security risks of mandatory data sharing under the Biden-era Rule 1033 shows the danger of heavy-handed policymaking.
President Trump’s CFPB should build a lasting legacy of practical, forward-looking regulation that respects both consumer protection and market competition. The fall of the Biden-era Rule 1033 is a reminder that the free market, when allowed to work, delivers the best results for everyone.
