The federal consumer financial protection agency drew fresh criticism Wednesday for a lack of transparency regarding large banks’ “excessive fees” charged to students in a statement from Rep. Maxine Waters, D-Calif., who is poised to take the chairmanship of the House Financial Services Committee in January.
“It is deeply troubling that a previously unpublished Consumer Bureau analysis showing that some large banks, including Wells Fargo, charged excessive account fees to students, was only revealed in response to a Freedom of Information Act disclosure,” Waters said of the report by the Bureau of Consumer Financial Protection (BCFP, formerly known as CFPB).
Waters’ statement focuses on an analysis that was apparently produced during the tenure of former bureau student loan ombudsman Seth Frotman, who resigned in September after releasing a letter charging the bureau had strayed from its consumer protection purpose under the leadership of its then-acting director, John (“Mick”) Mulvaney. In that letter, Frotman criticized, among other things, the withholding of the report findings, which he said shows “dubious account fees” being charged by banks.
The report, released in recent days to requesters under a Freedom of Information Act (FOIA) filing, looks at data from an analysis of 573 colleges and universities over the 2016-2017 academic year and the fees paid to the 14 financial firms – large and small banks, specialty nonbank providers, and credit unions – that offered sponsored accounts.
The bureau, in the report, said its analysis shows that 1,322,000 students attending the colleges identified had open and active accounts with their college’s account sponsors during the 2016-2017 academic year. Overall, the students using accounts at the colleges paid $27.6 million in fees. The highest fees, it shows, were charged by Wells Fargo, where students paid an average of $46.99 over 12 months – nearly double the total charged by TCF National Bank and U.S. Bank, which were ranked second and third highest in fees.
The report also shows the difference overall in fees charged by providers that pay colleges to promote their accounts and those that do not (see table).
Waters, in Wednesday’s statement, points out that in a 2016 report, the bureau “expressed concerns that college-sponsored accounts that charge such high fees may run afoul of federal regulations that these accounts ‘not be inconsistent with the best financial interests’ of their students …”
The 2016 report, the bureau noted then, fulfills a requirement for reporting information annually to Congress under the Credit Card Accountability, Responsibility, and Disclosure Act (“CARD Act”) showing information provided by card issuers and colleges or affiliates.
2018 report (provided to the Department of Education and released to FOIA requesters)
CFPB Annual Report to Congress: Student Banking (December 2016)