By: Meg13 Apr 2011
I went to a great brownbag talk today by Professor Katherine Porter (visiting HLS this year from the University of Iowa) on the Consumer Financial Protection Bureau. Because I know this is a topic of interest to many--and because I was already a supporter of CFPB and learned details that made me even more in favor of its success--I'm liberating my notes from their Evernote prison to share here. I'm not cleaning them up much, so be warned they are bullet point-y and there are guaranteed to be typos, mistakes, simplifications, and distortions.
Unlike some areas of law, consumer protection affects everyone, because we're all consumers.
CFPB is not about belt and suspenders-style redundant regulating (Colbert) - it's about America having no pants (Elizabeth Warren) (See 5:40 in this clip.)
FTC is a cautionary tale - it too started off with high hopes
Some state regulators wanted to do something about problems they saw - federal regulators said there were no problems, so they couldn't
Banks shop for their regulators - the ones that will make things easiest for them
"Safety and soundness" mission for banks means profit for shareholders rather than good practices/fairness
Purpose of CFPB--though some claim it is a mystery--is right in the statute - focus on markets and access to them (so it's not some socialist thing!), and that those markets are fair, transparent, and competitive
6 Functions of CFPB
1. Financial education - timing (more at point of need), innovation, new appointee coming from Consumer Union
2. Consumer complaints - routing system, tracking disposition of complaints, improved govt responsiveness. Will be expensive, but change to govt being there for ppl instead of in the way
3. Researching market functions - getting, sharing, making data public
4. Supervising compliance -
5. Issuing rules - authority to. Bankers are terrified of abusive aspect added to existing UDAP (Unfair and Deceptive Practices Acts) statutes. They claim it is undefined when it is--but of the terms, deceptive is the one that is undefined! Abusive is defined in statute as materially interfering with consumer understanding or taking unreasonable advantage of consumer lack of understanding, inability to protect their interests, etc. (will prob be similar to 60s-70s unconscionability litigation)
6. "other duties as assigned"
CFPB will be able to subpoena/issue c&d letters/conduct hearings/ and sue, selecting fed or state jurisdiction as appropriate. There will be respect for role of state law, but right now no decision on whether to have state/regional offices of CFPB. May work a lot with local attorneys general.
Limitations on power
CFPB will follow normal APA/notice and comment rule making
Exemptions: real estate brokers, home retailers, lawyers practicing law (rather than say debt collecting), those regulated by insurance or fed/state securities regulators, auto dealers. Funny thing: the FTC can still regulate auto dealers and now has all its energy focused on them bc it has lots of free time due to losing power to CFPB
2/3 vote of Financial Stability Oversight Council can set aside a CFPB rule if it puts safety/soundness/stability at risk
In charge of fed consumer law - EFTA, ECOA, FDIC, HOEPA, Truth in Lending/Saving, lots more. Enforcement of consumer protection aspects of these is fragmented under many agencies and will now fall to CFPB. Non-CP provisions of those laws will remain with the other agencies
Draft CFPB Org Chart - Some interesting choices made in where things placed
Chart includes targeted individuals groups - servicemembers, elderly, and students [having dealt with terrible service from one of my lenders, I'm glad to see this group included] are under education, but could have been put in enforcement too
Also notable: central placement of research--in most agencies this function is shunted way off to the side and pretty much ignored
Roughly half of spots filled [I think this means the higher level posts] - CFPB is hiring out of other agencies, politics, academia, and is also v. diverse, because EW wants everyone to feel connected to CFPB.
New CFPB building will be open for tours, lobby education opportunities.
150 employees right now (10% of projected) - they are working on building good organizational culture
Logo of a shield with clear lettering - hopes to draw on positive feel for law enforcement