Welcome to today's episode with my very special guest. He is the Director of the Consumer Financial Protection Bureau, Richard Cordray.
We got together in Washington to mark the fifth anniversary of the CFPB's opening its doors, on July 21, 2011. I had the pleasure of serving on the Bureau's Consumer Advisory Board, or CAB, for its first three years. It's been fascinating to watch the launch of this agency, which is the first in many years to be built from scratch, as opposed to something like, say, Homeland Security, that amalgamated existing agencies. As Director Cordray says in our discussion, the CFPB has actually faced many of the same challenges as private sector startup. There are obvious differences, of course, but they still began with a small team, like founders, and went through the stresses of very rapid growth amid having to deliver against a lot of tough deadlines - and under a bright floodlight of scrutiny.
A unique thing about the CFPB is that it looks at consumer financial services as a holistic marketplace. Most of our financial regulatory system is bank-centric, with numerous agencies closely overseeing bank activities, while nonbank financial companies - while generally subject to the same rules -- don't normally face the constant, close scrutiny that banks do. This has led to a highly uneven marketplace in terms of both de facto regulatory standards and compliance burdens. That unevenness, in turn, produces some unintended consequences. One is uneven protection of consumers based on what financial company they deal with. Another is some distortion of what products banks and nonbanks are willing to offer, based on their assessments of the related regulatory risks. Moving toward a more uniform framework lays groundwork for a system that can potentially be more fair and workable for both consumers and providers.
The CFPB has also been a leader in pioneering regulatory exploration of innovation. Its Project Catalyst was the first initiative in the world, to my knowledge, to create a learning laboratory for looking at regulatory issues in innovative fintech. In our conversation, Director Cordray mentions that they have special powers to allow trial waivers of disclosure rules for companies that have better ideas. They're open for proposals on this -- it would be great to see some new thinking come out of those tests, to move toward updating our old, low-tech disclosure models.
I think you'll enjoy hearing Director Cordray's thoughts about Project Catalyst; about how the Bureau thinks about innovation and fintech; and about CFPB itself being a startup and how hard it is to do that inside government. You'll also be interested in what we discussed about the agency's priorities as it enters year six, and about what he has learned from the first five years.
Here's more information:
- CFPB Video: Making Consumers Count
- Download the full video
- 5 year anniversary factsheet
- CFPB's enforcement actions have resulted in $11.7 billion in relief for more than 27 million consumers.
- They've taken nearly one million consumer complaints.
- They provided millions of consumers with materials to Know Before You Owe.
- They issued new rules on mortgage lending
- Blog and infographic
- Four factsheets by topic:
The Consumer Financial Protection Bureau at age 5! Enjoy my conversation with Director Richard Cordray.
And a note about our next show....
My guests next time will be the chief compliance officers of two of America's largest banks -Yvette Hollingsworth Clark of Wells Fargo and Kathryn Reimann of Citi, who are leaders in - if you can imagine this phrase - innovating in regulatory compliance.