Consumer Finance Protection Bureau: Open for business!

Consumer Financial Protection Bureau: Open for business!

Last fall, I was so excited about Elizabeth Warren’s appointment to help establish the Consumer Financial Protection Bureau (CFPB). Last week, however, President Obama announced that Elizabeth Warren will not head the bureau.

But, as they say on Broadway, the show must go on! And in this case, the CFPB still opened its doors last Thursday. (One year after the Financial Reform Act passed and created the agency.) So, as Warren heads back to her professor post at Harvard Law School and considers running for Senate, in comes the new nominee to lead the CFPB: Richard Cordray, a former Ohio attorney general. To be fair, Warren chose Cordray to lead the bureau’s enforcement operations last year—so if he’s got the Warren stamp of approval, he deserves mine, too.

With a new leader nominated and 500 staffers, what can we expect from the CFPB? From a report the bureau released last week, here are a few things to look forward to:

  • Mortgage paperwork without the mumbo-jumbo. As part of the bureau’s “Know Before You Owe” campaign, it asked consumers like you to vote on a new design for mortgage disclosure agreements. Both design options are only two pages long, so, in my opinion, either one is a win. Also in the simplicity queue: an easy way for folks to compare credit cards and choose the best one.
  • A keen eye on credit scores. The CFPB released a report last Tuesday that analyzed each of the credit reporting agencies (Experian, TransUnion, and Equifax) and determined that having a variety of agencies, each with different scoring methods, may harm consumers, since they may think their score is X and a potential lender may think it’s Y—which could lead to consumers settling for subpar loans. I’m curious to see what actions this report will inspire.
  • No nonsense from so-called “nonbanks,” aka financial institutions like payday lenders and private student loan lenders notorious for charging sky-high interest rates. These service providers have never been subject to federal supervision, so it’ll be a relief to have the CFPB as a watchdog—however, they won’t start until Cordray or another CFPB director is confirmed.
  • A complaint center that can fight on your behalf. The same way New York City residents can call 311 about a noisy neighbor or an unsafe construction site, consumers can soon file complaints through the CFPB’s website. Next time your credit card company raises your interest rate for no reason or your bank bamboozles you with an unexpected overdraft fee, you’ll know there’s an advocate in your corner.
  • Perhaps some more political setbacks. Passing over Warren was purposeful, since Republicans would be hard-pressed to approve the anti-big-bank advocate. However, approving Cordray may not be much easier, since what Republicans really want is a more bipartisan committee leadership over the bureau, rather than one leader. As Ezra Klein points out in his Washington Post blog, Warren may be better off out of the line of fire.
CFPB consumer finance protection bureau elizabeth warren richard cordray


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