WASHINGTON – Analysts are suggesting that after a brutal legislative fight this year, the Consumer Financial Protection Bureau may prove to be the most important agency to watch in 2011.
With a broad mandate encompassing consumer protection rules from seven different agencies, a powerful director position and a large budget, the CFPB is poised to have a significant impact on the financial services industry, noted American Banker, an affiliate of Credit Union Journal.
“It’s an idea whose time has come,” said Elizabeth Warren, assistant to the president and special adviser to the Treasury secretary, who is charged with getting the agency up and running. “The need for this agency was clear to millions of people. No one could really argue that the regulators had done a good job or that dividing consumer financial protection among seven different agencies made any real sense. The failures were too obvious. The difference in lobbying dollars and lobbying muscle would have predicted that this agency didn't have a chance, but history ran against the industry.”
Despite Warren’s assurances the agency will be targeted, the CFPB makes bankers nervous because of the sheer scope of its authority. “In many ways, it is the most powerful agency ever created,” said Ed Yingling, president and chief executive of the American Bankers Association.
Warren conceived the idea for a consumer agency in 2007, and the financial crisis helped it gain grassroots support.
“Had [Warren] proposed the idea five years ago or 10 years ago, she wouldn’t have gotten anywhere. But the regulatory failures highlighted the huge failures for customers, and it became clear a major restructuring, not just tinkering around the edges, was necessary,” Travis Plunkett, a legislative director for the Consumer Federation of America, told American Banker.
Ed Mierzwinski, the head of the U.S. Public Interest Research Group, said the industry opposed the CFPB because it is unlike supervision they currently face.
“The bureau is the first agency that has only one job, protecting consumers, and it will have the resources and the authority to look at financial issues from the standpoint of the consumer,” he said. “The agencies that have been captured by the industry have served the industry well, and that’s why they didn’t want this agency.”
