CFPB Departure Triggers Concern by Banks

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WASHINGTON — The news that Raj Date, the No. 2 at the Consumer Financial Protection Bureau, intends to resign early next year sparked anxiety Tuesday among bankers still skeptical of the fledgling agency.

Although the financial services industry has been wary of the CFPB since its creation, Date — a former banker — was viewed as a moderating influence who listened to their concerns.

“There will be some concern from the industry perspective because [Date] was the voice of reason from their standpoint,” said Paul Miller, a managing director at FBR Capital Markets.

Date had previous ties at Capital One Financial (COF) and Deutsche Bank (DB) and helped reach out to Wall Street firms when the CFPB launched two years ago. Since then, he has proved to be a key point of contact for the industry.

“Time and time again [Date’s experience] became the factor in laying aside certain fears,” said Isaac Boltansky, a policy analyst for Compass Point Trading & Research. “The question becomes: who will the bureau use to effectively communicate its priorities in the future after he’s been such a mouthpiece for the bureau?”

A CFPB spokeswoman confirmed late Tuesday that Date plans to leave his job as deputy director by Jan. 31, after the agency finalizes several significant mortgage regulations.

It is not immediately clear who will succeed him, especially considering whoever does may eventually run the entire agency.

Richard Cordray’s recess appointment as the agency’s director expires at the end of next year. After that point, the deputy director by statute serves as acting director until a successor is confirmed by the Senate — a key problem since GOP lawmakers have refused to consider any candidate until structural changes are made to the agency.

“The departure of Date brings a degree of uncertainty to the CFPB’s structure going forward,” wrote Boltansky in a note released Tuesday. 

Sources said the CFPB is already looking at outside candidates to succeed Date. It is not clear where Date himself intends to go next.

Industry representatives are already suggesting the CFPB hire someone with industry expertise.

“It’s critically important in making sure the agency has knowledgeable leadership about the finance system” like Date, said Dave Stevens, the president and CEO of the Mortgage Bankers Association. “These rule-makings are extremely complex and we need to ensure the right skillsets are in place so it doesn’t stop the market in its tracks.”

From a policy perspective, the good news for bankers is that Date had a heavy hand in how the “qualified mortgage” rule shakes out. Under the Dodd-Frank Act, banks must ensure borrowers have the “ability to repay” unless it is a qualified mortgage. A final rule had been expected early this year, but was delayed this summer.

Still, Date will not be in a position to incorporate feedback on the regulation once it is released by the end of January.

Date’s “influence will be felt through at least the finalizing of the [qualified mortgage] rule,” said David Luigs, counsel in the banking group at Debevoise & Plimpton LLP. “To the extent that further revisions of rules are made, he won’t be there to provide that expertise.”

Boltansky said he had expected Date to focus on non-bank rules, particularly on credit cards, once he was finished with the mortgage regulations.

“As the bureau expands into its non-bank regulatory focus, it’s lost an important voice in communicating its priorities and efforts to Wall Street and the banking industry,” he said.

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