Data, not ideology, key to CFPB goals
Raj Date, adviser to the Treasury Department and de facto head of the Consumer Financial Protection Bureau, told mortgage bankers the new regulator's efforts will be inspired by data, not ideology. Date addressed the housing finance industry at the Mortgage Bankers Association annual conference in Chicago. "The CFPB will diagnose problems carefully and intelligently after examining all the evidence. We will have different tools to choose from when we address a problem. Maybe it is best addressed through education. Maybe it is best addressed through rule writing. Or maybe it is best addressed by examining relevant market actors and shining a brighter light on the issue," Date said. He said transparency for buyers and sellers is the CFPB's chief focus. In short, he blamed the housing bubble and its subsequent crash on the excessive use of structured financial products like hybrid adjustable-rate mortgages, option ARMs and interest-only loans in the past decade. "To properly calculate the costs and risks of those products, borrowers needed sophisticated knowledge of things like rate caps and rate spreads," Date said. "The potential costs and risks of these mortgages were unclear to many consumers — and that lack of transparency helped saddle too many people with mortgages they couldn’t afford." Date said the focus of the CFPB will be on smarter regulation inspired by research and market analytics. "To do this, we need data — lots of data — and a team of world-class economists, social scientists, and market veterans to figure out what that data means," he said. Write to Kerri Panchuk.