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CFPB's Cordray spikes the ball at ABA

CFPB plans to do to other industries what it did to mortgages

April 3, 2014
KEYWORDS ABA / CFPB / Cordray / humor / Regulation
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It’s nice to find a pond of quiet humility in the sea of narcissism that is Washington D.C.

We find that today in the remarks of Richard Cordray, director of the Consumer Financial Protection Bureau, speaking to a trade group entirely made up of people who will be benefitting from the CFPB’s product for decades – the American Bar Association.

Cordray sets the table for his own humble story by invoking, well, you’ll see.

Not quite a century into this new experiment of our democratic republic, Abraham Lincoln felt the need to remind us at the Gettysburg battlefield that it remained an open question whether such a novel government “of the people, by the people, for the people” could long endure.  Through many further tests…we have continued to answer that question successfully, though our model of representative government continues to evolve in various ways.

Apparently it has evolved, Mr. Lincoln Cordray. So much so that “representative government” means “secret closed door meetings” and “little or no accountability to the legislative branch” now.

My colleagues and I are blessed with responsibility for a mission that seeks to further our society’s noblest aspirations.  We are the first federal agency ever created with the sole purpose of protecting consumers and seeing that they are treated fairly in the financial marketplace. 

“The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.” – C.S. Lewis

(Pictured: Probably not Cordray's office)

Cordray goes on into a history of the CFPB’s regulation of the mortgage and housing industry. He discussed how the agency is moving away from housing now that it has had its way with it good and hard, and how the CFPB is moving to mark their territory in other industries.

During our first 18 months of existence, our rulemaking activities were largely ones mandated by the Dodd-Frank Act to implement provisions of the statute governing the mortgage market.  That was clearly the right priority, since irregularities in the mortgage market were the primary cause of the financial crisis and economic meltdown.  We were mandated to complete those rulemakings by January 2013, and through the tremendous efforts of our dedicated team we succeeded in meeting that hard deadline.

We are now in the process of considering other areas for rulemaking where we will be implementing federal law but without a specific congressional mandate or timeline. 

He is proud of QM, of course.

Regardless of its length, any such period creates an opportunity to facilitate implementation of the new rules.  With our mortgage rules, we unveiled them in January 2013 and most took effect in January 2014.  These were largely congressionally-mandated deadlines and we stuck to them, though we knew they were tightly drawn.  But we made a conscious decision to use that year to the fullest by climbing into the trenches and working closely with those who had to implement our new rules.  The goal was a successful rollout, with fewer problems for industry and less consumer harm.  So during this period, we engaged in vigorous outreach and assistance to financial institutions.  We viewed this as a joint enterprise.  We wanted to make things go more smoothly and achieve better results.

He didn’t discuss the unintended consequences of QM, which will be winding their way around the industry for years.

But hey, joint enterprise and stuff.

In short, our rulemaking process is designed to produce rules that deliver tangible value to consumers and make the financial markets work better.

Is big success?

So these are some of the ways we are trying to reimagine the administrative state. 

Other than that, how was the play, Mr. President?

(Mr. Cordray's uncut and unsnarked speech can be read here.)

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