The five-year anniversary of the Consumer Financial Protection Bureau is coming up this summer – July 21, to be exact – and few can argue the impact the CFPB had on the financial industry in these four-plus years.
From the recent implementation of the CFPB’s TILA-RESPA Integrated Disclosures rule, to the national mortgage servicing rules, the Ability-to-Repay rule and the Qualified Mortgage rule, just to name a few, the CFPB seismically changed the face of mortgage lending, with rules and enforcement actions as well.
It’s not just mortgage lending that’s changed. The financial industry as a whole has undergone significant changes since the CFPB began operating in 2011.
And the CFPB is far from being done with reshaping the financial industry.
In a speech this week at a meeting of the Consumer Advisory Board, a group of “external experts, industry representatives, consumers, community leaders and advocates” that the CFPB meets with to discuss financial issues facing consumers, CFPB Director Richard Cordray laid out a series of goals for how the CFPB wants the financial industry to operate.
In his speech, Cordray said that the CFPB was founded with two “strategic objectives” that it would use to guide its work, and said that CFPB is using those two strategic objectives as the basis for setting nine goals for reshaping the financial industry within the next two years.
“The first objective was delivering tangible value to consumers,” Cordray said of the CFPB’s founding, according to his prepared remarks.
“We knew this meant following through on our statutory responsibility to clean up the practices that led to the collapse of the economy and caused so much harm to everyday Americans,” Cordray continued. “It also meant monitoring consumer financial markets so we could see developments as they occur in real time and head off problems that might arise in the future.”
Cordray said that many financially regulators have “ruefully noted” that if they had known more about the “deteriorating dynamics” of the mortgage market before the crisis, and understood more about the scope of potential damage, it could have been possible to “head off or limit the financial crisis that collapsed the economy.”
Cordray said that now, the CFPB’s “unique focus” on consumer financial protection allows to be in a “much better position to conceptualize and assess how these markets are working.”
Cordray said the CFPB’s second objective was to build a “great institution,” which could fulfill the goals Congress set for it, including supervision, enforcement, rulemaking, research, consumer education, and handling consumer complaints.
“By pursuing the goals of evenhanded oversight, appropriate law enforcement, fair rules, expert research, and broad-based consumer education and engagement, we have been working to restore trust and confidence in the markets for household financial products and services,” Cordray said. “As we do that more and more, we can see that we are succeeding in delivering tangible value for consumers.”
Using those two objectives as a base, Cordray said that the CFPB is setting nine goals, which represent the “key areas” where the CFPB hopes to make “significant progress” in the next two years.
“They are statements we are making about particular outcomes in particular markets that we want to drive toward fulfilling, rather than descriptions of what tools we plan to use,” Cordray said. “So strategy starts with what we want to see in the marketplace, which then can guide us in selecting the tools most appropriate for the task.”
Cordray said that the CFPB wants to see “markets that perform better for consumers” in the following ways:
- First, we envision a mortgage market where lenders serve the entire array of credit-worthy borrowers fairly, and where servicers have processes in place that result in fair and efficient outcomes for consumers.
- Second, we envision a student loan market where student loans are serviced in a way that is transparent and fair to help students repay their debts.
- Third, we envision a consumer reporting market with better data that is more accurate and inclusive of more consumers.
- Fourth, we envision a market free from discrimination and where consumers have equal access to small business lending.
- Fifth, we envision a market where consumers are savvy about their own finances, and they have reliable places to turn to for the tools and skill building to increase their own financial capability.
- Sixth, we envision a market where consumer education and policy decisions about household finances are based on a deep understanding of how households use financial products and make choices about money and the effects on their lives.
- Seventh, we envision an open-use credit market where payday and installment lenders rely on business models that succeed when consumers use credit as needed and are able to repay their debts when they come due.
- Eighth, we envision a debt collection market where everyone who collects debts substantiates the debts they are collecting and communicates with debtors about their debts in a respectful, lawful, consumer-oriented manner.
- Ninth, and finally, we envision an entire consumer financial marketplace where consumers will have the ability to effectuate their rights and hold institutions accountable for unlawful conduct.
“As we look ahead and work toward the primary goals we have set for ourselves, I believe these are also important characteristics of our work together at the Consumer Bureau,” Cordray said.
“We are intent upon constantly and tenaciously pushing forward to make progress on behalf of consumers,” Cordray continued.
“We strive to iterate in everything we do, avoiding defensiveness in making improvements that reflect implicit criticism of the partial progress we had made before, in our quest to be better today than yesterday, and better tomorrow than today,” Cordray concluded. “In maintaining this outlook and approach, we are always seeking to learn, grow, and get better at what we do.”