Title: Building the New Consumer Regulator: Presidential Advisor Raj Date Discusses the Challenge of Creating a Brand-New Regulatory Agency with a Very Different Mission
Abstract: Nearly three years ago, when the Consumer Financial Protection Bureau was still just a twinkle in Elizabeth Warren's eye, a defender of the concept made what some might have considered an unexpected point in a paper called of Bad Ideas. The writer, having argued that a key duty of the bureau should be to help consumers figure out what aspects of products to dig and which to pay less heed to, argued: new agency should not simply repeat the mistake of assuming that mountains of disclosure documents can be rendered effective simply by making those mountains higher. This mission is notably distinct from the notion of designing or mandating 'plain-vanilla' products--a notion that is problematic both in concept and in practice. Most bankers would vigorously support both parts of this statement--ABA, in fact, attacked the plain vanilla concept early on. And while the author, then chairman and executive director of the Cambridge Winter Center for Financial Institutions Policy, a fledgling think tank, had worked for both Wall Street and commercial banking institutions, what's of more interest is where he works now. The author was Raj Date (pronounced Dahtay), who is an assistant to the President and special advisor to the Treasury Secretary, assigned to work for CFPB. More importantly, he is the man running it while the nominated director, Richard Cordray, awaits Senate confirmation that remains on indefinite political hold. Interestingly, sources who follow the agency indicate that it was Date's work at Cambridge Winter, which he founded, that attracted the attention of Warren, who is campaigning for U.S. Senate. Date is considered more businesslike and easier to communicate with than Warren. As he moved into a government post, he did not change his mind on the point he made in his January 2010 Scalability paper. In a recent speech, for example, he compared federal consumer financial protection to a sailboat badly in need of having its accumulated barnacles scraped. Also: It is too often too easy to respond to a specific problem with a specific rulemaking solution that then lasts forever, he said. [ILLUSTRATION OMITTED] Cleaning out the files Indeed, one of the bureau's immediate missions is to begin sorting out the regulatory attic. Date says the bureau will not be inclined to simply grab at low-hanging fruit--bankers have seen that over the years--but will deeply examine candidates for regulatory streamlining. One of the first targets, still underway, is the melding of the Truth in Lending Act and the Real Estate Settlement Procedures Act. We are taking that project on just like we're going to take everything else on, said Date in an interview with ABA Banking Journal. We're going to try to be smart about it, ground it in actual customer behavior, and get a ton of input from regular people and the industry alike. And we're going to make it happen. Bankers have heard plenty of promises. And invitations to comment are embedded in the regulatory process. But consultant Jo Ann Barefoot, co-chairman of Treliant Risk Advisors and a former federal regulator herself, has met extensively with CFPB staff and says, they really do want to hear from bankers--and people should communicate with them. I've lived in this business The controversial bureau has been a pain point for the banking industry all along its evolution--a lightning rod for Dodd-Frank frustration. But when the Administration tapped Date, he brought credentials beyond those of the typical policy wonk. I've been a practitioner in financial services, and I complained frequently about the effectiveness and efficiency of bank regulation, says Date. My job is a classic case of 'OK, if you think you can do it better, why don't you try?' I'm going to try. But Date isn't running for office--he's not holding out an olive branch, just willingness to listen. …
Publication Year: 2011
Publication Date: 2011-12-01
Language: en
Type: article
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