by Rob Bramson
[Ed. note: Rob Bramson is a California consumer lawyer. We thank him for this guest post.]
Brian Wolfman’s recent post about an amicus brief submitted by the Consumer Financial Protection Bureau includes a quotation from the “CFPB Monitor” – a blog maintained by a law firm that represents financial services entities. The blog entry laments that all of the amicus briefs submitted by the agency to date have supported the consumer position and notes “industry suspicion that the CFPB will always align itself against the industry” in such briefs.
I made a flippant comment to Brian’s post (“If someone wants an amicus supporting ‘industry’, they probably should go to the "INDUSTRY Financial Protection Bureau"), which sums up my view. Brian asked me whether I wanted to flesh out my point further in a guest post.
It is no secret that the CFPB grew out of a 2007 proposal by Harvard Law School Prof. Elizabeth Warren for a federal agency whose primary mandate would be the protection of consumers in the face of the myriad “tricks and traps” rampant in the products being offered by the financial services industry. Following the financial meltdown of 2008, creation of just such an agency was included in the Dodd-Frank Act as Title X. The express statutory purpose of the CFPB is, among other goals, to ensure that “[c]onsumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination”. As noted in my earlier comment, the agency is the CONSUMER Financial Protection Bureau. Nothing in Title X suggests that the Bureau should also aim at ensuring that financial services providers make plenty of money.
The financial services industry has an army of paid lobbyists to urge their preferred outcomes upon members of Congress and the federal agencies with jurisdiction over them. Moreover, historically, the relevant agencies with jurisdiction over financial products and services have each had as a primary mandate the “safety and soundness” of the financial providers themselves (even if, nominally, these agencies were also empowered to enact consumer protection regulations). Unfortunately, all too often, “soundness” translated into protection of profitability for the very entities these agencies were tasked to regulate. It was precisely to avoid a repetition of this result that the CFPB was assigned the role of consumer protection alone.
To be sure, part of the Bureau’s mandate is to enact regulations governing various financial services offerings. As part of that public rule-making, the Bureau does (and should) solicit comment from all interested parties, including particularly the financial services entities. When creating new regulations (or deciding whether to dispense with old ones), the Bureau quite properly balances the prospective benefits to consumers of any given proposal against whatever costs or other burdens would result from the proposal. And, of course, companies offering financial products may have valuable insights or understanding to provide.
However, in the context of amicus briefs addressing the interpretation of existing law (which is what triggered this tirade in the first place), the Bureau’s proper role is, as its name suggests, the protection of consumers. Where an actual and good faith conflict exists between consumer interests and “industry” interests about how a law should be interpreted, it is precisely the CFPB’s role to urge the consumers’ side. I, for one, hope that it is more than “industry suspicion that the CFPB will always align itself against the industry” in such situations. That result would represent the fulfillment of the very purpose of the agency.