You’re Going to Need a Bigger Boat

For some reason, I cannot shake this classic line from Jaws (uttered by Chief Brody to Quint upon first seeing the shark) when I read the daily comings and goings of the Consumer Financial Protection Bureau. The question is not who or what the Bureau is attempting to regulate. But, who or what aren’t they wanting to regulate. Or, so it appears.

Like it or not, the Bureau is around to stay. It’s still in its infancy, but growing bigger and more powerful by the day. The Bureau hit a major growth spurt when President Obama recess appointed Richard Cordray to be its first director (controversially I might add). Since January, the Bureau has been one active federal agency. And, it’s not even fully staffed yet.

Here’s a quick, non-exhaustive run-down on the Bureau’s recent activities:

·       Request for Information on overdraft practices

·       Examination of overdraft programs at the largest nine financial institutions

·       Advance Notice of Proposed Rulemaking on General-Purpose Reloadable Prepaid Cards

·       Proposed Rule for Supervision of Nonbanks that Pose Risks to Consumers

·       Proposed Rule on express statutory protections of confidential information in bank examinations

·       Notice for Comment on updating and streamlining regulations

·       Proposed Rule to supervise debt collectors and consumer reporting agencies

Ready to cry “uncle” yet? One can certainly make the case the Bureau is so active because it is so young. But, is haste making waste? Case in point may be the Bureau’s final rule on international remittance transfers issued late last year. The Bureau assumed responsibility for the final rule from the Federal Reserve Board (who had issued the proposed rule). Without going into a detailed analysis of the final rule, many banks providing remittance services are stating the 2013 compliance date for new consumer disclosures and error resolution cannot be achieved. The message appears to be getting through to the Bureau. It may revisit the issue in some fashion.

We ought to be somewhat sympathetic to the Bureau and other federal banking agencies under strain to implement the more than 400 rules and studies required by Dodd-Frank. The Bureau must also find its way in working with the Fed, the OCC, FTC etc on bank examinations and enforcement actions. The Bureau must balance its requirements and obligations under Dodd-Frank against being spread too thin and possibly hurting the financial services industry’s ability to help the economy recover.

Does the Bureau go for the “bigger boat” option or focus on issues beneficial to consumers and the recovering economy? Time will tell.