The Consumer Financial Protection Bureau started its new life by meeting with a group of religious leaders this week.
According to a blog post by Elizabeth Warren, a special advisor to the Obama administration who is spearheading the establishment of the new bureau, the roundtable was set up to find out from spiritual leaders about the financial concerns that members of their congregations were having. The new bureau was created by last year’s passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Warren, a law professor at Harvard and an outspoken critic of banking practices, had originated the idea of setting up the bureau and was in the running to become its first director. But she was instead made an advisor to avoid the messy process of a Senate confirmation hearing, where she was expected to be opposed by many Republicans and banking lobbyists.
Since that time, she has been meeting with banks to find out about their concerns, as well as consumer advocates. Her meeting Tuesday with religious leaders was a surprising turn, though it makes sense in a way.
“At the new consumer bureau, we spend a lot of time listening,” she wrote. “We know that when Americans feel overwhelmed by financial problems, many of them turn to their ministers or other spiritual leaders for support. These leaders witness—up close and personal—the devastation that a financial crisis leaves in its wake. We are particularly interested in hearing from these community leaders about what they are seeing on the ground—what financial issues their congregations are confronting and what people of faith are doing to help.”
While she is known as a fierce critic of the dodgy practices of the big banks that led to the financial crisis, Warren has a little-publicized spiritual side as well, and used to teach Sunday school for her Methodist church.
Meanwhile, the bureau is in the process of getting up and running and recently launched its Web site, featuring the blog where Warren wrote about her meeting. It also recently hired former Ohio Attorney General Richard Cordray to lead its enforcement division. Cordray took an aggressive stand against banks for the shortcuts they took with their mortgage foreclosure practices, and he is promising to bring that same stance to the new CFPB.
He will also bring valuable state experience to the bureau, which will need to work with state consumer protection agencies that have been carrying out the type of enforcement that the CFPB will soon be doing at the federal level. The Dodd-Frank Act contained some preemption provisions that give the new bureau, which operates under the auspices of the bank-friendly Federal Reserve, the ability to trump state consumer protection laws. By bringing a former state attorney general into a prominent role leading the enforcement division, the new bureau is showing that it plans to work cooperatively with the states instead of simply overruling them.
As the new bureau tries to do more outreach in listening to the concerns of community banks, consumer advocates, religious leaders and state officials, it would also be a good idea for them to listen to some accountants. Accountants, like religious community leaders, hear a lot from their clients about their day-to-day financial worries and concerns.
While accountants are mostly exempted from regulation by the CFPB, thanks to lobbying by the American Institute of CPAs, they can still contribute some valuable insights on the kinds of financial stresses that are being faced by individuals and small businesses. In a way, the accounting profession has acted as a kind of unofficial Consumer Financial Protection Bureau for generations of clients.