Time Keeps Ticking Away for Implementation of the Consumer Financial Protection Bureau, and for Industry Readiness

Time keeps ticking away. Six months have passed and there are six to go. Dodd-Frank was signed into law on July 21, 2010, and the "Designated Transfer Date" or "DND" is July 21, 2011. That is the date on which all of the tranferor agencies (think FDIC, OCC, HUD, FTC, etc...) move their consumer protection divisions into the CFPB and under one roof. We think of it as a massive change in office space in Washington, and with the transfering federal employees will also go the rules, regulations, orders, settlements, enforcement actions, lawsuits and proposed rules that are currently in place or underway. All of that has to be ready for transfer and implementation in six months. In addition, the Bureau must be prepared to deal with inconsistencies in the various rules and/or in interpretations of the same language by different agencies. That is to say, the Bureau will have to harmonize the rules and regulations that are transfered over just as it will have to harmonize the new rules that it promulgates with those that are already on the books. No small task.

Add to that task the issue of coordination with State Attorneys General and State banking supervisors, and the broader complexity of setting up a major new federal regulatory agency and you have yourself quite a job, and one that is being undertaken, at the moment, without an appointed or confirmed Director. However, the implementation efforts currently appear up to the task. For instance, as we have previously reported, major hires have been made to head implementation teams for efforts such as "enforcement" (Richard Cordray), "Card Markets" (David Silberman), "Rule Writing" (Leonard Chanin), "Technology Operations" (Tim Duncan), "Online Engagement" (David Forrest), "Nondepository Institution Supervision" (Peggy Twohig)and, of course, "Depository Institution Supervision" (Steve Antonakes). Each of these hires has significant consumer protection bona fides, several of them are lawyers and presently the "industry" does not appear to have anyone on the inside that would be inclined to argue its perspective.

In terms of coordination, as we reported here on January 5th, the implementation efforts have extended to both the State Attorneys General and State banking supervisors. And, the details of that coordination effort are beginning to become public. Having read of closed door meetings and Memoranda of Understanding being negotiated between State regulators and the Bureau for purposes of coordinating supervision and enforcement efforts, we have watched for the first such memoranda to be made public. The first that we have seen is the one executed with the State of Maryland, which you can read here.

Finally, any industry players that have not seen Elizabeth Warren's January 14, 2011, appearance on HBO's "Real Time" political talk show can and should watch it here. And, compare it to (1) her interviews on the same program from about a year ago (she wasn't wrong, by the way). . . and here; against (2) some of her early comments from last Fall that were made to leaders in the industry. The inescapable conclusion? The Bureau may be interested in the type of financial education that Ms. Warren discussed last Fall. However, to the extent anyone believes that rule making, supervision and enforcement are not top priorities, those people are not paying attention. Currently, leaders of divisions that will focus on information gathering, supervision and enforcement are in place. The Attorneys General have their marching orders and the Conference of State Banking Supervisors is also on board. We didn't choose a "bread" clock on a whim. Time is ticking for the industry to ready itself for rapid change, otherwise, the "bread" that it has historically made may be relegated to mere memory.