Tuesday, February 15, 2011, 10:35 AM

CFPB--and Misinformation

Posted by: Chris Jones


One of the risks of creating a regulatory, investigatory and enforcement agency such as the Consumer Financial Protection Bureau, and of founding it in connection with a complicated set of new financial reform laws is the proliferation of misinformation. From time to time, we at BB&R run across such misinformation, which often emanates from industry sources where the otherwise unindoctrinated go to edify themselves...or so they think. Here is one such example, an auto dealer blog in which the contributor is allowing as to how rough the CFPB is going to make the lives of auto dealers, and how quickly the regulations are going to fly. Of course, because the blog entry makes no mention of the fact that auto dealers are specifically excluded from the CFPB's jurisdiction, we infer that perhaps the contributor may have overlooked that fact. Now, this is not particularly unusual and it would not have even caught our attention but for the fact that there is a robust series of "comments" following the blog entry. Several who appear to be affiliated with the auto dealer industry lament the coming regulations and enforcement and theorize that the CFPB's main purpose is to protect the military, and themselves opine that if auto dealers are careful to stay within regulations then they will be safe. Some of which is true. If auto dealers stay within existing regulations, then they should be able to do their business without molestation by the government. Of course, those rules and regulations have nothing to do with the CFPB, and if auto dealers look to the CFPB as their regulator, then they do so in error. Also, while the military is certainly one aspect of the CFPB focus, protecting the military is by no means the vanguard mission...though based upon how quickly these commentators became concerned about the military angle implies, and we sort of infer, that those in the military might do well to be wary of auto dealers.

The message is this: As with everything else in life, don't believe everything that you read in connection with the new world of financial regulation and enforcement. Yes, the world is changing, and, yes, it is going to be more challenging to live in the consumer finance industry in 2011 than it was in 2006, but thriving will not be made impossible. That said, blind faith in people who simply don't know what they are talking about will put you in a pretty good position to fail.

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