CFPB Enforcement Chief Talks to the Wall Street Journal

In an interview published in the February 9, 2011 edition of the Wall Street Journal (Jean Eaglesham), the chief of enforcement for the Consumer Financial Protection Bureau, Richard Cordray (former Ohio State Attorney General), stated that the Bureau intends to use its enforcement powers “immediately” once the designated transfer debt is reached. The designated transfer date is July 21, 2011. The article quotes Mr. Cordray as stating that his new responsibilities are “in many ways doing on a 50-state basis the things I cared most about as a state attorney general, with a more robust and a more comprehensive authority.” The article further quotes Mr. Cordray’s response to the question of how soon the Bureau would bring enforcement actions, that he “would see to it that we will be ready with some of our priorities immediately.” The article states that Mr. Cordray identified as high priorities on his enforcement agenda mortgages, credit cards, and student loans. However, the article states that Mr. Cordray stated that the Bureau will set its “priorities accordingly.”

As this blog has been reporting, the CFPB continues to emphasize preparation for enforcement. The Bureau entered into memoranda of understanding with state mortgage regulators and the Conference of State Bank Supervisors establishing state and federal coordination and cooperation for the supervision of providers of consumer financial products and services. Professor Elizabeth Warren, White House special advisor, appointed Mr. Cordray to head up the enforcement arm of the Bureau. While the consumer financial services industry has heard this promise of increased enforcement before, any past subtlety is gone in favor of promises of quick and aggressive enforcement, perhaps on the model of the EPA, which launched investigations and enforcement actions almost immediately following its empowerment and subsequent to passage of the Clean Air and Clean Water Acts. Of course, this is not to be confused with rule-making, which will likely be slowed to some degree by the "speed bump" provision requiring an SBA panel to review any new rules that will have broad impact on a significant portion of the industry. So, industry participants should clearly be investing time and focus in the coming months to ensuring that their policies, procedures and the terms of their agreements meet existing federal and State statutory and regulatory requirements. To the industry we say, heed this not at your peril, because Mr. Cordray does not have a reputation or history of being slow to act.

-- contributed by Stephanie Shaw