Here We GO!

Well, it's here. The Designated Transfer Date has arrived. Don't believe us? Take a look here, and here, and here. And, were it not for all the predictable summer time talk about the debt ceiling, Rupert Murdoch and, ahem, Casey Anthony, the front page of every news paper and major news outlet would be touting the fact that today is the Designated Transfer Date. Instead, there isn't even a reference on the New York Times web edition front page. However, if you are interested in how the Bureau has evolved from the pages of Dodd-Frank, Article X, into the functioning agency that launches today, this article, authored by Elizabeth Warren, is a must read.

But wait you say, the Consumer Financial Protection Bureau does not have a Congressionally confirmed leader. It doesn't matter. And, wait you say, the Bureau doesn't have all of the powers that Congress intended it to have when Dodd Frank was passed one year ago today. Again, it doesn't matter. Today is the day that the lights go on, and all of the transferees from other enforcement agencies officially begin their new quest for equity in the realm of the consumer finance industry.

Never mind that the Bureau has been quietly active for seven or eight months. Never mind that Elizabeth Warren and her deputies (See Richard Cordray) have been speaking before any group of business people numbering more than three for the past six months, and never mind that the Bureau has been playing an active an important role guiding settlement negotiations and deals in connection with the great robo-signing scandal of 2010. No...today is the day everything changes. It is the day that we will all look back on as the dividing line between the "good 'ole days" and the hard life. For those of you who haven't seen "Armageddon," this scene sort of typifies the effect that many industry insiders believe the Bureau will have on the consumer finance industry. And, many politicians warn that no Bureau director will be confirmed until and unless certain powers that Dodd-Frank conferred upon the Bureau are rolled back. Principally and, again, predictably, the politicians are concerned that the Bureau is too independent...uh, we mean too powerful. Now, the sound bytes that you will hear will include the word budgetary "oversight," but the real issue is control. He who holds the purse strings also holds the power...right? If unclear on that, then just ask the chair of the House Ways and Means or Senate Appropriations Committees. With the Bureau's budget being calculated as a percentage of the Fed's overall budget, it is completely independent of the Congressional budgetary hammer...and, thereby, independent of the work-a-day politics that we see from 5-11 p.m. nightly on CNN, FOX and MSNBC. But, budgetary control is not all that the House of Representatives wants. It also wants to force feed a five person panel to replace the position of "Director" of the Bureau. Really? A five person panel is a good idea to head up a government agency? Only the House could come up with such a completely lame brained idea. Without regard to whether we endorse the Bureau or its mission, this much is clear, if I were writing a blog post in which I describe the worst possible way to design a regulatory enforcement agency, it would start with...absolutely right...a "five person panel" directing it. Imagine if EPA or MSHA or OSHA were led by a five person panel? Could the Bureau become any more politicized?

To all this, we at BB&R echo Frankie Goes To Hollywood and say "Relax."First, the Bureau became a reality last summer, before the midterm elections. While the midterms changed a lot, they did not change the fact that Dodd-Frank was passed. They did not change the fact that Article 10 exists, and they did not change the fact that the intended architecture is an independent Bureau. If not independent, then it cannot fulfill its mission, because the fact is that consumers will never...ever...be on equal footing with the financial industry. Period. The Bureau's political independence may level the playing field a bit, but even complete independence wouldn't level it completely. Second, whether or not Richard Cordray is immediately confirmed, the Bureau will not be without leadership. Cordray, the former Ohio Attorney General who led the charge in the robo-signing scandal before losing his election last Fall and nearly immediately being pulled into the fold at the Bureau (and as an aside, anyone who believes that Cordray will be easier to deal with than Elizabeth Warren...well, there is this bridge that we would like to sell to you). Cordray will take the reins whether he is confirmed or not. In fact, as I write this piece, he is likely sitting in the same office, behind the same desk where the eventually confirmed Director will sit. Third, the Bureau has teeth. It has a budget, and money, and enforcement powers, and it has them with or without a confirmed director. Now, there may be some new rule writing and, thereby, new rule enforcement powers that will be delayed ("delayed," not precluded) by the "we won't confirm" tactics, but trust us there are plenty of regulations to be enforced until a confirmed director takes the oath.

The Bureau is our new reality in consumer finance. Its first enforcement action(s) will come within days or weeks. The yellow caution flag has been lifted; we are now under green; and it's about to get interesting.