Both sides grossly overstate consumer watchdog’s impact

In light of the recent change in leadership at the Consumer Financial Protection Bureau (CFPB), a debate about the utility and performance of the CFPB has resurfaced.

Most of the ink spilled falls into two camps. The first is courtesy of Sen. Elizabeth Warren (D-Mass.) and most self-appointed consumer advocacy groups: The CFPB is the only thing stopping Wall Street bandits from breaking into your home and prying money out of your calloused, hard-working, blue-collar hands.

The second argument comes courtesy of Rep. Jeb Hensarling (R-Texas), Wall Street Journal op-eds penned by highly paid industry lobbyists and disgruntled former CFPB employees that want jobs in the Trump administration:

The CFPB is an unaccountable bureaucratic government monster that didn’t sue Wells Fargo fast enough or for enough money — but sued everyone else for too much money — and is preventing banks from giving more money at better rates to more consumers even though those banks really really want to.

I am proud to have worked at the CFPB for three years. Now, I am proud to advocate for clients with matters before the CFPB and clients in industries that are regulated by the CFPB. I don’t know if I’m the best voice to opine on the societal value of the CFPB, but I can tell you that everything you’re hearing about the CFPB from those two deeply entrenched camps is either false or grossly overstated.

The bureau has done some good things for consumers and for stability in consumer financial services markets, but they could also probably do more — sometimes by doing less. Most banks and financial services providers do well by their customers and consumers are, by and large, happy with their financial services providers; if they weren’t, they wouldn’t continue to do business with them.

So don’t tell me with a straight face that the financial services industry is suffering. If you do, then I don’t think that word means what you think it means. Yes, compliance costs have skyrocketed at most consumer financial services companies, but when the cost was next to zero prior to 2010, the only reasonable result was for costs to increase substantially.

You may justifiably feel that the CFPB has been heavy-handed in overcorrecting problems abound in the consumer financial services industry, but when expressing your displeasure, please don’t rewrite history and proclaim that the economy was booming in 2009 before the CFPB came to crash the party.

Charts of economic growth trends, industry financial performance and consumer satisfaction with their financial services providers will quickly make a liar out of you.

But also, don’t tell me that an agency of 1,500 Democrats wouldn’t be improved by adding a few diverse voices to the mix. My god, was that place an echo chamber. As a result, there were definitely industries and companies that were perceived to be good or bad and were more or less likely to find themselves on the receiving end of an enforcement action or a blistering press release. That’s not a good trait for any government agency.

The CFPB should be praised for its commitment to hiring diverse employees along the lines of race, creed, sexual orientation and gender. But from my vantage point, that place was never a champion of diverse thought and was not particularly kind to its dissenters.

Maybe that’s a symptom of any agency in its infancy, but I firmly believe that the CFPB will be a better agency in 2025 after a few administrations have had a chance to staff it.

The debate about the utility of the CFPB suffers from the same problem that most policy debates suffer from today. At some point, all these smart people debating started not only speaking in, but also thinking in talking points.

I have no doubt that Sen. Warren is smarter than I’ll ever be, and so I’m always saddened when I see her cranking out lazy one-liners and editorials about Wall Street greed and big-bank cronyism. What happened to making the easy questions hard, professor?

If CFPB 2.0 is going to be better for consumers than CFPB 1.0, then it’s time for its supporters to acknowledge that there’s room for new voices and course corrections to be made at 1700 G St. and time for its detractors to acknowledge that rules of the road for the financial services industry, $12 billion in consumer relief and 1.2 million consumer complains answered are not results that should be associated with your poster child for government bureaucracy gone wrong. 

Nate Viebrock is an attorney at Bradley Arant Boult Cummings LLP and works out of the firm’s Charlotte office. Prior to joining Bradley, Nate worked in D.C. at the Consumer Financial Protection Bureau from 2013-2016 in the CFPB’s External Affairs and Enforcement offices. The opinions expressed are his own and do not necessarily represent the views of the firm or the CFPB.