tv Panel Discussion on Consumer Financial Protection Bureau CSPAN April 18, 2019 3:17pm-3:52pm EDT
consumers really need to approach things with that skepticism and understanding what their needs are. it's also true that the government cannot be put in himself in a place of deciding what is best for each individual in their own circumstances and given their own situation. i think it's a personal judgment and responsibility starting. at the same time we know where there are violations and where we find them. >> that is just about our time. everyone here will be watching closely and looking forward to what you're doing next. thank you very much. >> thank you. [applause] >> we are going to reset for a panel discussion.
>> i would like to invite the panel to come forward and we can get the discussion underway. >> it looks like we are waiting for one more panelist. we can start by introducing herself and giving people a sense of their background. >> i am rick fisher. i have been working in the consumer financial services area for 49 years. at the time the bureau was created, i had a full head of hair. you can see with the last decade has been like.
i was invited to do a study with eric rodriguez who has become a close friend on the bureau for the council. i would say seven or eight years ago it was a treat to do that. i learned a lot. i am learning a lot every day with our new director. >> i'm linda with americans for financial reform. before coming to afr, i was here about a year in d.c. before that i spent most my career as a legal aid attorney representing homeowners and consumers hung by the financial crisis on the predatory practices that we have been tasked to protect consumers from. >> hi, everyone. i'm kate, i'm vice president regulatory counsel with the chamber of commerce. before coming to the chamber arrives at the consumer bankers association which is in this
building. it is good to be back to mecca morning. my name is hilary shelton. i'm director of the naacp washington borough and senior vice president for policy and advocacy. in that capacity my responsibilities are advancing the legislative and particle agenda of the naacp. prior to working there i work for the negro college fund working on issues of student loans and addressing particular concerns. i also had the distinct privilege of probably testifying before the house and senate a good dozen or more times as we looked at the challenges and problems that were evident after the 2000 major economic downturn. it led to is working with both senators dodd and congressman break to craft what became the consumer financial bureau in those terms.
a lot of opportunity to hear from people as we go through those challenge and as words sitting with the lawmakers to craft some protection that will help everyone as we move forward. >> thank you for coming and offering your expertise. a lot to think about from the speech. i believe there is a high degree of interest given that it's a relatively new agency. we have a new director to learn about where we may be going in the years and months ahead. what jumped out to you the most is the most significant thing that the director has said both in terms of what may be that is most significant and was the biggest departure for how things are. >> to me, the most important thing is she is looking forward. was the future, where is the agency going to go from here. i've worked closely with people at the agency through a director and acting director. i think that each had their strengths, each had their weaknesses. the benefit frankly for director
cranor juror of mick mulvaney is that he exploded the agency. i don't mean that, if you think about it in thin tech terms, he was a disrupter. in that context it's a positive term. i'm not suggesting everything he did was positive. there's things i agreed with, things they did not agree with. but he has cleared the air in many respects. that gives the new director the opportunity to look forward. >> linda, i know you're listening closely for any hints of polity shifts to come. i'm curious, what jumped out to you as was going to represent a market shift under this director. >> i'm grateful the directors focused on she mentioned a lot in her speech about preventing consumer harm. everything she said about enforcement, i think it remains
to be seen. she said she will go after bad actors but in references to the previous regime it seems there's less concerns about that. my biggest concern is that predatory practices will go it means they will be less which means they will lead to more people be in harms. that's a concern i have but we continue to monitor that. >> kate, what turns out to me in her remarks is a lot of taking input from stakeholders. everybody has something to contribute to this conversation. i think there are some people in the industry who view that is a shift and they think of it as more of a serial with the agency. now it thoughts on this idea that the industry and the regulator can somehow work in conjunction with each other to pursue a common goal. is that a good place for the regulator to beheading?
>> being one of those people in industry was welcoming the change, we are excited to have a seat at the table this time around. i think it's important to note, her focus on supervision. there is a lot that is going on constantly that is confidential. while the previous leadership before mr. mulvaney focused a lot on headlines and attention grabbing. i understand that from being a young agency. they had to be the cops on the beat. i think taking a more market approach and we, for years i have written countless comment letters on regulation. using that tool in putting your parameters and working with industry to see what works and what doesn't. from a business perspective understanding if this happens this is going to be the consequence. a good example right now is what is happening in remittances.
some countries we literally don't know the fees because there's no feedback. if you're not talking industry what necessarily know that. i think it's definitely a good place to be at. having all stakeholders at the table is very valuable. >> one of the areas that they opened with was this emphasis on consumer education, empowering consumers to make the choices that best suit them. they watched a savings initiative to help people build up their emergency reserves. if people have a better financial footings they may not have to look at these services that fall within the purview. i want to look at educating empowering consumers to make choices is the effective way to ensure that consumers are protected. >> it's a very important tool. certainly it is important. consumers are educated on issues to help keep them out of troubles and other things along
those lines. but protection is also important and accountability is important, as well. to have one without the other leaves gaping holes in opportunities for discrimination and predatory practices and other issues. >> for the remarks we talked about how do we measure success in the agency, particularly one that is shifting away from the black-and-white enforcement heavy approach where we pursue x number of cases and suggesting that there's going to be a more nuance way of looking at the regular going forward. maybe we can start with you on this, is it possible to have as effective a regulator or is there any way to even tell if the regulator is as effective for shifting away from this binary effort? mac that's a hard thing to measure. one thing i was thinking about
his complaints. if there is a reduction in complaints there's a number of reasons. one she was saying that will forgive me, just seeing clients, especially the least sophisticated consumers who i represented for many years, it can also be because they have less space in the system or there's less knowledge about the system or that even the way the complaint database, the questions have changed as hard to navigate it can be any of those systematic issues, there's different categories of harms that are not captured there. there's many reasons. i think the less enforcement or less complaints actually means there's less harm. i think you would have to at that much more carefully. but the bureau needs look at
that from all perspectives. >> i would be curious to get their perspective on the enforcement piece. we have now had over a year with the new administration in charge has there been a shift in the dynamic? what are you hearing from members? when the agency has been gutted decks have been cleared, i talked to members all the time who have issues going back to the beginning of the bureau things like that are still very much going on. but, it's not as flashy and exciting to see. so, i think it's going to be, i'm exciting that she's going to be using all the tools in her toolbox and education it kinda
sounds fluffy with financial literacy. that to me is the biggest issue is getting ahead of the problem we measure things with how many dollars do we spend in the emergency room last year that's not the right way to be looking at it. it's usually the people who get ahead of problems before their credit goes to ryan i don't think there has been a halt in enforcement actions at all. there has been a lot still going on and to this is been a year and a half of transition. now the directors looking at just because there hasn't been splashy headlines doesn't mean there's not more going on. >> rick, this is already been noted in the conversation, the idea that is a brand-new agency and active and are almost aggressive stance obviously the rule writing process is a
lengthy and arduous process. what we are now hearing is a seemingly renewed focus on establishing the practices and protocol through formal rulemaking rather than establish boundaries through enforcement or other tools to step the parameters of what proper activity is. i'm curious what your thoughts are on the renewed focus of were going to take info when great rules to defined what all sorts of different characteristics of the activity. what is that going to mean for the agency going forward? >> first of all, if you look back historically agree completely, the agency just starting up wants to make its mark. they want people to recognize they're there and they're doing their job. at the same time, there are statutes out there that they have authority over. the agency does that can be enforced. they were enforcing some, the actual rules when he think of
them saying, we want clear rules of the road, when you enforce a statute early on you make your mark. when he set guidance in an enforcement action as you rules you confuse everyone. i have spent my life advising financial institutions. when those initial guidance is were out they were impossible to understand, let alone to describe the people. enforcement is essential. i believe that in my heart. education is not enough but it has to be enforcement of rules that people can understand. >> linda, i want your thoughts on this notion of complying with congress lays out but then leaving the discretion going forward. what is your expectation for the regulatory output going forward? is been relatively slow so far. i think we've had the.where it's
been a transition. i will.you feel like you have a sense of what is going to look like. or we can have the same debate in the year. >> i think when -- was confirmed and i continue to want to keep an open mind with how she will operate. but the biggest item of concern is the release of the -- proposal. talking about input from all stakeholders, that was an arduous rulemaking process. it's five and half years of industry and civil rights groups paid a wonders loans themselves. the entire spectrum of people have a chance to contribute on lots of evidence and research at the bureau. lots of resources were invested in that. so, i think that is the biggest cause of alarm in the first
major think she is done in office. i think we are all concerned with that direction. >> it wouldn't be a panel discussion if we didn't talk about the structure little bit. obviously the director and she mentioned it in her remarks that there is incredible power handed to the director. maybe i can open it up to whoever. i'm curious to what people make of the single director structure now that we've had some time under that. obviously the director was able to make a lot happen as a single director. now we see the other end of the coin come through. as people who have various interest in how it operates i be curious to see what they think of the single director structure. >> let me start with that if i can. that was one of the issues on the table when we did the study early on. should it be a commission, should it be a single director? you talk about a political
issue. my deal with rodrigues was if we cannot agree well on a topic he was not in the report. this one is not in the report. we talk to different groups about industry and consumer groups who said, you know if you have a single director, it can twist and turn and change in a hurry. somehow, that did not get through. we have seen it already once, i think everyone regardless of what your view is on commission versus single director, we have seen what happens. my personal view is, a commission would be better. after karen injures five years. [laughter] >> i was very surprised going to the hill after president trump selection that other people were not clamoring for a commission. as we can see, the agency is so personality based. i think that is bad for
consistency and for financial institutions. it is this pendulum swinging back and forth. that's a perfect example of why there has been so much intrigue about what is she going to say. yes, the chairman speeches are highly regarded. i don't think there is as much of an attention because he's dealing with the commission. i think it serves consumers better because there is a little bit more parameters around it and won't be as personality based. >> let me just disagree humbly with my friends. after going through certainly all of the hearings and discussions about where we should go with a commission after watching how it works even the process and issues at this agency has to address, be more nimble is extremely important. as we look at issues in these predatory consumer-products they change very quickly.
what's fascinating, many will change my name only. and then pop up in a different way. having a quick response is extremely important. if we look at other government agencies is not inconsistent. even though they say there's no accountability i don't see any come before the u.s. congress more often. the oversight is clearly there. i would argue that after the debate for discussion looking at a commission and looking at other government agencies to cover our proud responsibilities from the attorney general of the united states and quite frankly the secretaries and various agencies i see no problem with one person doing it. certainly in each of these cases with my conversations there is usually a group of people around them that are part of the agency that participated in the process of helping them make the right decision. there's one person who is held accountable for how the
decisions are made and that would be the director. >> we talked about the agility and be in a single director structure is what makes it possible for the bureau to respond to those changing practices and bad practices, as well. >> speaking of directors, i would be curious to get the panels thought on what has jumped out to you on what has been the biggest shift from veining to . mulvaney came in as a disruptor but now we have a couple months of the new director and we can contrast how she is handling the job versus how mulvaney handled the job. how do people see her feeling that will definitely and what might it mean for the bureau moving forward? let me mention one thing to set the record straight. in 2017, -- at 36 enforcement
actions. in 2018, mulvaney had 11. no question, that's a significant drop. and i'll read already, we have had seven and three months. i see enforcement continuing. ice enforcement continuing as part of a focus on rules rather than guidance. in fact, not just the cf pd and i will you are use that term in this context but also financial regulators agreed that guidance was not to be the basis of enforcement actions. that is the september statement that one out from all of the banking agencies, the credit union administration and the cfpb, i think that's critical clear rules of the road. >> a subtle disagreement but i love these conversations. as we look at many challenges
along with the concern for us is the slowness of action and in many ways it is very thoughtful about what happens when you decide that there are some problems with how things are working and you decide you don't want to fully enforce the law as it is written that you're not using the full guise of power that comes along with an agency like this. certainly as we talk about rules and rules are important and we look at the testimony for the rulemaking and regulatory process all the time. but, the use of guidances for quick changes. looking at the very fast nature of the economic society which is important to have. in essence we are looking for a broad set of rules and tools to give us the opportunity to face such a pervasive problem in our society. >> may be now we can turn to specific items on the agenda. you mentioned the outgoing efforts to revise the payday lending role. obviously that's a significant
project that were aware of. curious to get your thoughts under one regime finishing up her rule and then another very quickly turning it around and tweaking it. is that a helpful way to go about regulating that? and on the payday piece what are people making on the changes? >> one of the biggest questions i have is, payday loans in 2019 versus payday loans in 2012, 2013, 2017. the cfpb leadership has changed things have changed in washington as far as leadership is concerned. but, i haven't seen anything besides the reinterpretation of a study they looked out at length. payday loans themselves have not changed. the mountain of evidence, that wasn't like they only got one part of the story is the
director said going forward, back out input from all stakeholders. the biggest question i have is besides the change in leadership, what has changed that would warrant a change in her role that that went through the proper rulemaking procedur procedures? >> i will quickly add to that. i would say the payday rule as in 1600 pages. there's a lot of nuance in that. doesn't mean we are going to completely got it but i've talked institutions that literally cannot comply with how it's written. what changed i think is being able to digest it in looking at the implementation process. we saw what a mess trade was to implement and the fact that it needed to be pushed back. so, that's my first., looking at implementation saying, august is around the corner and we need to see if we can implement this provision. another piece has not been reassessed as the cover loans
provision. is figuring out that wealth management projects are covered by that. that is not the quote unquote you dap in team to payday rule was intended to cover. if you have a $300,000 bridge loan that is technically covered by the payday rule. the different parts of the bank understanding that now these products are covered. is being able to digest and have legal departments talk to one another. >> in our experience comments fascinating to see how things have moved. i've had the opportunity to meet with the number of owners of the biggest payday in the country. trying to figure out how i wanted sitting down with the guy who's a multibillionaire as use. as we discussed the issue would payday challenges throughout the society which are heavily in communities where the naacp
served. we have 2200 memberships. we are in every state of the united states. were hearing from one end of the country to the other. even military members, with all that in mind, the single thing that each payday lender the representative said was, under any other guidance, we would not be able to maximize the profits we make now. think about the protections for the american consumers. there say their protections you are asking for. i cannot do business that way because i can't make the level profits i'm making today. so thinking about what payday loans payout in the equivalent of interest called fees, were talking about over 400% interest over the course i would hear. most of the challenges and problems we have is a predatory nature of many of these financial service products as
they simply cannot maximize the kind of profit unless they're able, at some level to be able to take advantage of those who do business with them. >> payday rule is a misnomer that this goes across the financial services spectrum and this prohibits banks from getting back into the market. i think some will remember the deposit advance guidance which basically brought all of the banks out of the market, as well. we have the occ say we want banks back in. we have the fda see with request for information that we have the payday rule. i used to stat all the time. 40% of americans can't put an emergency 400-dollar expense, where are these people going to go? if were not getting banks into the mainstream small dollar market what are the alternatives? >> i would agree. i would love to see banks and small lending markets.
but i would like it in a disciplined way that doesn't take advantage and create predatory scenario. even looking at products that are not as predatory as many of these payday lending stores and even some coming from our banks it's amazing to see the banks actually duplicating what we are seeing happening in some payday lending stores and shameful in many ways. i don't want to name names now. >> i have very good research. >> i will whisper into your ear. some even went around state protections and utilizing their federal status to put together payday lending packages. indeed they are able to do it because they utilize their -- sea ice just seen some that were highly regarded. we'll talk. >> a family who cannot afford a
400-dollar emergency can't be a $400 loan at 400% interest. i would like to see alternatives that are not bad for people. it can't be the answer. i think that's a big concern. >> some of the credit unions quite frankly offer packages that are much more sustainable, not nearly as predatory. >> one area we haven't talked much about his the idea of innovation and obviously they're taking strides there with the notion of a regulatory sandbox that allows private industry to try out different things in that space without worrying about the hammer coming down on them. curious to get the panels thoughts on how a regulator like the cfb should think about innovation. is it an asset? what are the risks? i would welcome thoughts. >> when we started out in a couple ways. i think of innovation as new products. alternatives to payday lending
and also deposit accounts that are sustainable. those are new products. also think about meeting the future and the ability of companies to be able to deliver what they need to deliver in terms of disclosures and the like. the office of innovation at the cf pete be previously was made up of really good people, very interested in meeting but were able to accomplish almost nothing because they didn't get the support from the top that they needed. they were great people. one single no action letter that essentially went nowhere, that can't be if there's going to be a future in this area. if the director talks about existing regulations, think about the truth in lending act. all of these disclosures. how do you deliver that on a cell phone?
how do you deliver that on a payment device and emergent location when somebody's going to get a loan at that minute. it might be a new credit card account might be an installment loan. that minute. the disclosures are worthless in terms of an educational tool they may be an enforcement tool later on. it's critical for the agency to develop an approach that is meaningful for disclosures on ipads, cell phones and other ways to make the market work. >> i would just add, pre-plans are a good idea. if their products are concerned about having a division with cfpb that can evaluate it prior to implementation and determine if we're going to have problems would be consistent with other tools even in the voting spear and prevent them from happening in the first place what we have been looking at is whatever agencies do. they've been sharing no action
letters for decades. there hasn't been massive consumer investor protection harm coming out as a result. so, that's what we would like to see from the bureau. i hope it's looked at as more than simply just an innovative product, to rick's., there is a lot of outdated laws that we just need some thoughts on an disclosure. on the innovative side i would like everyone to read the philadelphia fed report on the matting case last fall. the fact that marketplace lenders went out bankruptcies rose 8%. as these people who really need that access to credit. and can hopefully be able to have access to these products to further their financial. >> innovation needs to be looked at carefully. this idea that regulations, is it a new product is because --
there's a mobile banks, there's good things that have come with technology, but also is there any unintended consequences? companies can mean well but innovation needs to be looked at more carefully and not less carefully. there needs to be reporting and public input. all stakeholders with the need to know what's going on to take a look at that. there needs to be more oversight and not less as we talk about how the regulatory framework moves forward. >> i think we have some time for some audience questions if anybody has anything. >> hi,. >> my name is caroline. i am a licensed bilingual social worker. coming all the way from boston
once a month year. so i do speak spanish and french. so i able to talk to my seniors in boston about a lot of issues. but, one thing that is very big concern for myself and for many of the seniors come is that you people, you beautiful people who are in this cfpb group, i have no here much about help for seniors. everyone think that when you are -- or your italian all the problems have gone. not so. we have a lot of seniors, including myself, i have a loan from the school that was $4000, now my last bill that i got was
39000 -- $39000.900. and no matter how much i tried to figure out how i'm going to get the situation straightened out, they -- from one beautiful person to another. for whatever not that great, that's my personal feeling. but, my feeling is also that we need to have a woman as a president, believe it or not, this is my feeling. we women are able to do better, the people have been able to do. >> we are going to leave the last few minutes of this and take you live for boston. former vice president joe biden just started remarks at a rally starting the strike of our grocery stores chain. live coverage parents he spent two. >> people have done everything they're supposed to do and they are entitled