Consumer Bureau Official Seeks to Ease Bankers' Fears

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The Wall Street Journal
By: Maya Jackson Randall
June 14, 2011

ORLANDO--A top official at the new U.S. consumer-protection agency sought Tuesday to ease banking-industry fears about the bureau, saying the agency will be very deliberative as it writes new rules and voicing confidence that it can improve markets for both companies and consumers.

The Consumer Financial Protection Bureau, a key plank of the Dodd-Frank financial law Congress passed last year, is set to open its doors next month as a new financial-markets cop. The agency will have broad powers over financial firms, triggering anxiety among financial players and uncertainty about what the rules of consumer finance will be going forward.

Raj Date, the bureau's associate director of research, markets and regulations, sought to play down the importance of new financial rules. He said the bureau also plans to improve financial markets by supervising financial firms, taking enforcement actions, boosting financial literacy and addressing consumer complaints.

"We have a lot of tools," he said. When the bureau does write rules, it will be through a very deliberative, fact-based process, Mr. Date said.

He added that he sees a lot of room for new research on consumer finance and that new data will help drive policy decisions. Last month, the bureau hired Harvard University economist Sendhil Mullainathan, a leading behavioral economist, to serve as the agency's assistant director for research.

Mr. Date, a former Wall Street executive who has worked at Deutsche Bank Securities and Capital One Financial Corp., also touted the financial industry as a critical part of the economy and said he believes in a free-market society.

"I wouldn't want to live in anything else," he told the crowd of bankers while also dodging a question about whether he would like to be the consumer-protection agency's first director. His name was floated last week as a potential candidate the White House would consider tapping to head the agency, which is set to launch on July 21.

Mr. Date's comments come as the banking industry faces a new level of uncertainty and questions about profitability in wake of the Dodd-Frank law and other regulations from Washington over the past several years.

Richard Hunt, president of the Consumer Bankers Association, the industry group hosting the conference in Orlando, said the financial industry opposed the bureau's creation, but "since that time, we have embraced" the consumer bureau. "However, there is still some fear," said Mr. Hunt.

One of the industry's current worries is that the nascent consumer bureau won't be able to police the broad swath of payday lenders and other nonbank financial firms, leaving the watchdog solely focused on banks. While the financial industry fought the bureau's creation, bankers like the fact that the bureau would bring their nonbank competitors under the same regulatory umbrella.

Jaret Seiberg, an analyst at MF Global, said he doesn't think the bureau is prepared to regulate nonbanks. "There's simply too many companies at the state level," he said during a panel discussion on Monday.

But Mr. Date said it's "absolutely false" to say the bureau won't have a capable examination team that can oversee nonbank firms, which have largely escaped federal regulation. "I think it's a critical part of the mandate," Mr. Date added.

While answering questions after his speech, Mr. Date defended Congress's decision to have the consumer bureau solely focus on consumer protection. Traditionally, banking regulators have been charged with protecting consumers while also protecting banks' health.

Republicans and financial-industry critics of the new consumer agency argue that the two mandates should always be paired, but Mr. Date begged to differ. "It is a rare institution that can do a great many things at one time," he said.

Write to Maya Jackson Randall at

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This page contains a single entry by CFED published on June 15, 2011 3:39 PM.

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