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CFPB: 4 years in

Nobody’s indifferent about the “new cop on the beat”

The Consumer Financial Protection Bureau has changed banking. Question is, are all the changes for the better? The Consumer Financial Protection Bureau has changed banking. Question is, are all the changes for the better?

Controversy and banking regulators are old acquaintances. FDIC insurance, now an essential, was opposed bitterly by many bankers in the 1930s. And the Federal Reserve stirs more controversy on more fronts than you can track, from frustrated investors, savers, and bankers to conspiracy theorists.

Yet the Consumer Financial Protection Bureau stands in a class by itself, for controversy.

CFPB debuted in the wake of the turmoil of the Great Recession, conceived in the mind of now-Senator Elizabeth Warren, brought into being by the Dodd-Frank Act, mired in party politics since its beginning. To backers, CFPB is a brainchild long overdue, doing wonderful work. To critics, it’s an unwelcome arrival. To some in the middle ground, it’s been a letdown, a great idea that failed.

For an attempt at a balanced look at how CFPB and the banking industry interact, we approached over 25 sources, a wide range of bankers from institutions of all sizes; compliance, legal, and regulatory experts; bank lobbyists; and former CFPB officials. Representatives of some organizations—including all but one of the four trade groups approached—decided not to be interviewed or did not respond at all. Several large banks with a strong consumer banking orientation flatly declined an interview about CFPB. One pro-consumer organization ignored three emailed requests for an interview.

Clearly, while many have strong feelings about CFPB, they won’t always go on the record. That may suggest a lot of negative comments, yet from the 14 sources who ultimately did speak, we heard both positives and negatives, even from bankers who have dealt quite directly with it.

In the following report, we quote from interviews with bankers from four institutions over $10 billion in assets that spoke only on condition of complete anonymity. For the sake of reader clarity, we identify these institutions with plain labels of “Bank A, Bank B …,” etc., and the bankers with similar labels. All of these bankers are quoted in second reference as “he” for the sake of simplicity.

Some bankers will be angered by some of what they read here, though they will agree with a great deal. Our intent is to bring a balanced look at an agency that most agree that, like it or not, is here to stay, and that has changed the compliance landscape.

Attorney Alan Kaplinsky, a partner at Ballard Spahr LLP, says it was destined, given the crisis, that something like CFPB would arise. “Congress did the politically expedient thing,” he says. “It created a new agency to deal with a problem that had already occurred.” Once created, the bureau took off.

New game, new umpire

Name a compliance challenge and CFPB is there, from the expanded UDAAP mandate to post-crisis mortgage lending to fair lending to overdraft service and payday lending to consumer complaints. Some bankers worry that the bureau will stifle innovation when, increasingly, innovation is the name of the game. CFPB began with a broad and deep legislative mandate, and it consistently strives to broaden and deepen its coverage.

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“CFPB has definitely raised the profile of compliance up the ladder in banks,” says Lyn Farrell, managing director at Treliant Risk Advisors. “Consumer compliance is much more prominent than it used to be. The transition to principles-based regulation has changed a lot of the perspective on the importance of compliance. Compliance professionals used to be trained on the technical rules, and if you were in compliance with those rules, you’d be OK. And that’s not the case today.”

One of the large bank representatives interviewed says the pressures created by the bureau are worrisome.

“Overall, we are in a very challenging environment,” says Banker A. “It is difficult work. I grow concerned about maintaining expertise. I’ve seen a lot of experienced compliance people exit the job because it is a very different job than it used to be.”

Indeed, one of the objections bankers raised time and again is that too many compliance landmines have been enunciated through enforcement actions, rather than through before-the-fact guidance.

Another banker worries that bureau policy and practices lack real-world perspective.

“How expensive do you want to make this service that we provide?” asks Banker B. “The bureau is trying to implement a lot of change without thinking things through. Banks are not nonprofit organizations. We provide a service and there is a cost to that.”

Asked if the bureau has changed the level and nature of banks’ consumer protection dialog, Raj Date, a former CFPB official, makes clear that this was by design:

“Most importantly, we now have a conduct regulator that doesn’t care what kind of charter a firm has—the rules apply to everyone. You’re a bank, finance company, thrift, fintech startup, investment bank, industrial loan company … whatever. It doesn’t matter who you are, the same rules apply to everyone. Second, within the banking universe, I really think that for the first time consumer protection is being viewed as an equal and independent set of constraint on business conduct. It’s not more or less important than safety and soundness concerns, and very much a separate lens.”

Says Banker B: “They went to work with a very specific vision of what they felt they needed to accomplish. Unfortunately, they use a lot of media soundbites that sound rather good. But life is very different outside of Washington, D.C.”

How is CFPB doing?

Texas Republican Jeb Hensarling has had CFPB in his sights for a long time, and kept up the attention and pressure after assuming the chairman’s post at the House Financial Services Committee. But the bureau was politicized from the get go, stirring the bank lobby to some of the most direct attacks ever unleashed on a legislative creation.

Date, now in the financial services business as managing partner at venture firm Fenway Summer LLC, served as acting head, and the first CFPB deputy director, before current Director Richard Cordray was in place, and oversaw much of the bureau’s initial structuring, policymaking, and setup. Bankers give the bureau some points for outreach, and that started in Date’s day. But from its formative days, the bureau was a banker bullseye.

“I think that some of the opposition to the CFPB’s existence was pragmatic and grounded, but much of it was marked by hysterical hyperbole that was political and short-sighted,” says Date. “Financial reform was a priority for the Obama Administration. As it turns out, the Obama Administration was one that many of the individual leaders within many of the industry’s trade associations genuinely and viscerally hated, so they let their own personal attitudes get in front of their clients’ best interests.”

Even today, with a few years under its belt, the bureau continues to be a “punching bag,” in Date’s words. However, there is dialog between the industry and CFPB now, and, as will be explored later, a willingness, at least at the top, to listen.

William Isaac, consultant and former FDIC chairman, says much of the tension between the industry and the bureau is inevitable, and not a product of the bureau, but the bureau’s challenges.

“CFPB’s mandate involves it in political controversy,” says Isaac. “If you are trying to regulate financial institutions and their relations with customers, that is pretty political. You’ve always got a tension between financial institutions and their regulators over how they treat their customers. CFPB did not invent that tension.”

Isaac, however, does not think that creating CFPB was necessary. “Most of the consumer abuses came from outside of the banking industry,” he explains. “A lot of the mortgage problems, for example, involved nonbank mortgage lenders.”

That said, Isaac says there is no going back. He gives the fledgling regulator a B, overall, considering the huge volume of tasks undertaken by the bureau—both those mandated by legislation and those taken on by the bureau pursuing its goals.

Regarding the bureau’s mission, attorney Alan Kaplinsky says that “I think CFPB has gone well beyond where anybody ever contemplated it would end up going.” Kaplinsky leads Ballard Spahr’s 100+ attorney Consumer Financial Services Group. The group, which publishes a frequent blog called CFPBMonitor.com, has represented banks and nonbanks, including fintech firms such as P2P lenders, in issues related to the bureau.

“Everybody knew CFPB was going to be a big deal,” Kaplinsky continues, “but I don’t think people expected that in the short period of time they’ve been around that they would have the enormous impact they’ve had in a lot of different areas.” On every front, he points out—regulation, examination and supervision, and enforcement—the bureau has gone full throttle. Kaplinsky says his firm alone has worked on more than 40 separate client negotiations with bureau staff.

Yet some point out that as fast as the bureau has pushed much of its agenda, some issues percolate more deliberately. Overdraft is one example. Some see the more deliberate pace on this controversial issue as an indication that the bureau isn’t just a loose cannon, though others wish the bureau would finalize some guidance the industry could go on.

Lucy Griffin, a veteran compliance consultant, and former attorney at both the Federal Reserve and the Federal Trade Commission, boils her view of how the CFPB has done down to one word: “Disappointment.”

More of same or less?

Griffin’s watchword in her work through the years has been consumer fairness, so this verdict intrigues.

“It could have been such a great thing, and it has turned into quite literally more of the same,” says Griffin. “It has turned out to be an FTC expanded tenfold.”

Her largest objection—putting aside her concerns about volume of regulation produced and related issues—comes down to results. “The predators are still out there,” Griffin says. Though the bureau has made much of its complaint process, for instance, Griffin says she used to forward examples of misleading advertising to the bureau and seen no action. She’s stopped.

“They’ve gone after the easy cases,” says Griffin, “the ones that prudential regulators brought to them.” Others make this criticism as well. [Griffin blogs on www.BankingExchange.com]

“I’d call CFPB a misfire,” says ABA’s Wayne Abernathy. “It has failed to prove itself.” Supporting Griffin’s contention, he says the cases made on the bureau’s own standalone efforts have not been major cases.

Going further, Abernathy, who is ABA’s executive vice-president for financial institutions policy and regulatory affairs, calls CFPB “pretty much a dysfunctional agency.”

“Richard Cordray has had to preside over a civil war going on in his agency,” says Abernathy. The war, he continues, is between staffers who came over from prudential regulators, who want to run a “real” agency, and people who have come aboard from consumerist backgrounds. The latter, says Abernathy, “don’t give a hang for due process, they’ve got an agenda.”

Indeed, Banker A notes that the bureau recruited among existing compliance officers, as well as among staffers at other regulators, but that only went so far.

“I think there was a very conscious effort by CFPB to get folks with fresh ideas, that hadn’t been too ingrained with the way things had been,” says Banker A. “There was a limit to how much experience was valued. They were trying to think outside of the box.”

This creates a situation frequently seen with bureau rulemaking, according to Abernathy: “They put their rules out, finalize them, and then revise them after they finalize them.” Often, he says, the initial try is unworkable, but industry input is discounted. Later, when things don’t work smoothly, revisions take industry input into account. Abernathy points to the CFPB remittances rule as one example. “And how many times have they revised the QM rules?” he adds.

“Sometimes they charge forward, and listen afterward,” says Banker D.

Too much energy goes into what will make a good headline, says Abernathy. Nonetheless, Abernathy says that ABA has been able to forge a working relationship with CFPB. In part he credits this to Steve Antonakes, a former Massachusetts regulator who came aboard as deputy director. Abernathy says that Antonakes, who left CFPB this summer to become a top bank compliance official, “was a calming influence and had an influence in increasing professionalism at the bureau.”

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And Abernathy notes that the bureau does learn from experience. Early on, enforcement staff came in on exams with regulatory staff, but banks found this off-putting.

“We likened it to a doctor coming in with an undertaker, and the doctor telling the patient, ‘Don’t pay any attention to that guy’,” says Abernathy. The bureau stopped that practice.

Does cure hurt?

While most observers see the bureau as a given going forward, community banker Guy Williams dislikes the bureau enough that he would see it go away, especially if a Republican administration takes the White House.

To those who see the bureau as permanent now, Williams offers his own beacon of hope: the current moribund status of the Ex-Im Bank, which was also a target of Chairman Jeb Hensarling.

“CFPB is based on a false premise,” says Williams, president at $1.3 billion-assets Gulf Coast Bank & Trust, New Orleans. “The Washington viewpoint is that consumers are too stupid to know when they are being treated badly.”

Williams disputes that consumers’ lot has changed. “CFPB’s objective is to get consumers better treatment,” he says, “but the result is that they are being treated worse.” Mortgage lending has become more involved, more expensive, and more fraught with paperwork, he points out, with the rising cost of closings only one result.

“This wasn’t their intention,” says Williams, “but it is the outcome.” Consumers speak of this sea change themselves.

Community bankers interviewed say bureau rulemaking has already led to changes in product offerings, or may do so in the future. West Virginia community banker Bill Grant, for example, says his bank exited indirect lending due to unworkable rules. Even so, he believes the bank will have to add a “person and a half” to handle added compliance duties, such as expanding HMDA reporting. He says that CFPB did give many community banks some relief under the bureau’s mortgage rules: “We may have a little more leeway, but not a whole lot.”

Washington state banker Laurie Stewart, who served on CFPB’s first Community Bank Advisory Council, says most of her time there was taken up with mortgage rulemaking. Even with some allowances for small banks, the end result “makes me worry that community banks might not be able to stay in the mortgage business—the margins are already so narrow,” says Stewart, president and CEO, $503 million-assets Sound Community Bank, Seattle.

“Costs have gone up, compliance has gone up, and the poor are being squeezed out of the banking system,” says Williams. He says big banks can throw many staffers at rules, but community banks must decide when they have to exit a business because the burdens outweigh the gain. “They don’t examine us, but everything that they do filters down to us,” continues Williams. “Any time Washington tells you that something is going to affect the big guys only, that’s the first lie. Complexity favors the large.”

Our interviews with bankers from large institutions bear out some of this—certainly they have bigger compliance staffs—but those bankers also feel the impact of the huge amount of rules, studies, commentary, and must-read enforcement actions that come out of CFPB.

Exams: bureau in banks

A key difference between CFPB and traditional banking regulators is that the latter physically examine all of their banks. CFPB administers most consumer banking rules now, and can, legally, examine any bank, given cause. But the bureau specifically only examines institutions of $10 billion or more in assets.

Each of the four CFPB-examined bank representatives we spoke with had been through multiple CFPB exams. In the early days there seemed to be some element of exposing lots of examiners to the process. One observation was that there’s sometimes turnover in who works on a bank from one exam to another, which does not permit the development of examiner-banker rapport that can exist in prudential agencies’ exams. One banker suggested this may be by design, the bureau desiring to avoid any familiarity between regulator and regulated.

Typically, according to the bankers, the first official bureau exam was extensive, aimed at fully understanding a bank’s systems and approaches. Subsequent exams tended to target specific areas of interest that appeared to come from headquarters. Banker D noted that Washington definitely seems to call the shots for CFPB exam teams in general, with examiners in charge exercising less individual initiative and discretion than might be the case from a prudential regulators’ team leader. Overall, the bankers indicate, the approach, past the first exam, tends to be risk-based, though the perspective is a bit different from traditional regulators’ use of that term.

“Their mindset is different,” says Banker A. This banker was explicitly told that not all exams would be full-blown affairs, but often an across-the-board assessment of certain functions. In this the bureau is following prudential regulators’ approach with some safety-and-soundness issues, where they conduct so-called “horizontal exams” that look at one area at multiple banks.

Banker A adds that “they don’t think much about materiality,” that is, compliance and consumer protection are viewed on a standalone basis. The bureau has only one mission.

“They were very open, they wanted to understand how we operate, before they began to dig down into whether we were in compliance,” says Banker C. “For both sides there’s been a learning curve.”

Asked about surprises seen, Banker A had this to say about bureau examiners: “It’s a myth that they are all zealots. I’ve worked with some perfectly normal people from CFPB. And it’s a myth that they are all unqualified.”

Banker A says the “mission” does show. Some examiners have been on a rampage—“I’ve been preached to, a bit, about consumer harm,” says Banker A—but others are respectful and genuinely want to help banks get it right. But the executive adds that while many bankers and lobbyists accuse CFPB of a “gotcha” mentality, “they are not all out to get us. Though there’s no question that their perspective is different.”

“I feel like we are moving away from a gotcha mentality,” says Banker C. “Overall, I think CFPB had to establish itself as an agency, had to go down the path of getting some wings.”

Rulemaking for all

As much as Banker D found the CFPB examination process professional, reasonable, and measured, he believes there is “a disconnect” between that face of the bureau and its rulemaking function.

TILA-RESPA changes, effective in October, reflect this disconnect, Banker D continues. “The bureau was hell bent to make a deadline date and wasn’t talking to the vendors and the bankers about what was workable,” he says.

The bureau has straddled multiple challenges from its beginning. Under Dodd-Frank it faced deadlines to be met from virtually a cold-start, with an increasingly ambitious agenda from within and from without. Layer on top of this a stated pledge to run its regulatory approach on a “data driven” basis, and that’s quite a do-list.

“Building the bureau was a formidable challenge,” says Raj Date. “Startups are hard; post-merger environments are hard; strategic overhauls are hard. And CFPB had all of those challenges. We were, by design, a startup, with merged sets of authorities, with a blank-slate strategy. So we had all the challenges of three different tough private-sector environments, but all at the same time, and all within the public sector, which I can assure you is tougher to manage and lead within than within corporate America.”

Formidable for the bureau staff, but bankers have felt their own pain. The sheer flood of paper coming out of CFPB challenges all players. “I can barely keep up,” says Banker B, “and that’s just digesting it. Then you have to figure out how to comply.”

That said, Banker B admits “if we weren’t getting all that input, we’d be complaining about the lack of input.”

One thing for which bankers give the bureau positive marks is its attempt to provide aids to compliance beyond just the rules and a FAQ. An example several pointed to was the one-pager CFPB designed to help community bankers understand the QM rules and related matters.

While this effort had its fans, not everyone gave the bureau an “A.” Banker D says more than once the answer to a question has been “it’s there, in the rules.”

Truly “data driven”?

Practical workability has often been an issue for bankers trying to follow regs. An avowed principle from the start for CFPB was its “data driven” approach, portrayed as fact-finding before policy is developed.  Opinions differ about this.

“They really do seem to use data as much as they can to assess conditions in an unbiased way,” says Banker C. “They are not always successful, but they do try to do it that way.”

“The bureau has definitely been very focused on collecting data and studying it,” says Banker B. “But I don’t believe they’ve applied rigorous standards to be sure that what they are interpreting from the data is accurate. That’s dangerous.”

“It’s just a lot of words that doesn’t mean a lot,” says attorney Alan Kaplinsky. “They do a lot of studies, no question about that. But they don’t necessarily base their regulations on the results of the studies. They only like the data that supports the direction they want to move in, philosophically.”

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Ben Olson, now in private practice, came to CFPB from the Office of Regulations in the Federal Reserve’s Division of Consumer and Community Affairs and worked for two years in the bureau’s Office of Regulations. When he left, he was Deputy Assistant Director for the office and had played a leading role in developing the Bureau’s new mortgage disclosures and completing eight other Dodd-Frank mortgage rulemakings, including the ability-to-repay/qualified mortgage rule.

Olson says the data-driven policymaking publicized by the CFPB is no mere window-dressing, but a genuine desire to guide regulation writing with facts. He says that he appreciated the bureau’s approach because, at the Fed, he often wished for more help from Fed economists in attempting to predict the real-world impacts of different policy approaches. At CFPB, the Office of Regulations is part of the Division of Research, Markets, and Regulations, headed by Associate Director David Silberman, and Olson says that the trio of functions was intentionally combined when the bureau was organized to foster interdisciplinary policymaking.

Olson, today a partner at Buckley Sandler LLP, acknowledges some of bankers’ frustrations with the CFPB, but notes that “the issues that the bureau is wrestling with are not easy” and were particularly challenging when the bureau was in its infancy. He adds that staff, faced with a monumental regulatory to-do list when the CFPB was still setting up its offices and getting itself organized, “used to joke among ourselves that we were trying to build the boat while we were steaming down the river.”

The regulatory dialog with the banking industry frequently hinges on who is talking, Olson points out. Differing messages were sometimes heard by CFPB staff from compliance bankers, versus lines of business bankers. In the same way, bankers heard differing kinds of messages when hearing from regulation developers versus enforcement staff versus examiners.

Olson says a good tip for working with bureau staff is to consider what perspective they bring—examination, enforcement, etc.—and to always remember that they are people doing a job.

“Chances are they are doing that job because they believe they are making the world a better place,” says Olson. “But it’s still a job. They are not out there to get you, but to do their job. They have a boss and an org chart and a performance plan. If the organization is out to get you or your industry, then, of course, you have a problem.”

Adds Olson: “Unless you are in enforcement negotiations, then you should want—and you need—to help CFPB staff get their jobs done.  Chances are the work will get done with or without your cooperation, but you will get a better final product if you participate.”

Approached in such a way, he suggests, banks may find relations with bureau representatives more productive. He has seen it work more effectively than butting heads.

Rules after the fact

Paradoxically, given the huge amount of paper flowing from CFPB, many bankers interviewed complain that the bureau is making too much policy through enforcement actions, rather than explicit rulemaking.

In a way, says Lucy Griffin, “the bureau is using HUD’s philosophical approach of saying, ‘Do your best to guess what we mean, and if we don’t like it,’ we’ll let you know.”

Ultimately, Griffin continues, she doesn’t think the bureau truly understands supervision, which is a give-and-take process—echoing Olson’s recommendation above. She believes, however,  the bureau decided early on that “banks are the bad guys,” and that the tool of choice was enforcement. This would be in keeping with CFPB’s early self-portrayal as a “new cop on the beat.” Early on CFPB’s website actually had an icon of a police badge prominently displayed. Indeed, a common prediction made from the bureau’s formative days was that traditional regulators would strive to prove themselves to be “the tougher cop.”

Bankers and observers disagree—some say that it didn’t play out, some say it has As a defender of banks and other providers, Alan Kaplinsky has no doubts. “Each agency has had to show that it was just as tough as CFPB. They don’t want to be shown up by CFPB.”

Because the bureau is a one-mission organization by design, Kaplinsky says when an institution finds itself on the outs, CFPB wins. “On enforcement matters, CFPB can be more difficult to deal with because you can’t make a safety-and-soundness argument to them,” he says. “They don’t care.”

Consultant Lyn Farrell at Treliant says in her experience, “there has been a significant tightening of the reins by the prudential regulators. They don’t want to be caught flat-footed again.” She’s actually heard some large-bank executives say that, by contrast, they find the bureau easier to work with as a result.

UDAAP: What is it?

Something that sets CFPB’s work apart from other regulation is the nature of the services regulated. “The best thing about working in consumer financial protection is that everyone is a consumer of the products,” says Ben Olson. “Your mother, your brother, your aunt and uncle, yourself.  However, policymakers can’t help but be influenced by the experiences that they’ve had with a product or a provider, which can sometimes lead to idiosyncratic results.”

Direct or nearly direct experience with products generates empathy, perhaps, but not necessarily precision or clarity. UDAAP—which stands for Unfair, Deceptive, and Abusive Acts and Practices—is one of the biggest question marks for bankers.

“For us, it’s feeling your way around in the dark,” says Banker B.

Kaplinsky says that uncertainty is intentional, a regulatory wild card. “If the bureau finds anything that they don’t like, they put the UDAAP label on it,” he explains. “Then they don’t worry about whether it meets the definition.”

Buckley Sandler’s Ben Olson takes another slant. “Fundamentally, you want a flexible tool,” he explains. He believes it is necessary to have that flexibility for CFPB to address new products and services but adds that that discretion has to be used wisely.

The actual verbiage on UDAAP is found in a very brief mention in CFPB examination procedures, which most bankers find quite vague. And they see that as quite intentional.

Kaplinsky has found that the grayness of UDAAP has affected some banks’ ability to try new things.

“I can’t tell you how many times I’ve had to say to clients  who are doing innovative things, ‘I don’t think CFPB is going to like what you are doing’,” says Kaplinsky. “The bureau has had a chilling effect on some innovation.”

Little is heard these days of the Bureau’s Project Catalyst, announced in 2012, an effort to spur consumer-friendly innovation. The Catalyst blog has five entries, none made since October 2014.

Kaplinsky isn’t surprised. Innovation, he says, “is not what the bureau is about.”

ABA’s Abernathy says bankers worry about the “abusive” element of UDAAP, especially. He says their concern is that UDAAP can be used arbitrarily. “I don’t think we’ve seen that yet,” says Abernathy, “but it could happen.”

“One of the biggest challenges with CFPB is that its big concern is with softer issues, with fairness issues,” says Banker A. “Sometimes we’re going where there aren’t rules.”

Cordray’s CFPB style

Outreach from CFPB gets mixed grades. Community bankers interviewed who have met with bureau representatives in Washington visits have found staffers respectful, but the bankers  don’t feel that their points have any traction. Bankers with compliance duties, by contrast have a higher opinion of the many ways that CFPB handles two-way communication with actual bankers.

One community banker who has had more than a passing acquaintance with bureau staff and leadership is Seattle’s Laurie Stewart. Shortly after coming off service on FDIC’s Advisory Committee on Community Banking, Stewart was appointed to CFPB’s Community Bank Advisory Council.

“I always felt that Richard Cordray listened to everything [council] bankers had to say. He took copious notes,” says Stewart. However, she found that bureau staff wasn’t as responsive as Cordray himself.

“The nature of the agency is to always assume that the consumer is being disserved,” continues Stewart. “They are very passionate about the idea that consumers must be protected.”

As a community banker, Stewart found this a disconnect, the assumption that banks are out to cheat customers. “I always think of what works for both the consumer and my bank,” she explains. Staff does not seem to understand banks’ need to be profitable.

Cordray, she says, always seemed open to hearing banker opinions about the workability of a proposal, “but when push came to shove, the bureau would tilt towards protecting the consumer.” She refers to a statement the bureau requires banks to provide periodically to consumers who opt for automatic mortgage payments. She says her bank issues the statements as required, and customers wonder why they are getting an advisory about something they know is going on that they chose to have.

“CFPB insisted that consumers would only be protected if they got the statement,” says Stewart.

ABA’s Wayne Abernathy is quite direct about the council’s role: “Bankers feel it is all for show. The banker members still do it because they are hopeful.”

Stewart’s praise of Cordray’s openness is repeated by other bankers. “I think that they do a pretty good job of doing outreach, better than I might have expected, initially,” says Banker A. “The difficulty is in that CFPB is such a bureaucracy. Ultimately, the question is whether the bureau is always getting to the right issues.”

Ben Olson says CFPB staff have similarly found Cordray to have an open door as a boss. Olson describes Cordray as someone with firm views but also as a good listener who wants to get it right.

“Even if he disagreed with us, he would frequently say, ‘Come back to me if you think we need to explore this further’,” says Olson. “And we did come back, sometimes multiple times. He would always listen and sometimes he would change his mind. That’s unique, in my experience.”

Isaac suggests Cordray’s open door is a legacy of his days as Ohio’s attorney general. “To be a good government leader, you have to be open to hearing a lot of different points of view,” says Isaac. “The good ones tend to be open to all sorts of points of view.”

While Banker B gives the bureau high marks for accomplishing so much in so short a time, the executive adds that “its political nature creates a downside.”

The murky issue of “culture” came up in discussions, and brought up a feeling bankers, lobbyists, and compliance experts enunciated early on that the bureau suffered from “too much Harvard.” Some would call it a “not invented here” attitude.

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Some say this has dissipated, but not all do. “I think that’s fairly accurate,” says Banker B, “and continues to be so.” This banker feels that staff has good intentions, but doesn’t always think through the impact on those the bureau wishes to protect.

“I’m talking about the typical Joe or Jane that they think they know,” says Banker B, “but they’ve never been a Joe or Jane.”

Bureau 2.0?

While there is a difference in style and attitude between Cordray and his staff, Alan Kaplinsky firmly believes the bureau’s pace, even setting aside legislative requirements, comes from the corner office.

“As long as CFPB has one director, he’s not going to take his foot off the accelerator,” says Kaplinsky. “He knows only one speed, and he’s shrinking the industry.”

A theme that comes up frequently in interviews is Cordray’s unusual position, a bureau headed by a single director, with no board accompanying that position such as FDIC’s. “No oversight,” “absolute power,” and similar descriptions are favorites.

ABA’s Wayne Abernathy notes that this was a longstanding desire of the association, to have more than one person at the top of the new regulator. ABA still believes it would be a good idea.

As structured, says Abernathy, CFPB lacks any check on the director. There’s no one else in the building, he says, who can speak to Cordray as a peer. “It was part of the original proposal,” says Lucy Griffin, “but Elizabeth Warren didn’t like it.”

Bill Isaac, who served both as an FDIC board member and as FDIC chairman, believes a bipartisan board would help CFPB.

“The bureau needed more guidance as to its function,” says Isaac. “It has a very broad mandate. It has had to develop its direction by itself, with very little direction given by Congress.”

Adds Isaac: “I think having a bipartisan board running CFPB would be helpful in that it would relieve some of the tension between the bureau and the industry and take some of the pressure off the head of the agency.”

The country is just beginning the presidential political season, and thus far the bureau is not on the radar. Would a change in party at the White House make a difference? Raj Date doesn’t think so.

“I would be very surprised if the American people elect someone—of either party—who believes that protecting consumers is somehow a negative feature of the financial regulatory environment. I’m no political pundit, but I’m also not an idiot. So I don’t think there are giant changes in the offing, irrespective of the election. This is a democracy. In a democracy, what the people want actually does matter. And the people want strong consumer protections, watched over by a competent regulator. And that’s exactly what we were trying to build.”

Steve Cocheo has covered regulation for over 30 years and is the only reporter to sit in on three bank exams.

This article originally appeared in the October-November Banking Exchange magazine. Read it in magazine form here.

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