Compliance Blog

Posted by Anthony Demangone

Earlier this week, I had the pleasure of attending a luncheon where Congressman Spencer Bachus (R-Ala.) addressed a gaggle of regulatory peeps.  Rep. Bachus is a big deal in Washington, as he is the Chair of the House Committee on Financial Services.   He spoke about a number of issues, including his views of the CFPB. 

He viewed the new agency as potentially problematic, laying out three basic reasons for his view.

• While Elizabeth Warren is not technically the Director, she is hiring everyone who will "count" at the CFPB.   Those new hires will be molded by Ms. Warren. Mr. Bachus doesn't see eye-to-eye with Ms. Warren on the role of regulation, so he sees an agency of Warren-ites as troubling.  Mr. Bachus' views are very interesting in light of this article from the L.A. Times. 

In any case, Warren is already aware that fresh blood is needed in the regulatory arena. She said she wants to avoid hiring nothing but older, seen-it-all-before bureaucrats who may be set in their ways.

"We're going to hire new, young staff and train them to follow the law," Warren said.

Hey, wait a minute. Isn't that the script for "The Untouchables"?

"That's what I'll be renting this weekend," she said, laughing.

• He noted that the CFPB will increase regulatory burdens.  But he added something that is missed by many.  When a new set of regulatory hurdles is put in place, those hurdles have a greater impact on smaller businesses.  So, credit unions and community banks, entities that don't have a ton of resources to throw at compliance and legal risks, will be affected the most.  This remains to be seen, but it is a concern that I share with Mr. Bachus.  I understand that Ms. Warren wants to level the playing field so that good actors are not competing against bad actors with one arm tied behind their backs.  But if the smaller good actors are using both hands to deal with new regulatory requirements, we won't have any free hands to compete with anyone.
• Mr. Bachus also noted that financial regulators must balance consumer protection with safety and soundness.  If the only products that a financial firm is allowed to offer do not make money, that firm is in a world of trouble. 

Mr. Bachus' comments are a reminder of the complex dance that is done in Washington, D.C.  Ms. Warren has her marching orders. She is building the CFPB.  But checks and balances are in place, and Mr. Bachus has indicated that he'll use his position and power to keep an eye on things at the CFPB.  

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Here are a few items of interest.

• The CFPB will host a "credit card conference" next Tuesday to measure the impact of the Credit CARD Act.

We will bring together academics, industry leaders, consumer advocates, and voices from within government to look at the data from multiple directions, and to analyze how the industry has reacted and how consumers are responding. The idea is to establish a fact base upon which the CFPB can improve our understanding of the impact of the CARD Act and to help us understand how we can make credit markets work better.

• The FFIEC announced its new and improved IT Examination Infobase.   The announcement doesn't signal a change to the FFIEC's IT handbook, but the FFIEC believes the change should improve access to guidance and the ability of the FFIEC to update guidance in the future. The IT Examination Handbook is a huge source of valuable guidance.
• NAFCU has entered into an agreement with Sheshunoff and Thompson that benefits the entire credit union industry. NAFCU was able to negotiate a credit union discount for the entire Sheshunoff and Thompson libraries of content. If you find a manual or product that tickles your fancy, use promo code NAFCU11 at checkout when you purchase or renew the product to save 10%.  Learn more about this new development here.

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I arrived a bit early for the luncheon with Rep. Bachus, so I had about 5 minutes to kill.  Those five minutes became a personal pep-talk. I've lived in the D.C. area since 1996.  The traffic may be bad and the work may be hectic, but part of me will always be a tourist that is overwhelmed by Washington, D.C. and the institutions and places it hosts.