At a summit held in Charlotte, North Carolina on Monday, the new Consumer Financial Protection Bureau (CFPB) and the Presidential Initiative Working Group of the National Association of Attorneys General (NAAG) released nine principles which a press release described as "the first step in forging a new partnership between federal and state officials to protect consumers of financial products and services."
The Joint Statement of Principles grew out of goals set by the CFPB and NAAG to protect consumers of financial services and products through provision of clear rules, protect law-abiding businesses from unfair competition and finding efficient and effective ways to promote understanding and address concerns about those products and services.
Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB, told the group that the partnership has the potential to fix broken consumer financial markets. Dodd-Frank authorized the AGs to enforce certain regulations that CFPB will write and in many cases to enforce the statute directly. Consistent and effective enforcement of consumer financial laws will require sustained collaboration and Warren said CFPB is already trying to determine how CFPB can be a resource for the state officials.
Warren told the Working Group that there would be a two pronged approach to fixing the broken consumer financial markets. First, it must be made easier for a family to see the costs and risks of a product up front and compare that product to two or three others. Second, and her prepared remarks stressed this, CFPB will enforce the law. The Joint Principals that the Working Group and the Bureau have laid out will help to achieve these objectives. Under the Agreement the parties will:
- Develop joint training programs and share information about developments in state and federal laws that apply to consumer financial products or services;
- Share information about conduct and practices in the markets for consumer financial products or services to inform enforcement policies and priorities;
- Engage in regular consultation to identify mutual enforcement priorities that will ensure effective and consistent enforcement of the consumer protection laws;
- Support each other in the enforcement of the laws that protect consumers of financial products or services, including joint or coordinated investigations of wrongdoing and coordinated enforcement actions;
- Pursue legal remedies to foster transparency, competition, and fairness in the markets for consumer financial products or services across state lines and without regard to corporate forms or charter choice for those providers who compete directly with one another in the same markets;
- Develop a consistent and enduring framework to share investigatory information and to coordinate enforcement activities to the extent practicable and consistent with governing law;
- Share, refer, and route complaints and information between the CFPB and the state attorneys general;
- Analyze and leverage input from consumers and the public in order to advance their mutual goal of protecting consumers; and
- Create and support technologies to enable data sharing and procedures that will support complaint cooperation.
Warren said that the statement represents the intent to collaborate but that CFPB has no plans to overstep its welcome. "We know that communication and collaboration do not always lead to agreement. You are independent state officials, and you are accountable to the people of your state. You enforce the laws of the state in the way that your individual state legislature intends for you to enforce them. You make your own decisions. We would not presume otherwise. But even when we might disagree, we believe that our relationship can still be productive." By working together, she said, we can make the whole greater than the sum of its parts
Warren's appearance before the group is notable as she has been strongly criticized by Republicans in Congress for her role in a recent preliminary settlement agreement sent by the 50 states' AGs to large banks involved in the servicing industry. House Financial Services Chairman Spencer Bachus (R-AL) and majority committee members have charged that Warren overstepped her authority by getting involved in the state officials' responses to reports of shoddy industry practices. Republicans had objected to the creation of the Bureau under Dodd-Frank and Warren, who had proposed such an agency from the earliest days of the financial crisis, has not been officially named as its head, supposedly because the President fears she cannot be confirmed by the Congress. She will, however, be running CFPB when it becomes an independent agency under the Federal Reserve in July. The House has attempted to rein Warren in by cutting the Bureau's Treasury Department budget which will fund its launch from $143 million to $80 million. Once CFPB is under the Fed's umbrella its budget will be outside the congressional appropriations process.