The CFPB on September 12 announced the appointment of 25 people to its Consumer Advisory Board, 14 people to its Community Bank Advisory Council, 15 people to its Credit Union Advisory Council and, most significantly, 6 professors to its Academic Research Council.
While there is nothing very noteworthy in and of itself about the CFPB’s appointments to the Consumer Advisory Board and the Bank and Credit Union Advisory Councils (all of which the CFPB was required to do under Dodd-Frank), the announcement pertaining to the Academic Research Council has raised some eyebrows. The CFPB had not previously announced that it intended to organize an Academic Research Council. It was not required or authorized to do this under Dodd-Frank. Unlike the Consumer Advisory Board where the CFPB in February published a notice in the Federal Register seeking nominations, the CFPB did not seek public input regarding its appointments to the Academic Research Council. Instead, it appointed six professors—two from Harvard (which, of course, is where Elizabeth Warren was a professor) and one each from Yale, Brown, MIT and Chicago. This is unfortunate because the Academic Research Council will undoubtedly be very influential in connection with empirical studies being conducted by the CFPB regarding a wide array of products (e.g., payday lending) and practices (e.g., arbitration).
The CFPB’s press release describes the Council’s mission as follows: “To support the Bureau’s commitment to fact-based policy development, the CFPB established the Academic Research Council, a consultative body comprised of scholars with relevant subject matter expertise. The Council advises the CFPB on research methodologies, data collection, and analytic strategies, and provides feedback regarding the Bureau’s research and strategic planning process.” Click here to see the Charter of the Academic Research Council.
The CFPB has repeatedly fashioned itself as a data-driven agency in which its rule-making will be driven by the empirical studies it conducts. Who are the members of the Academic Research Council? While the press release attached biographies for each person appointed to the Consumer Advisory Council, it did not do so with respect to the Academic Research Council. What are their qualifications? What prior research have they done? And, most importantly, do they have agendas of their own?
I was also alarmed to read in the press release that the Academic Research Council already held a meeting on July 27, 2012. Indeed, the Charter of the Academic Research Council is dated June 28, 2012. Why was the existence of this Council kept under wraps until now?
There is also a serious question in my mind as to whether the Academic Research Council is subject to the Federal Advisory Committee Act, 5 U.S.C. Appendix (the “FACA”). The FACA purports to apply to any “advisory committee” of a federal government “agency.” Assuming that the FACA applies to it (and I know of no reason why it would not), the CFPB has not complied with it since, among other things, the July 27 meeting of the FACA was not open to the public as required by Section 10(a)(1) and notice of that meeting was not published in the Federal Register as required by Section 10(a)(2). This is particularly disappointing for an agency that prides itself on being transparent.
The Consumer Advisory Board will advise CFPB leadership on consumer financial issues and emerging market trends. Members, who will serve staggered three-year terms, were chosen based on recommendations solicited by the CFPB in a Federal Register Notice, which also outlined the board’s responsibilities. Its first meeting will take place September 27 and 28 in St. Louis and the Board will meet at least twice a year. The Consumer Advisory Board Charter and biographies of the newly selected members can be found on the official CFPB website.
The Community Bank Advisory Council (CBAC) and Credit Union Advisory Council (CUAC) will provide the bureau with feedback and recommendations that will drive its policy development, research, rulemaking, and engagement functions. Members of both were appointed by Richard Cordray and the only criterion seems to be that they be employed by a company with total assets of $10 billion or less and not affiliates of companies with assets of more than $10 billion. Members will serve two-year terms. The first CBAC meeting is October 10 and the first CUAC meeting is October 11. The CBAC Charter, CUAC Charter, and Charter of the Academic Research Council include detailed information on the new entities.