Raj Date spoke in Philadelphia about how the CFPB will help resolve the issues that caused the financial crisis in 2008. Date began by discussing the Lehman Brothers bankruptcy, which had been filed three years prior, and reminded those in attendance how close the nation was to financial collapse. He then noted that while most banks have returned to profitability, American families are still feeling the pain. With this pain in mind, Date emphasized the importance of the Dodd-Frank Act for creating the CFPB, the first agency with the range of tools and authority to oversee the whole consumer finance market. Date noted that the CFPB will use tools “from supervision, to rulemaking, to research, to financial education, to enforcement, to the ability to handle consumer complaints” to rebuild the economy and promote a better financial future for all Americans.

The first task Date and the CFPB will address is the mortgage meltdown. Date stated that the mortgage market, which, at $10.4 trillion, is ten times larger than the next largest consumer lending market, was the epicenter of the global financial crisis. To start, the CFPB is working to streamline mortgage forms to help consumers understand what they are signing. The “Know Before You Owe” project has already received more than 22,000 comments regarding CFPB’s draft forms, and the project has recently begun a fourth round of public testing, which is focused on comparison shopping. Second, Date commented that the CFPB will be working with other federal agencies to develop basic standards for mortgage servicing. Date feels that this will help “establish some commonsense safeguards to prevent bad practices from harming consumers.” Finally, Date emphasized that supervision and enforcement of mortgage regulations must be applied across the board, whether the lender is a bank, credit union, or finance company, and that the broad authority given to the CFPB has made this possible.  

Date then highlighted some of the other areas the CFPB will be considering to provide a level playing field for all consumers. First, while noting the importance of the recently enacted CARD Act, Date stated that credit cards are still complicated and consumers have difficulty understanding and comparing different offers. As such, the CFPB will study the impact of credit card regulations, make sure they are being followed, and take whatever action is necessary to resolve the remaining gaps in regulation. Second, Date recognized the current issues with student lending, including the rising costs of student loans and the difficulty American families have in understanding how to navigate through this market. The CFPB plans to adopt new disclosure requirements and undertake a comprehensive study of the private student loan market beginning this fall. Finally, the Bureau will take on so-called “free checking” accounts and the problems associated with overdraft fees.  

In tackling these issues, Date emphasized that the CFPB is committed to using research and data analysis to make “fact-based, pragmatic, and deliberative” decisions. After understanding the problem and its causes, the CFPB will be able to use the variety of tools at the Bureau’s disposal to “use the right policy levers to address” the problem. Lastly, Date made clear that the Bureau will take on its mission with the understanding that it alone is responsible for its success.