Home > Personal Finance > Consumer Watchdog Walks Regulation Tightrope With Bankers

Comments 1 Comment

The newest advocate for consumers in Washington met with bankers Tuesday to talk about how their actions helped cause the 2008 financial disaster, while reassuring them that his agency is not on any ideology-inspired witch hunt.

“Now, to some understandably weary mortgage market practitioners, and possibly to one or two of you in this very room, the prospect of an energetic regulator is not exactly what you want to hear about,” Raj Date, interim leader of the Consumer Financial Protection Bureau, said in Chicago at the 98th annual conference of the Mortgage Bankers Association. “Some might be anxious: Is the consumer bureau going to make my life harder? So let me be clear: The Bureau believes in smart regulation.”

[Related Article: In First Public Speech, Consumer Watchdog Lays Out His Plans]

The relationship between the bureau and the association could be described as tense. The mortgage bankers group criticized the CFPB’s attempt to make mortgage forms easier for consumers to understand, and it has lobbied Congress to limit the bureau’s power by taking direct control over its budget (currently the bureau is funded through fees charged to financial institutions), and replacing its single leader with a board of directors.

In his speech, Date did not directly address either issue. Rather, he reiterated the bureau’s perspective, first enunciated by Elizabeth Warren, its first interim leader, that the recent Great Recession was caused by lenders’ lack of transparency regarding mortgage terms, by incentives that encouraged lenders to emphasize short-term fees over the long-term quality of mortgages, and by the practice of many lenders to go shopping between different state and federal regulators to find the most lax enforcement regime.

“The result was a race to the bottom in lending standards,” Date said.

[Featured Product: Looking for your credit report?]

Now that the CFPB has consolidated enforcement of federal consumer protection laws into one agency, lenders will have a harder time venue shopping. But Date emphasized that the agency will exercise its broad power fairly.

“In short, we won’t shoot from the hip” he said. ”We won’t reason from ideology. We won’t press a political agenda. Instead we are going to be fact-based, transparent, and measured.”

Image: quinn.anya, via Flickr.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team