January 23, 2013
The extraordinarily prolific Adam Levitin has posted The Consumer Financial Protection Bureau: An Introduction. He concludes that the
CFPB faces a constant challenge in terms of measuring and then balancing the consumer protection benefits from regulation with the costs of regulation and the potential impact of those costs on the availability and pricing of consumer financial products and services. What remains to be seen, however, is whether the CFPB will back away from more controversial rulemaking and enforcement activity because of the political threat it faces or whether the agency will pursue the policies it believes to be substantively right irrespective of the political situation. In other words, will the agency’s own interests affect guide its behavior? And are those interests best served by compromise and living to fight another day or by taking a principled stand and hoping to rally political support on that basis? The CFPB is a powerful new agency, but it is also one very much aware of its vulnerability. (35)
The paper was posted just as the Bureau unleashed a series of major rules for the mortgage industry. Levitin is right that the path that the Bureau will take in the long term is still unclear. But the early reaction indicates that the Bureau has taken a middle ground that has not unleashed vicious attacks from consumer advocates nor from industry groups. Indeed, it has garnered measured praise from both camps. Congressional Republicans do appear, however, to be preparing for a long term fight to dismantle the Bureau (see here for instance).