NEW YORK (
) -- You gotta love a winner. Especially a winner who shows the inclination and promise to make life better for the majority of the nation's citizens -- say about 300 million of us.
Having recently celebrated its first birthday, the
Consumer Financial Protection Bureau
should be very proud of itself for having accomplished so much with so little drama.
Oh, there was drama
the CFPB. Depending on your point of view, the CFPB was either going to strangle the banks in red tape or defend consumers from those swashbuckling pirates of Wall Street. The reality is that in spite of a raucous birth and rancor on Capitol Hill about its creation, the agency accomplished much in its first year.
The very first thing the CFPB did was to create a user-friendly website and invited consumers to submit complaints. And submit complaints they did -- several hundred thousand in only a month or so. This stream of complaints allows the agency to take the pulse of consumers and at the same time provide feedback to banks about how their customers feel. All in all, a very good idea.
The CFPB also undertook several initiatives to help consumers compare credit card fees and to guide students to navigate student loans and other financial aid. While this sounds like pretty tame stuff, these aids provide a sorely needed independent framework to help consumers make more informed decisions.
More controversial was the fine assessed to one of the nation's largest banks for being less than candid with consumers about their credit card protection plan products.
Capital One Bank
was ordered to pay refunds and fines totaling $210 million. Within a matter of days, other large banks were making decisions to abandon their card protection plan offerings.
Especially meritorious was the way the entire matter was handled by the CFPB. In an age where politicians hold press conferences and make announcements for the express purpose of attracting attention, the punishment handed down was hardly known outside the banking industry. This calm no-drama approach seems to exemplify the demeanor of the CFPB. There is much to admire in an agency that goes about its work quietly and calmly -- yet clearly carries a big stick they are not afraid to use.
Another major initiative relates to credit bureaus. The CFPB, recognizing how difficult it is in the modern world where computers zap information back and forth at the speed of light, is undertaking an effort to measure the quality of information provided to and used by the nation's credit bureaus. The stated goal is to establish standards and find tools to help the credit bureaus do a more accurate job of tracking billions of pieces of credit history. The clear result will be a big win for consumers and for the users of all that credit information.
The CFPB has a lot on its plate for the next year. Sometime after the election, the CFPB will rule on what constitutes a "qualified mortgage" and thus inject some standardization into an industry where transparency has been a serious problem and the root of much of the financial calamity that has shaken the nation these past five years.
The debt collection industry will be a major focus of the CFPB in the coming year. The Federal Reserve estimates that 30 million Americans have a debt with a collection agency. The industry certainly has an entirely unsavory reputation and is overripe for scrutiny. Richard Cordray, the CFPB director, said, "Our goal is to help honest debt collectors do their job responsibly and see that the rest are either rehabilitated or run out of business once and for all."
That is tough talk and the fireworks should be entertaining when the CFPB takes a peek at foreign call centers and the controversy surrounding credit robo-signing and robo-suing. To the millions of Americans who are hounded on a daily basis by abusive debt collectors, the cavalry is on the way!
What else is on the horizon for the coming year? Prepaid credit cards, overdraft practices for checking accounts, arbitration clauses in credit card and other financial agreements, reverse mortgages and student loans.
The CFPB has done an extraordinary job this past year. There is no reason to expect anything less in the coming year. Much of the credit goes to the demeanor of Richard Cordray, former Ohio Attorney General and head of the agency.
In today's world of political divisiveness, it is refreshing to see leadership that truly tries to put all that aside and focus on the job at hand -- making sure that consumers get a fair shake from the banks, mortgage companies, credit bureaus, debt collectors and sundry others who deliver financial services.
From one of the 300 million of us -- and one who happens to know a thing or two about debt collection -- it's been a good first year for the CFPB.
--By Bill Bartmann
Bill Bartmann is the CEO of debt advisory firm,
, and the CEO of
, a debt collection company. Bartmann is the author of
Bailout Riches! How Everyday Investors Can Make a Fortune Buying Bad Loans for Pennies on the Dollar
. His recently published book,
Out of Control: Cases of Debt-Collection Abuse in America and What We Can Do About It
, documents clear patterns of abusive tactics used by unethical collectors.