Comments on: Why a prudential regulator can’t house the CFPA http://blogs.reuters.com/felix-salmon/2010/03/03/why-a-prudential-regulator-cant-house-the-cfpa/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: ChrisMaresca http://blogs.reuters.com/felix-salmon/2010/03/03/why-a-prudential-regulator-cant-house-the-cfpa/comment-page-1/#comment-12426 Thu, 04 Mar 2010 17:26:39 +0000 http://blogs.reuters.com/felix-salmon/?p=2806#comment-12426 @carter

It’s axiomatic that government agencies wind up serving their largest constituencies, and your comments reflect that. Margaret Thatcher once described the UK Foreign Office as ‘looking after foreigners’…

What Warren and everyone else is saying is that there needs to be an agency who’s constituency is the consumer, the man/woman on the street, rather than the ‘system’ or the commercial institutions.

And, just as an aside, your statements about safeguarding the system are, quite frankly, disturbing. As a government official, your first duty should be to country (aka, “We, the people”), not to the banking system. Your view neatly encapsulates why we wound up in the mess we are in.

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By: Carter http://blogs.reuters.com/felix-salmon/2010/03/03/why-a-prudential-regulator-cant-house-the-cfpa/comment-page-1/#comment-12415 Thu, 04 Mar 2010 13:08:29 +0000 http://blogs.reuters.com/felix-salmon/?p=2806#comment-12415 Responding to wiilid3,

I am what’s called a “safety-and-soundness examiner” – I was only making the point that the banks are not our clients. The consumer compliance examiners are in a different area, and they are very devoted (and principally motivated) to enforce the consumer laws.

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By: RogerNegotiator http://blogs.reuters.com/felix-salmon/2010/03/03/why-a-prudential-regulator-cant-house-the-cfpa/comment-page-1/#comment-12401 Thu, 04 Mar 2010 03:58:38 +0000 http://blogs.reuters.com/felix-salmon/?p=2806#comment-12401 For a concrete example of Felix’s point, take a look at OCC Interpretive Letter 916, which authorized a bank to adopt largest-to-smallest check posting. http://www.occ.treas.gov/interp/oct01/in t916.pdf Banks began adopting that practice in order to maximize overdraft fee revenue. (For example, if a customer with a $500 balance wrote checks for $600, $250, and $50 on the same day, by posting largest-to-smallest the bank could charge for three overdrafts, even though the customer had money to cover the two smaller checks.)

The OCC, like Carter the bank examiner pointed out in the comment above, is mostly interested in “safe and sound banking practices.” In practice, this means “bank profits.” So if you look at Letter 916, the fact that largest-to-smallest check posting will generate more revenue for the bank is deemed to be a positive factor. The fact that this revenue is coming at the expenses of consumers is assigned no weight by OCC.

The Fed or any of the other bank-captured regulators will look at consumer protection the same way, as a dangerous impediment to bank profits and the regulator’s larger mission.

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By: willid3 http://blogs.reuters.com/felix-salmon/2010/03/03/why-a-prudential-regulator-cant-house-the-cfpa/comment-page-1/#comment-12388 Wed, 03 Mar 2010 18:14:50 +0000 http://blogs.reuters.com/felix-salmon/?p=2806#comment-12388 I am thinking what the bank examiner just described is exactly what Warren described. the current regulators don’t care about the consumer, they care about the stability of the system, or the bank. the consumer has no place in either of those. and the complexity of the rules usually has been driven by the financial institutions innovative creation of new ways to get money from their customers. and when the moon is right and the stars align just right, some body decides maybe that particular innovation wasn’t good for the consumer (usually because the consumer (aka voter) bends the ears of their representative enough times that eventually they push the regulators to do some thing about the fleecing the consumers had been getting

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By: Ademanaonge http://blogs.reuters.com/felix-salmon/2010/03/03/why-a-prudential-regulator-cant-house-the-cfpa/comment-page-1/#comment-12386 Wed, 03 Mar 2010 17:12:05 +0000 http://blogs.reuters.com/felix-salmon/?p=2806#comment-12386 I could not disagree more. The recent final rules concerning Regulation Z’s open-end lending totaled more than 1,150 pages. The requirements within Reg Z are byzantine. I have not heard from one banker, thrifter or credit unioner who thinks the complexity of the rule is a welcome addition. Warren’s comments almost imply that all of these changes were born within the financial industry. Not so. The complexity of disclosures often is a direct response to the complexity of financial regulation. Creating a new regulator will not solve this problem. It will only worsen it.

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By: Carter http://blogs.reuters.com/felix-salmon/2010/03/03/why-a-prudential-regulator-cant-house-the-cfpa/comment-page-1/#comment-12384 Wed, 03 Mar 2010 16:18:27 +0000 http://blogs.reuters.com/felix-salmon/?p=2806#comment-12384 Sorry. I am a Bank examiner and I disagree. I would never consider the bankers our “customers.” Our job is not to protect a firm from losses, or to make decisions that “protect their finances.” Depending upon which agency, and consequently which mandate, you work for, your primary interest is either in maintaining the stability of the financial system so that it can perform its appropriate role of intermediating deposits and allocating credit well, and/or insuring that the bank does not take risks with insured depositors money that jeopardizes the DIF (the regulation as mitigating the moral hazzard of deposit insurance argument).

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