John Dugan’s CFPA U-turn

By Felix Salmon
March 31, 2010
Remember OCC head John Dugan's email to to Cheyenne Hopkins? He told her -- and since the article was only published yesterday, I'm assuming it was in the last few days -- that a consumer agency could conflict with safety and soundness concerns. "a consumer agency might think that down payments on house purchases should be limited to 5% to promote homeownership," he wrote, "while a safety and soundness regulator might believe a higher minimum could be needed to ensure lenders don't make loans that won't be repaid".

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Remember OCC head John Dugan’s email to to Cheyenne Hopkins? He told her — and since the article was only published yesterday, I’m assuming it was in the last few days — that a consumer agency could conflict with safety and soundness concerns. “A consumer agency might think that down payments on house purchases should be limited to 5% to promote homeownership,” he wrote, “while a safety and soundness regulator might believe a higher minimum could be needed to ensure lenders don’t make loans that won’t be repaid”.

Compare that to the email he sent Shahien Nasiripour on Tuesday:

“It’s hard to say in the abstract what sort of conflicts could arise, though I don’t think there will actually be many instances in which there is a genuine conflict,” he wrote.

Better late than never, I suppose, especially when he goes on to underline that CFPA measures which “simply reduce a bank’s profitability” are not measures that he would consider to interfere with safety and soundness concerns.

Still, as Shahien notes, Dugan doesn’t exactly have the zeal of the newly converted: he’s still trying to insist on federal preemption, preventing state and local governments from stepping in when and where the OCC proves toothless or asleep at the wheel.

The consensus among those who have long been pushing for a consumer protection agency is that the latest “evolution” in the OCC position is tactical, and a way to preserve as much power for the OCC as realistically possible. I buy that. But if the OCC is now conceding that a consumer protection agency is likely to happen in some form, that’s surely an encouraging sign.

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