How CFPB Develops Policy:  The Way Forward


This is the final post in a series on how CFPB develops policy: the vision, the reality, recent changes, and the future.

CRREA Project offers recommendations on what can be done to course correct and build a CFPB that can serve consumers and the public for the next 100-years.

In creating the CFPB, in what was and is a radical departure from the structure and mandate of other federal agencies, Congress sought to give prominence to the voices and experiences of marginalized, or, in the language of the statute, “traditionally underserved”  communities, through research, consumer complaints, market monitoring, and what are known as the “special populations offices”–Servicemembers, Students, Older Americans, and Fair Lending.   In this blog series, we explore:  

  • How was CFPB uniquely designed to listen to the voices of the “traditionally underserved”?  
  • How have recent reorganizations at the CFPB have undermined this congressional mandate?
  • What could be done to course correct and build a CFPB that can serve consumers and the public well for the next 100-years? 

Current demands for racial and economic justice make this conversation, about how the CFPB can fulfill its charge to listen to the voices and experiences of traditionally underserved communities, more pressing than ever.

The Way Forward

In our series on how the Consumer Financial Protection Bureau (CFPB) develops policy, and the inclusion of marginalized communities’ perspectives in that policy development, we’ve talked about the  vision as set forth in the Dodd-Frank Act,  the reality of how the statutory structure was implemented,  and changes to the organizational chart under the Trump administration.  In this blog post, CRREA Project considers how future CFPB leadership could realize the Dodd-Frank Act mandate to listen and be responsive to traditionally underserved communities and consumers. 

We urge the agency to center the voices of marginalized communities as a necessary adjunct to promoting accountability under the statute.  The exigencies of the current moment, the demand for racial justice, the recognition that racial and economic justice are linked and that the pandemic is amplifying and embedding existing racial disparities, all call for us to move beyond the generalities of the statutory language.  Poor, rural, and immigrant communities, across racial differences, are all both underserved and poorly served by financial institutions.  Black people in particular have always been excluded from the financial mainstream in this country.  The CFPB should explicitly re-center its antidiscrimination mandate and address itself squarely to fostering racial and economic equity.

Recommendation 1:  Name it!  Identify Who Is Served by the CFPB’s Mission

What’s In a Name?

As a first step to re-dedicating itself to its statutory mission, the CFPB should take a public stance acknowledging the centrality of consumers and traditionally underserved consumers.  We should put behind us the  fight over the name of the CFPB, and whether “consumer” or “bureau” should come first.  Regardless of how often the statute put which one first, Congress was clearly focused on a certain set of concerns in the creation of the CFPB: consumer concerns and particularly those of traditionally underserved communities and consumers.  Consumer interests always come first in the Dodd-Frank Act, and so they should in how the CFPB understands its work and presents it to the public, whether through the website, the logo, or consumer education materials.  

The Strategic Plan

The CFPB’s current strategic plan runs through 2022.  In developing the new strategic plan, the CFPB will have the opportunity to revisit its mission and vision statements, as well as the overall goals for its work, including specific measurable goals to be reported on annually.  The CFPB should seize this opportunity to center consumers, and a recognition of the CFPB’s special responsibility to traditionally underserved communities, in its work. 

Recommendation 2:  Lay the Foundation! Regularize Public-Facing Research on Consumer Financial Products and Services and Traditionally Underserved Communities

The Office of Research

The Office of Research is the first of the statutorily mandated Dodd-Frank Act offices .  Its mandate includes research and reports on risks to consumers, access to credit for traditionally underserved communities, and the experiences of traditionally underserved consumers.  It has both world-class economists and access to datasets covering all consumer financial markets, in many cases with only a month’s lag time.  The CFPB also has the authority, in section 1022(c)(4) of the Dodd-Frank Act , to collect additional information from financial institutions. 

Foundational Research Questions

Those resources should be focused on foundational work on the role of consumer financial products and services in traditionally underserved communities.  When is disclosure effective and for what risks?  How do consumers view tradeoffs in access to credit versus risk?  How can we untangle when the benefits of credit to traditionally underserved communities outweigh the costs of credit?  For example, the subprime lending boom of the early 2000s promoted access to credit and led directly to both the foreclosure crisis  and the  loss of more than a generation of wealth accumulation for Blacks and Latinx.  Credit can open doors and it can close them. 

Making Research Visible

The Office of Research has done significant work in all of these areas and more.  The CFPB should follow the precepts of the bipartisan Foundations for Evidence-Based Policymaking Act and adopt a public “learning agenda .”  A public research agenda, coupled with a regular cadence of reports on issues of importance to traditionally underserved communities, could bring public accountability to this aspect of the CFPB’s statutory mandate.  For example, researchers look to the CFPB for its annual release of the HMDA data and accompanying reports analyzing that year’s data.  Changes to the user interface for accessing the data have brought congressional scrutiny.  The CFPB could also expand its discussion in its semiannual report to Congress of the “significant problems faced by consumers in shopping for or obtaining consumer financial products or services.”  That discussion could explicitly center the experiences of marginalized communities in accessing credit on fair and non-discriminatory terms.   

Recommendation 3:  Build It! Create a Structure that Reflects the Statute and Makes Visible Traditionally Underserved Communities

The Organizational Chart

The Trump-era CFPB organizational chart has moved four of the Dodd-Frank mandated offices and special units off the public-facing organizational chart.  The offices of community affairs, financial education, service members, and older Americans are now all housed inside the consumer education office, itself housed inside a new division of external affairs and consumer education.  Offices important enough for Congress to name are important enough to be visible on the public-facing organizational chart.  The public should know who leads those offices.  

Fair Lending

Any new leadership of the CFPB will have to consider the location of the Office of Fair Lending.  The move of the fair lending office from its initial home in the same division with supervision and enforcement to the Director’s Front Office was meant to refocus the fair lending office’s work on “advocacy, coordination, and education” instead of supervision and enforcement.  We at CRREA Project believe that leaving the Office of Fair Lending in the Director’s Office could be used to signal its cross-cutting importance to the work of the CFPB, if coupled with the necessary formal and transparent decision rights and processes. 

For example, the CFPB could publicly commit to a formal role for the Office of Fair Lending in priority setting across the agency. The CFPB could update its written procedures related to decisionmaking to embark on specific actions that would normally rise to the Director for final decision, such as authorizing specific enforcement actions.   Establishing formal and transparent decision rights and processes would provide accountability to Congress and the public.  Such actions could provide reassurance that fair lending was a central consideration in supervisory and enforcement actions without disclosing confidential internal CFPB deliberations. 

Other Structural Reforms

Other steps could include explicit roles for outreach connected to rulemakings to facilitate input from marginalized communities or a designated role for the statutory offices in providing input into policymaking.  Clarifying the role of the Community Advisory Board would assist both the CAB and staff in understanding the purpose and nature of their interactions.  Other agencies, such as the Environmental Protection Agency have, from time to time, published detailed guidance for staff and guidance for rulewriters about the agency’s policy decision processes.  This kind of work is foundational to consistent management across administrations and could contribute to the development of a culture and identity for the CFPB that lasts for generations.

Conclusion

Accountability to the underserved and poorly served consumers and communities the statute repeatedly calls out is critical.  Public-facing documents, like the strategic plan, a research agenda, or an organizational chart, afford one level of accountability.  They explain what the agency intends to do and offer a point of engagement for the public.  Future leadership should go further and embrace the statute’s emphasis on consumers and traditionally underserved consumers and communities to apply an explicit racial and economic equity lens to decisionmaking across the agency.  Doing so would build a CFPB robust and resilient enough to serve the public well for the years to come. 

 

CRREA Project Is Recruiting for Law Student Interns

Download our Recruitment Flyer 


CRREA Project is seeking interns for the Spring 2021 semester.  Will you help us get the word out?

CRREA Project has relied on law student interns since the day we launched this site.  Law students draft our regulatory advocacy materials, they conduct research that informs our reports on CFPB, and they gather input and feedback about CRREA Project materials by interviewing and engaging with all types of experts and stakeholders.  The contributions made by law students to CRREA Project cannot be overstated.

Internship Experience

We do our best to make the experience enjoyable and valuable for our students.   We endeavor to offer students flexibility to work on what they are passionate about.  We can tailor the experience to what a student needs most given their stage in law school and their career path.  Whether a student needs to leave this internship with a writing sample, a few professional contacts, or more subject matter expertise in a particular area, we work with students on their professional development goals.

The internship is fully remote, and the work schedule is determined by the student’s availability.  We have worked successfully with students in a range of time zones.

Qualifications and Preference Criteria

CRREA Project is seeking law student candidates with: (1) demonstrated interest or experience in public policy and government and (2) experience with plain language writing for a mass audience. 

We prefer to work with students who can obtain academic credit or a stipend through their law school for this experience, and who are generally available for 10+ hours per week.

How to Apply

Students should send a cover letter and resume to diane@crreaproject.org and kate@crreaproject.org.  Applicants are encouraged to apply by November 6.

Questions or Suggestions

Contact Us with any questions, and also let us know if you have any suggestions about law schools we can contact who may have particular interest in supporting their students to intern with CRREA Project.

Thanks for your help!

Diane and Kate

 

Introducing the Regulatory Advocacy Glossary;

Examples of Acronyms in Action 


You may find the glossary useful if you have questions about the nuts and bolts of setting up a meeting with an agency. Or the difference between an NPRM and ANPRM. Or what all these acronyms even stand for!

As we’ve developed the resources on this site, we’ve received questions about some of the terms we use to describe regulatory advocacy. We’ve created a glossary  to explain what we mean (and we link to it on the Quick Guide to Regulatory Advocacy). 

You may find the glossary useful if you have questions about the nuts and bolts of setting up a meeting with an agency. Or the difference between an NPRM and  ANPRM. Or what all these acronyms even stand for!

This glossary is a living document. As we identify new terms that need clarification, we’ll be working to add them. Please reach out if you think of something you’d like to see added to the glossary or you see something we’ve gotten wrong.

Why Should I Care About SBREFA?

The glossary explains why SBREFA (Small Business Regulatory Enforcement Fairness Act) shows up in the pre-rule stage along with the more familiar RFI (request for information) or ANPRM (advanced notice of proposed rulemaking). The Small Business Regulatory Enforcement Fairness Act (SBREFA) requires the Consumer Financial Protection Bureau (CFPB), the Environmental Protection Agency (EPA), and the Occupational Health and Safety Administration (OSHA) to take certain steps before issuing a rule that is likely to have a significant impact on a substantial number of small businesses.  Those steps include preparing materials about the proposal and reviewing those materials with a panel of small business representatives. After the panel review, a report on the panel’s recommendations is made public. The panel report must be made public, usually in conjunction with the release of the proposal.

These three agencies differ in what they make public when, but all three have mechanisms that allow for some public review of the agencies’ thinking at this pre-rule stage. Engagement at the pre-rule stage is particularly powerful and can help shape the proposal. Advocates can engage during the SBREFA process even if they don’t represent small businesses, whether by reviewing SBREFA panel materials, listening to the SBREFA panel meetings, or asking questions of the agency about the SBREFA process and opportunities for public engagement. The panel report can provide a particularly clear roadmap to likely business opposition to the rule.

An Example:  Do You Care About Financial Inclusion?  Comment by December 14th!

Right now, the Consumer Financial Protection Bureau (CFPB) is preparing for a SBREFA panel later this month  on its implementation of Section 1071 of the Dodd-Frank Act. It has published both the outline of the proposed rule it is providing to the SBREFA panel and a  high-level summary of that outline, along with other materials. Anyone can review them and comment on them. The National Community Reinvestment Coalition (NCRC) has already published an initial summary of the outline, headlined, “ A Step in the Right Direction, But Improvements Needed.

This rulemaking has particular significance for our historical moment. Small business development can buffer Black and Brown communities against discrimination and serve to build wealth in the face of centuries of financial exclusion, but only if credit is available on non-discriminatory terms. Entrepreneurs of color are often discouraged from even applying for a loan. One study on the Paycheck Protection Program, using matched-pair testers, found that none of the tested banks encouraged any of the Black female testers to apply for a Paycheck Protection Program loan.\

Section 1071 of the Dodd-Frank Act: Making Visible Racial and Gender Discrimination in Small Business Lending

Section 1071 of the Dodd-Frank Act was meant to make visible the discrimination against small business owners based on gender or race. Section 1071 requires financial institutions to collect data on application for credit from women-owned, minority-owned, and small businesses. It also requires annual reporting to the CFPB. This data would let us see where and how discrimination is occurring. Data would help us fashion a remedy and hold discriminatory actors to account.   

The outline contains proposals the CFPB is considering to implement Section 1071, many of which could significantly impact its efficacy in protecting business owners from racial or gender discrimination. For instance, while the definition of a covered lender under 1071 is relatively broad and inclusive, the CFPB is considering exempting financial institutions “from any collection and reporting requirements based on either or both a size-based and/or activity-based threshold.” Should we be concerned about predatory behaviors by smaller lenders? What evidence do you have either way to raise to the CFPB?  

The comments submitted on the outline, as well as comments from the small business representatives at the panel, will form part of the rulemaking record.  They will influence what rule the CFPB proposes.

Conclusion

We hope this detour has helped make clear some of the power regulatory advocacy has for racial and economic justice.  The glossary is just one of our tools to help with making your regulatory advocacy easier and more effective.  Please check out all our regulatory advocacy tools and let us know what you think.

 

– Sarah and Diane

 

Where Did All the Statutory Offices Go?


This is an additional post in a series on how CFPB develops policy: the vision , the reality, and the future.

In prior blogs, we’ve reviewed what the Dodd-Frank Act had to say about the structure of the Consumer Financial Protection Bureau (CFPB) and  how the CFPB has implemented those statutory requirements.  Before we go on to discuss our vision of what a CFPB that fully centered the voices of marginalized communities would look like, we want to look more closely at changes to the organizational chart under the Trump Administration.

2017 CFPB Organizational Chart

The CFPB’s November 2017 public-facing organizational chart is below.  The statutory offices and functional units are in green. Included in the green are the Advisory Boards and Councils office, responsible for the statutorily-required Consumer Advisory Board, and both the Community Affairs office and the Financial Empowerment office.  Community Affairs and Financial Empowerment each performed some of the functions of Dodd-Frank § 1013(b)(2). 

Click on image to view detail

The 2017 organizational chart provided both visibility and accountability to the Dodd-Frank Act’s “special populations” and other interested parties.  For example, major consumer advocacy groups across the country as well as faith-based coalitions and legal services organizations knew they could contact the Office of Community Affairs if they had questions about a CFPB initiative.  Groups working on student lending, financial education, or with older Americans or servicemembers could also see at a glance whom they were supposed to call.

2020 CFPB Organizational Chart

Advocates looking at the current organizational chart, below, would have difficulty discerning if they have a voice inside the CFPB.  Less than half the statutorily-mandated offices are visible now—the green has shrunk.  In its place, we have yellow—representing positions filled through external hires since 2017 (or vacancies, where the yellow is cross-hatched with blue)—and purple—new offices created under the Trump Administration.   

Click on image to view detail.

The offices of Advisory Boards and Councils, Community Affairs, Financial Empowerment, Financial Education, Older Americans, Servicemembers, and Students and Young Consumers are no longer on the public-facing organizational chart. These offices still exist, all suboffices inside the new Consumer Education and External Affairs division.  But, unlike the offices shown on the organizational chart, the leadership of the new suboffices is not named.  Even if a diligent advocate clicks through every link on the CFPB’s organizational chart, the advocate won’t discover who heads the office or if it is staffed. 

All but Advisory Boards and Councils are now suboffices of the Consumer Education Office.  The website informs us, “The Consumer Education Office provides information for American consumers to consider in their financial decision-making process .”   Providing information to consumers is not the same, for example, as “providing . . . technical assistance regarding the offering and provision of consumer financial products or services to traditionally underserved consumers and communities,” as Dodd-Frank Act § 1013(b)(2) requires of Community Affairs, or coordinating state and federal efforts to protect servicemembers, as the Dodd-Frank Act § 1013(c)(1) requires the Office of Servicemember Affairs to do.  There is no recognition in this formulation that the statutory offices have obligations beyond consumer education, as every statutory office or functional unit does.  There is also no invitation in this formulation to marginalized communities, as distinct from the general public, to engage with the CFPB. 

This de-emphasis on marginalized communities and vulnerable consumers is carried through in other changes, as well.  The former External Affairs office called Community Affairs, now located within the Office of Stakeholder Management, has been re-named “Public Engagement,” subtly shifting its focus from traditionally underserved communities into something much less targeted.  And, while we have lost visibility into the statutorily-mandated functions of financial education, older Americans, and servicemember affairs, among others, the new Office of Innovation, reporting to the Deputy Director, which grants applications for waivers of statutory requirements in order to promote competition, innovation, and consumer access, is clearly visible on the organizational chart.

CRREA Project’s Take

Looking at these charts, it’s indisputable that the leadership structure of the CFPB has been fundamentally reshaped over the last three years.  Both structure and personnel have shifted significantly.  A new administration will face significant time and resource challenges if it wants to “turn back the clock.”

 

Taking Stock at CRREA Project


Whether you have just found us, or you have been with us since the beginning, we invite you to take stock with us of all of our regulatory advocacy materials.  Let us know how we can improve, and what you think we should do next!

With the release of the Regulatory Advocacy Quick Guide, our one page mapping tool for regulatory advocacy, we wanted to stop a minute and take stock of our first three months at CRREA Project and to share our upcoming plans.

Regulatory Advocacy Materials

Under Regulatory Advocacy Materials, we now have up:

Taken together, these materials walk you through how to engage in everything from commenting on a rule to developing a multi-pronged regulatory advocacy strategy focusing on the issues core to you and your community.  They are also, as far as we know, unique in their focus on practical tips geared to busy people.  Both Decoding the Unified Agenda: A Guide for Advocates and Decoding the Unified Agenda: A Guide for Advocates are focused on helping you translate what you know into the language of regulators.

We’ve also got a few short videos (40 seconds to just over two minutes) up on a You Tube channel of Diane earnestly explaining our core philosophy at CRREA Project.  Simply by telling our stories, conveying to regulators what we already know, we have great untapped power to change the rules that do so much to shape the possibilities in our lives and in our communities.  Some of you may have seen them on Twitter or watched them in a training.    

We expect we’ll have a longer guide on effective commenting up in the next few weeks, and there are other materials in the pipeline.  With any of these materials, we encourage you to use them, share them, and let us know how we can improve.  Our goal is to help you do more effective advocacy on behalf of racial and economic justice; we can only do that if you let us know what works and what doesn’t.  If you have been a fan of our work, consider signing up for our newsletter, using the application on our blog.

We’ve done a few trainings so far and are looking forward to our three-session extravaganza at the NCLC Consumer Rights and Litigation conference this November.  With NCLC, we are hosting a session on why and how to do regulatory advocacy, a Q&A on regulatory advocacy with former CFPB officials, and a strategy summit on economic justice regulatory advocacy.

CFPB Specific Materials

The website also has CFPB specific materials, including a  list of every regulatory action the CFPB has taken since the beginning of COVID, updated through September 15, and our rating as to whether the regulatory action was consumer-protective or advanced fair lending.  We’re in the middle of a  blog series now that is exploring the question of what the Dodd-Frank Act said about centering the voices of marginalized communities at the CFPB, what the CFPB did, and what more we can do to make sure the voices of marginalized communities are centered at the CFPB.  If we want racial justice, we have to listen to what marginalized communities have to say, and we have to act on that information. 

The need to listen to and act on the experiences and views of marginalized communities was apparent in the wake of the subprime foreclosure crisis and the Great Recession when the Dodd-Frank Act was passed.  The disparate impact of COVID-19 on Black and Brown communities, as well as Native American and immigrant communities, in terms of health, mortality, and financial well-being, has only made the need for the CFPB to center the voices of marginalized communities more evident and more pressing.

Kate and I are very grateful that we’ve been able to work so closely with Sarah Brandon, Travis Doyle, and Nikka Pascador.  Each of them has offered amazing contributions and helped us re-imagine this work.  We also couldn’t have done it without all the people who’ve been so generous with their time in reviewing materials and encouraging us.  Thank you.  We’re looking forward to seeing what the coming months bring.

 

Diane and Kate