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Consumer Financial Protection Bureau — When will it be up and running?

Dear Experian,

Now that the Consumer Financial Protection Bureau has an interim director, when do you expect the agency to be up and running?

— SRH

Dear SRH:

The president’s appointment of Elizabeth Warren to serve as the Interim Director of the Consumer Financial Protection Bureau (CFPB) is the first in a number of organizational hurdles the bureau must address. While an official nomination of a permanent director is still in the works, that doesn’t mean the new agency won’t be active. There are a number of studies and required rule-making, particularly in the credit card and mortgage industries, that the bureau must conduct by next summer. Nevertheless, it will be some time before the new agency develops into a fully functioning regulatory body.

The first challenge will be finding staff for the new agency. A number of government employees will be shifted from existing agencies to the new bureau. As a result, leadership within the CFPB will need to negotiate with the other agencies in order to recruit staff.

Because the CFPB’s jurisdictional focus will be based on financial activities rather than specific industries, it also will take a considerable amount of time to assemble examination and supervisory staff. Additionally, because of the diversity of industries regulated, the CFPB will be faced with drafting new examination procedures that can accommodate the different industry approaches to consumer compliance.

Finally, before the CFPB begins issuing new regulations, it must iron out the rule-making process. That includes issuing guidance on the agency’s interpretation of key statutory terms and provisions and negotiating relationships with other federal agencies and state licensing authorities that jointly share oversight.

At the earliest, the various parts of the new agency could be fully assembled by next summer. However, because of the size and scope of the CFPB, it is more likely that the initial administrative tasks will not be completed until early 2012.
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