Tour the new consumer finance protection agency

John Dimsdale Jul 21, 2011

Tour the new consumer finance protection agency

John Dimsdale Jul 21, 2011

Kai Ryssdal: As we mentioned earlier, this is a big day if you’re the regulatory type: the one-year anniversary of the Dodd-Frank financial reform bill.

It’s also opening day for what may well turn out to be that bill’s most controversial provision: the Consumer Financial Protection Bureau. So, how does one go about building an agency that’s disliked — if not actively loathed — by many in Congress and most in the financial world.

Marketplace’s John Dimsdale got a sneak peek inside.

John Dimsdale: The new financial protection bureau has been setting up headquarters in a nondescript square building in downtown Washington, just one block from the K-Street lobbyists the new consumer watchdogs will be doing battle with in the near future.

Inside, with opening day just hours away, the computers and copy machines are kept busy. The cramped cubicles are grey and ordinary — even spartan. They house a couple hundred workers so far.

My tour guide was Associate Director Raj Date, who took me to a conference room that’s awaiting the arrival of a dozen or so new hires.

Raj Date: As you’ll see, it has been completely cannibalized for incoming staff who are transferring from other agencies. For example, this is a very senior economist from the FDIC who’s joining us and this is her office.

Dimsdale: It’s basically bare desks and a chair. No bookshelf, no file cabinet. And…

Date: Yeah, there are dorm rooms that look better than this. Heh, Heh.

The financial protection bureau also has four regional offices — from San Francisco to New York — employing a total of 400 with a half-billion-dollar budget. Congressional Republicans are raising questions about what they call lavish salaries. But Date says the bureau needs employees who know their way around bank financial statements.

Date: We have people on staff today whose other alternatives within the private sector are — and I am not exaggerating — 5 times, 10 times or 20 times the level of compensation they are able to command here.

Just last week before the House Oversight committee, the woman who came up with the idea of a powerful consumer bureau, Elizabeth Warren, defended the expense.

Elizabeth Warren: We need a budget because these are very large and powerful financial institutions who hire armies of lawyers to design financial products that can’t be read by ordinary American families. We need some push back. We’re the voice on behalf of the customer, the American families.

While Republicans aim to trim the bureau’s power and budget, surprisingly the bank industry is keeping its powder dry.

Scott Talbott with the Financial Services Roundtable says he and his lobbyists have already been working with the new industry watchdogs.

Scott Talbott: We’ve met with most of them. We haven’t met a bad apple, if you will. We haven’t seen a bad hire in terms of the intellectual capacity to do the job. We may disagree on philosophical grounds with different employees, but intellectually speaking they’re all solid hires.

The CFPB starts without a director. Elizabeth Warren has proven to be too controversial. Earlier this week, President Obama nominated another aggressive consumer advocate, Richard Cordray, to take over. But Senate Republicans say they’ll reject all nominees until the administration accepts changes that would weaken the power of the director. The bureau will eventually write and enforce new rules for non-bank companies — like payday lenders and check-cashing companies. But those regulations have to wait until Congress and the president agree on a new director.

In Washington, I’m John Dimsdale for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.