The CFPB is meant to be an enforcer of consumer protections. Many of its staff sit in offices of our biggest banks and are hard at work ensuring financial services work for everyday Americans. But uniquely, its mandate extends also to provide access and encourage innovation. They have a carrot and a stick. So far, we’ve mostly seen the stick.
But two days ago, the Bureau introduced a big, juicy carrot…I think. It looked like a carrot. It sounded like a carrot. But it’s still forthcoming. For the 50 or so in attendance, Director Cordray and many of his top luitenants flew cross-country to Silicon Valley to send a clear message they mean business, and to offer a nibble of a locally sourced, organic carrot.
And tasty it was, I must say. Cordray quoted English poet Thomas Gray and was clearly involved and engaged throughout the day with those in attendance. The livecast opening session included several “TED-style” talks (where now-exiting deputy director, Raj Date, was the clear highlight with a smart, funny and provocative salvo on good and bad financial innovation – and where I was probably the low-light, with a stiffly presented screed on the missionaries and mercenaries in our space) and then a closed session series of discussion panels where industry players (myself included) moderated conversations about topics from big data to short-term credit.
BillFloat’s Ryan Gilbert and Treasury’s Sophie Raseman gave my second most favorite TED-style talks, on sandboxes and smart disclosures, respectively, which were probably the most clearly actionable ideas presented: Ryan proposed creating a safe-harbor for experimentation and Sophie analogized how the government can be a commercial catalyst with financial data, as it has with GPS and weather information.
Personally, I’m optimistic. They’ve gone above and beyond to be engaged with industry. To actually listen. To actually ask questions (and not just on Wednesday). To hire from industry (and I hope that Raj’s legacy will live on after he leaves – can you tell I’m disappointed by this news?). To be data-driven. And to be modern (they know what Twitter is; even how to refer to hashtags). My guess it will take longer than 6 months to see something, but my guess is that we will see something real.
Financial “innovation” can hurt the economy. That is clear. But it can also make the economy and it’s easy to forget that, especially as a consumer watchdog. I believe the smaller group of “access providers” at the CFPB (vs the larger group of enforcers) have an incredible opportunity to pave the way for powerful, positive financial innovation that can change the lives of Americans and contribute meaningfully to GDP. I say Bravo Bureau. You’ve set the table. Now bring on some real carrots.