| WASHINGTON, July 13
WASHINGTON, July 13 The much vaunted and feared
Consumer Financial Protection Bureau officially opens for
business next week.
When it does, it will most likely have a laundry list of
consumer issues to manage, a smaller budget than it asked for,
and an empty chair where its director should sit.
Welcome to Washington, CFPB!
Consumer advocates nonetheless applaud the new agency as an
important step. "Consumers shopping for a mortgage or credit
card or using other financial products now have a watchdog in
Washington to help make sure they get a fair deal instead of a
financial headache," said Pamela Banks, senior policy counsel
for Consumers Union.
Maybe so, but consumers shouldn't expect too much
protection from the fledgling agency as soon as it bolts from
"You can't just start an agency and all of the sudden the
world is better for consumers, particularly when you have
companies and banks and payday lenders spending millions of
dollars to defang it." says Ira Rheingold, executive director
of the National Association of Consumer Advocates.
Even before the agency goes live, the Republican-controlled
House Oversight Committee will call its would-be director,
Elizabeth Warren, on the carpet on Thursday to defend its
"I expect you to remain before the committee until all
members of the committee have had all of their questions
answered and thus ask that you clear your schedule for the full
day of the hearing," Republican Committee Chairman Darrell Issa
wrote to Warren.
The House Appropriations Committee has only allowed the
agency $200 million for fiscal year 2012 -- $129 million less
than the agency says it needs.
So Warren -- who has been acting in an advisory capacity to
get the agency started -- and her colleagues have their work
cut out for them. The first item of business may be to get a
director. Consumer fans of Warren still hope that President
Barack Obama will simply use a congressional recess (if there
is one) to make her the director of the agency she conceived
Shortly after that -- or even before -- the agency plans to
tackle a slew of consumer issues, including mortgage
disclosures, bank examinations and credit reporting and
But consumer borrowers and savers cannot afford to wait
patiently for the CFPB to launch itself. After all, it takes
even a well-funded and managed agency a long time to consider,
propose, issue and enforce new rules. In the meantime, the rest
of us must go about our lives, borrowing money, paying bills
and opening accounts.
So wish the CFPB well, but look after yourself while you
wait for the new and improved world of consumer regulation.
Here are some ways to be your own regulator:
-- Read, read, read. The agency has made the most noise so
far about its plan to make mortgage disclosures clear and
uniform. How much are you borrowing and how much is it going to
cost you? Though the CFPB has twice solicited comments for its
proposed super-simple form, other issues remain: Will those
forms be binding? And when will mortgage shoppers see them?
If consumers have to apply for a mortgage before they get
those disclosure forms, what good will they do? "Those forms
should be binding offers and people need to be able to shop
around with it," Rheingold says.
Bottom line? If you are shopping for a mortgage, ask that
question yourself: How much am I borrowing and what will it
cost?" Use websites such as Mortgage Marvel
(www.mortgagemarvel.com), which include estimated
closing costs in the payment information they publish for
-- Go local. Just because the Feds aren't ready to jump on
every case of financial injustice doesn't mean there is no
regulator out there if you have a serious complaint. Most state
attorneys general have a consumer protection office under their
jurisdiction. A variety of county offices also review consumer
complaints, and the Federal Trade Commission and other federal
agencies monitor credit and other issues. If you suspect that
you are being ripped off, contact all of those agencies until
you find the one that will look at your case.
-- Monitor your own credit record the right way. The CFPB
will be studying the credit scoring industry, and in particular
look at why the same consumer can end up with different credit
scores, and whether consumers are seeing (and paying for) the
scores that are significantly different than the scores the
lenders are using. Consumers can head off most credit scoring
problems by making sure the information in their credit report
is accurate. Those reports are free at AnnualCreditReport.com
(www.annualcreditreport.com). Consumers can get a rough
idea of their credit scores by checking websites that offer
free scores. And if they are getting ready to borrow money,
they can pay for their FICO scores, the ones used by most
lenders to determine credit-worthiness.
-- Watch that space. The CFPB already has a website and
blog at ConsumerFinance.gov (www.consumerfinance.gov),
so you can check back there to see what the agency is up to.
Warren says Thursday, July 21, promises to be a busy day --
it will hit the ground running.
(The Personal Finance column appears weekly. Linda Stern can
be reached at linda.stern(at)thomsonreuters.com)
(Editing by Maureen Bavdek)