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June 18, 2012
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New Bureau Hears From Both Sides By Ted Craig
Rush - Dated Material
The Consumer Finance Protection Bureau wants the facts. Richard Hackett, who heads up the CFPB’s installment and liquidity lending group, said data drives all the new regulator’s actions. “We really want to have the facts before we make any conclusions,” Hackett said. Hackett answered a series of prepared questions at the recent National Automotive Finance Association conference. Many in the industry are concerned about the new agency, especially since it seemed to come into existence with a strong bias toward consumer advocacy. But Hackett said the CFPB hired plenty of industry attorneys to offset some of that zeal. He said they sit in the same room as the staffers
with the regulatory backgrounds. Hackett is one of those outsiders. He represented banks and other creditors for more than 30 years in private practice. Hackett said the regulator has been ramping up in the past year, growing to 800 staffers from four in 2010. It will top 1,000 by the end of the year. That staff is well paid by Washington standards, with a higher scale than other regulators such as the Federal Trade Commission. Joel Winston, an attorney with Hudson Cook, said that helps in attracting staff. Winston, who asked Hackett the questions on stage, left the FTC earlier this year after three decades at the regulator. The staff receives assignments in ways that differ from other regulators, too. Instead of a silo approach based on providers, the CFPB is assigning staff to business lines. This means an auto finance regulator will work with both big banks and small finance companies. One of the CFPB’s biggest roles is providing a clearinghouse for consumer complaints. Hackett said the bureau collects the complaints and passes them on to the creditors. “The person who knows best how to resolve a consumer’s issue is the
Photo courtesy of the National Automotive Finance Association TRADING PLACES: Former FTC attorney Joel Winston, left, asks questions of Richard Hackett, who heads up the CFPB’s installment and liquidity lending group.
creditor,” Hackett said. The creditor has 60 days to solve the problem. It gets turned over to an investigator after that. So far, the number of complaints is small, about 70,000. Winston said the FTC gets about 1 million through its Consumer Sentinel site. The FTC only collects information and doesn’t try to resolve those complaints. “It’ll be interesting over time as the complaint volume increases at CFPB to see if that’s feasible,” he said.
The main concern for finance companies and others remains what happens to those unresolved complaints. Hackett said the CFPB is putting together “one of the best litigation law firms in the country with close to 100 lawyers.” A priority issue for the CFPB is looking at racial discrimination in auto finance. Several large players settled a series of discrimination lawsuits from several years ago. Those settlements are
reaching their end and Hackett said the bureau would take a look at any lingering concerns. Hackett stressed again, however, that any action the CFPB takes would follow extensive research. Winston said he was hopeful about the CFPB’s future actions. “In my opinion, the CFPB is doing a fantastic job on getting public input on everything they do,” Winston said. “That bodes very well for us going forward.”
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