RSSThe Consumer Financial Protection Bureau will have a significant financial education component, in addition to its supervisory and enforcement responsibilities, said Barton Shapiro, senior advisor for community banks and credit unions with the CFPB. Barton spoke to bankers Nov. 3 gathered in Lincoln, Neb., for the annual meeting of the Nebraska Independent Community Bankers.
“One of the things we have in the tool box is consumer education and engagement. We are tasked with reaching out more to develop better levels of financial literacy,” said Shapiro. The Dodd-Frank Act specifically identifies military personnel, older Americans, and students as constituencies which should be the beneficiaries of the bureau’s financial literacy efforts, he said.
In an interview after his presentation, Shapiro said the vision is for the bulk of the Bureau’s work to focus on financial literacy.
Shapiro said the Bureau’s supervisory efforts are intended to assure a level competitive playing field. He said the Bureau’s handbooks, guidance and examination manuals are designed to help banks and other businesses understand how they are supposed to comply. “That is to keep the market robust, to keep the market competitive,” Shapiro said. The goal, he said, is for consumers to be able to easily understand the terms of any financial products they encounter. “It is to allow consumers to see what the deal is they are supposed to be getting, understand clearly what those costs are, to understand what the risks of any particular loan product might be, and to assure they are able to compare from one to another,” he said.
Shapiro noted other key departments within the Bureau, including its consumer response center, and its research area. Research, he said, will form the basis for CFPB rule-writing efforts and enforcement decisions. “The research is there with the market analysis to inform the rule-making process because the Bureau is designed to be a data-driven organization. It is not to come to decisions lightly, it is not to come to decisions predisposed,” he said. “It’s to have information guiding the process.”
Directly responsible for the supervision of 114 financial institutions across the country, all with assets in excess of $10 billion, Shapiro described the Bureau’s approach to enforcement. “It is not ‘gotcha’ enforcement. It is not that we are going to pull surprises and have these broad enforcement actions against any company,” he said. “It is based on what’s there, based on the gravity of the complaint, based on what’s borne out by proper fact-finding.”
Shapiro said that as part of the Bureau’s external affairs division, he is trying to reach out to the public, including community bankers. “We are the door to the Bureau and the door swings both ways. We are trying to get information out to you, but more importantly you should feel comfortable to know that we are here to receive your input,” he said. “All of us are aware that there is a great degree of anxiety across the industry because of the Bureau having been established…The more we can inform people how the bureau works, I think will help bring down this level of anxiety.”
Shapiro said that community banks are not part of the problem and that community banks have a sound business model. Saying there has been a skewing in the market toward the largest players, he commented: “We need to preserve and expand the community bank model.”
