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Posts from February 2011

Asking the public about the CARD Act


Yesterday’s CARD Act conference commemorated the first anniversary of the day when many provisions of the Credit CARD Act went into effect. Industry executives, leading academics, consumer advocates, government officials, and the CFPB convened to review changes in the card industry since the Act. In conjunction with the conference, the CFPB commissioned a survey to explore how people perceive some of the changes brought about by the Act.

Our survey showed that:

  • 60% of cardholders find their monthly statements easier to read and understand
  • 60% feel that the terms on their credit card are clearer than they used to be
  • Among those who are at least somewhat familiar with the CARD Act, 57% believe the Act has been personally beneficial to them

In addition, 32% of people who noticed a change in their statements reported that they changed their behavior by increasing the amount of their monthly payment or by limiting their use of credit cards.

Another important insight is that there is still work to be done to enhance consumer understanding of their credit cards. For example, 80% of all cardholders who carry a balance from month to month are able to report their interest rate, but 35% of them are unable to say how much interest they paid. The survey also showed that consumers who know their rates or fees are more satisfied than those who do not know this information.

Part of the CFPB’s role is to make sure consumers have clear information on costs and risks so they can make the best decisions for themselves and their families. We are paying close attention to the level of consumer understanding.

One other thing we’re especially excited about is that this is the first survey the CFPB has ever commissioned, and we’ve made the raw results available to the public to download in CSV and TXT (tab delimited) formats. This detailed data is available on our Credit CARD Act page along with more information about the Credit CARD Act itself and additional infographics like the one above. I encourage you to take a look.

Learn more about our survey methodology.

Marla Blow is the CFPB Deputy Assistant Director for Card Markets.

The Credit CARD Act turns one


One year ago many provisions of the Credit CARD Act took effect. To mark this occasion, the CFPB held a conference to examine what has happened in the past year in the credit card market. Here’s what we learned.

First, the law has brought about some important changes for consumers. For example, a study prepared by the Office of the Comptroller of the Currency indicates that prior to the Act, card issuers increased the interest rate on approximately 15 percent of accounts each year. Now, only about 2 percent of accounts experience rate increases. The amount of late fees has dropped by more than 50 percent since the Act was enacted, and overlimit fees have essentially disappeared.

There is another side of the coin. To achieve greater transparency and eliminate more hidden costs, the initial interest rates today appear to be higher than they were a year or two ago. In other words, the cost is clearer up front. Significantly, the total amount consumers are paying for their credit cards is no higher, on average, than it was one, two, or three years ago.

During the recession, credit card issuers tightened their standards for approving an application and reduced the amount of credit they made available. Over the past year, as the economy has improved, many credit card issuers have loosened their criteria for signing up new customers. Nonetheless, credit standards still appear to be tighter than they were two or three years ago. We do not yet know what the “new normal” will look like or whether less creditworthy consumers will continue to find it more difficult to obtain a credit card.

There are important challenges facing the CFPB when it comes to credit cards. We need to be vigilant in assuring that card issuers live up to their legal obligations and do not try to find loopholes to exploit. We also know that there’s more work to be done to make sure that consumers are able to understand the costs, benefits, and risks of different cards, and to compare them straight up. We need to continue to deepen our understanding of the consequences of the CARD Act for consumers and the credit card market.

David Silberman is the CFPB Assistant Director for Card Markets.

Finding a Home for the CFPB


Location, location, location.

That’s the real estate mantra, and the new consumer bureau is following the professional’s lead. We are getting a permanent home, and it’s all about location. Sometime next year, we will move right across the street from the White House complex to 1700 G Street, Northwest, Washington D.C.

The White House is one of the most frequent destinations for tourists who come to Washington – if only just to walk by and to get a picture taken. Our vision is a building nearby that is the clearly identifiable home of the Consumer Financial Protection Bureau. We want Americans to see where we work, to know that this is a place where financial cops are trained, and to be reminded that we are always looking out. We want this agency to have a very tangible presence for anyone who visits Washington.

In fact, we want more. We want the building to have as much public space as possible. We’re hoping that we can open up parts of the lobby and the adjacent patio for families and service groups, for foreign visitors and local school kids, for anyone who comes to town. This agency belongs to the American public, and we want the American public to be welcome.

If we get this right, we hope there will be space for displays, perhaps featuring financial education materials and tools to help consumers choose the mortgages, credit cards, and other financial products and services are best for them. But whatever we can get into the lobby, we want people to know that they own this building and that the people who work there are working for them.

The building is pretty dated, and it needs considerable renovation to update it to current energy and environmental standards. The outside spaces and the lobby need repair, and the office spaces need to be realigned so that we can accommodate more people. In other words, there’s a lot of work to be done. But that seems fitting for a new agency that is trying to make the consumer financial markets work for everyone. Making change starts with a vision.

Open for Suggestions: Our Favorite Videos


A couple weeks ago, we asked you to submit your suggestions on building an effective new consumer bureau. Since then, we’ve been taking some of these suggestions and asking members of our team to record video responses. Some of them are pretty camera shy – and some aren’t – but once they started talking about what they do and what the consumer bureau is up to, everybody was ready to jump in.

In just those couple weeks we received hundreds of suggestions on Twitter, YouTube, and our website, – and we’ve read or listened to every single one – most of them more than once.

Some of you are worried about long, complicated credit agreements. Some of you want to make sure we make financial education a priority. And some of you have ideas about how we can improve our website. The variety of responses has been the most encouraging part of this process: people are interested in the work the CFPB is going to do for American families, and they are willing to invest some time to speak up and tell us about it.

It turns out that these videos are pretty responsive to many of your suggestions and concerns. We’ve compiled a few of our favorites to share with you:

In this video, Marla Blow, Deputy Assistant Director for Card Markets, responds to a question about credit card terms:

Holly Petraeus, Assistant Director for Servicemember Affairs, offers important tips to servicemembers:

Rich Cordray, former Attorney General of Ohio and Assistant Director for Enforcement, talks about how CFPB will work with state attorneys general and other state regulators:

We’ve heard that these videos can be really helpful – so check them out, and share them with your friends and family.

September 2010: Transfer Date Announced


Each day this week, we will feature information about an important milestone in the establishment of the new consumer bureau. Today’s post is about our transfer date. Read more of this series.

Less than two months after President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, Treasury Secretary Tim Geithner announced that the one-year anniversary of the law – July 21, 2011 – will serve as the “designated transfer date” for the Consumer Financial Protection Bureau. This is the date when consumer financial protection functions of seven federal agencies will transfer to the CFPB.

The financial crisis that nearly brought the economy to its knees was caused in part by massive failures in basic consumer protections. Instead of leaving consumer protection scattered among seven different agencies, none of which had the necessary authority and focus to protect American consumers, the new law provides for one agency that is accountable for enforcing consumer laws.

With the announcement of a transfer date, Secretary Geithner set an ambitious deadline to get the CFPB up and running. On that date, the CFPB will receive many of the authorities it will need to protect families from abusive consumer financial practices. The new consumer bureau will work to make sure consumers have the information they need to make sound financial decisions for themselves and their families and to make consumer credit markets work better for all Americans. This milestone signaled to the American people a clear timeframe for when there will be a cop on the beat patrolling the markets for mortgages, credit cards, and other consumer financial products and services.

Building a completely new consumer bureau from the ground-up is a tall order, and Secretary Geithner’s announcement meant that much work would need to be done in a relatively short period of time. But the CFPB’s arrival to the regulatory scene is long overdue, and its mission is ambitious – so it was fitting for the deadline to be ambitious as well.

February 2011: CFPB’s HR System Comes Online


Each day this week, we will feature information about an important milestone in the establishment of the new consumer bureau. Today’s post is about our new HR system. Read more of this series.

The Dodd-Frank Act created the CFPB as an independent bureau within the Federal Reserve System. Many steps must be taken before the CFPB is fully operational, so Congress authorized the Treasury Department to conduct that preliminary work during this interim period. The CFPB implementation team took an important step in setting up the CFPB this week by launching its interim human resources system.

The CFPB continues to rely on Treasury to provide administrative support and to manage the implementation effort. But we have taken an important step. The launch of the interim HR system means that, for the first time, the CFPB will have employees of its own. The HR system enables the CFPB to create positions, recruit and hire personnel, and institute policies and practices designed to engage and retain staff. It also provides the infrastructure for performance management, training, recording time and attendance, and other important tasks. This system is a critical step as the consumer bureau works to build infrastructure and transfer personnel from other government agencies.

The most visible result of the new system is that the CFPB team will begin to use different job title conventions. For example, the leaders of each principal function, such as the General Counsel and the head of the Supervision and Enforcement team, will be Associate Directors reporting directly to the eventual Director of the consumer bureau. Assistant Directors will head up the working teams, such as Credit Card Markets or Fair Lending. This naming convention will provide greater clarity about the structure of the organization as we move forward.

Below is a list of CFPB leaders who are currently on the team or will be joining in the weeks ahead:

  • Steve Antonakes, Assistant Director for Large Bank Supervision
  • Ethan Bernstein, Deputy Assistant Director for Mortgage and Home Equity Markets
  • Marla Blow, Deputy Assistant Director for Card Markets
  • Leonard Chanin, Assistant Director for Regulations
  • Kelly Cochran, Deputy Assistant Director for Regulations
  • Richard Cordray, Assistant Director for Enforcement
  • Raj Date, Associate Director for Research, Markets & Regulation
  • Marilyn Dickman, Deputy Assistant Director for Human Capital
  • David Forrest, Assistant Director for Consumer Engagement and Acting CIO
  • Meredith Fuchs, Principal Deputy General Counsel
  • Roberto Gonzalez, Deputy General Counsel
  • Michael Gordon, Deputy General Counsel
  • David Gragan, Assistant Director for Procurement
  • Len Kennedy, General Counsel
  • Zixta Martinez, Assistant Director for Community Affairs
  • Patricia McCoy, Assistant Director for Mortgage and Home Equity Markets
  • Holly Petraeus, Assistant Director for Servicemember Affairs
  • Victor Prince, Deputy Chief Operating Officer
  • David Silberman, Assistant Director for Card Markets
  • Dennis Slagter, Assistant Director for Human Capital
  • Dan Sokolov, Deputy Associate Director for Research, Markets and Regulation
  • Corey Stone, Assistant Director for Credit Information Markets
  • Peggy Twohig, Assistant Director for Nonbank Supervision
  • Elizabeth Vale, Assistant Director for Community Banks and Credit Unions

Learn more about the CFPB’s organizational design.