I want to welcome you all to this meeting of the Consumer Advisory Board. I hope you do not mind me saying that I really love these gatherings. The members of the CAB have tremendous expertise and experience and they constantly teach us new things. They also provide diverse perspectives as they relate what they are seeing and hearing about consumers across the country. We are all here because we care deeply about how people are being treated in the consumer financial marketplace, and the quality of this group leaves nothing of importance unexamined.
At the Consumer Financial Protection Bureau, we advise all consumers to set goals and make financial plans to meet them. After all, as Antoine de Saint-Exupery said, “A goal without a plan is just a wish.” We believe the same should be true for the Bureau itself. If we want markets where good information allows consumers to make smart financial decisions, where consumers can choose among the costs and risks of various financial products, and where good service gives consumers all they reasonably can ask for, then we should first map out how we plan to get there.
In 2011, when we first opened our doors, we laid out two strategic objectives to guide our work. The first objective was delivering tangible value to consumers. We knew this meant following through on our statutory responsibility to clean up the practices that led to the collapse of the economy and caused so much harm to everyday Americans. It also meant monitoring consumer financial markets so we could see developments as they occur in real time and head off problems that might arise in the future. Many financial regulators have ruefully noted that had they known more about the deteriorating dynamics of the mortgage market, and understood better the scope of the damage that could be done, it might have been possible to head off or limit the financial crisis that collapsed the economy. With our unique focus on consumer financial protection, we are now in much better position to conceptualize and assess how these markets are working.
The second objective was building a great institution by putting in place the basic infrastructure of this new agency, which we built from the ground up, including the personnel and the strategy and the tools necessary to accomplish the purposes that Congress set for us. Those tools include supervision, enforcement, rulemaking, research, consumer education, and handling consumer complaints. By pursuing the goals of evenhanded oversight, appropriate law enforcement, fair rules, expert research, and broad-based consumer education and engagement, we have been working to restore trust and confidence in the markets for household financial products and services. As we do that more and more, we can see that we are succeeding in delivering tangible value for consumers.
Today we continue to move forward with those same two main objectives. Over the past year, we have been engaged in an intensive effort to prioritize how we use our tools to tackle the most troubling problems facing consumers. We based this new effort around the extent of the consumer harm that we are able to identify, as well as our capacity to eliminate or mitigate that harm. The result is a set of near-term priority goals and a plan for how to deploy our shared cross-Bureau resources to achieve these goals.
To be clear, these goals do not capture all of the important work we are doing. As we approach steady state as an agency, we have numerous dedicated work streams that are core to our mission. In particular, the Bureau will continue to work, both alone and together with our many partners, to fulfill our mandate under the Dodd-Frank Act to police all markets within our jurisdiction for compliance with consumer financial laws and regulations. Indeed, institutions would be making a mistake if they were to assume that they can let up on their efforts to ensure robust compliance simply because they do not see their particular industry explicitly mentioned among the shared cross-Bureau priorities.
We set nine of these goals, which represent the key areas where we hope to make substantial progress over the next two years. They are statements we are making about particular outcomes in particular markets that we want to drive toward fulfilling, rather than descriptions of what tools we plan to use. So strategy starts with what we want to see in the marketplace, which then can guide us in selecting the tools most appropriate for the task. In the end, we envision markets that perform better for consumers in the following ways.
First, we envision a mortgage market where lenders serve the entire array of credit-worthy borrowers fairly, and where servicers have processes in place that result in fair and efficient outcomes for consumers.
Second, we envision a student loan market where student loans are serviced in a way that is transparent and fair to help students repay their debts.
Third, we envision a consumer reporting market with better data that is more accurate and inclusive of more consumers.
Fourth, we envision a market free from discrimination and where consumers have equal access to small business lending.
Fifth, we envision a market where consumers are savvy about their own finances, and they have reliable places to turn to for the tools and skill building to increase their own financial capability.
Sixth, we envision a market where consumer education and policy decisions about household finances are based on a deep understanding of how households use financial products and make choices about money and the effects on their lives.
Seventh, we envision an open-use credit market where payday and installment lenders rely on business models that succeed when consumers use credit as needed and are able to repay their debts when they come due.
Eighth, we envision a debt collection market where everyone who collects debts substantiates the debts they are collecting and communicates with debtors about their debts in a respectful, lawful, consumer-oriented manner.
Ninth, and finally, we envision an entire consumer financial marketplace where consumers will have the ability to effectuate their rights and hold institutions accountable for unlawful conduct.
While these goals focus our shared cross-Bureau efforts for the future, we continue to dedicate resources so that we can follow through on a few priority work streams that are well-established and ongoing, such as our fair lending oversight of indirect auto lenders and our rulemaking on prepaid cards.
Today, we will also continue the conversation we have had previously on financial well-being, the ultimate objective to which all of our work is intended to contribute. As you recall, last year we published a study defining the concept of financial well-being for consumers. We learned that one’s sense of financial well-being is not just about how much money you have in the bank. Instead, it is about having financial security and financial freedom of choice, both in the present and in the future. Following that rigorous research effort, we have now developed and tested a set of questions – a “scale” – to measure financial well-being. The scale is designed to allow practitioners and researchers to more accurately and consistently quantify something that is not directly observable – the extent to which someone’s financial situation and the financial capability that they have developed can provide them with economic security and freedom of choice.
We know that the members of our Consumer Advisory Board have valuable insights to offer on these topics and many more. Indeed, that is why each of them was chosen from among many applicants for these positions.
So to conclude, I am reminded of a business article I recently read about how important the qualities of grit, tenacity, and persistence are to successful achievement, and how this process requires constant learning and adaptation. All of this rang true to me. Particularly compelling was the passage describing how people in sales who make more sales calls do better than those who make fewer calls – not simply because they obviously have more chances to score a sale, but because the greater effort and more frequent repetitions lead them to gain more insight, develop efficiencies, and make other improvements. In essence, they just have more chances to learn and grow from their increased activity.
As we look ahead and work toward the primary goals we have set for ourselves, I believe these are also important characteristics of our work together at the Consumer Bureau. We are intent upon constantly and tenaciously pushing forward to make progress on behalf of consumers. We strive to iterate in everything we do, avoiding defensiveness in making improvements that reflect implicit criticism of the partial progress we had made before, in our quest to be better today than yesterday, and better tomorrow than today. In maintaining this outlook and approach, we are always seeking to learn, grow, and get better at what we do. So thank you for being here today and we look forward to a vigorous discussion.
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.