Yesterday's New York Times featured a story about Raj Date, a Treasury official working to start up the Consumer Financial Protection Bureau after a spell as an influential financial-reform advocate. (I briefly profiled Date when he joined the administration.) The headline pretty much sums up the lack of news in the story: "Adviser to Consumer Agency Had Role in Lending." Heavens!
The piece, which has seen its facts disputed, reports that Date was a board member at an online peer-to-peer lender that was sanctioned by the SEC for failure to register with the regulator; it hadn't registered because the method of online consumer lending it pioneered didn't have an obvious regulatory home. During the crafting of the Dodd-Frank financial-reform bill, the lender lobbied to be regulated as a bank, not an investment firm. That's the central revelation in the article, which also includes the sentence: "There is no evidence that Mr. Date has violated any ethics or disclosure rules."
One of the great values that Date brings to the CFPB is his private-sector experience; combined with his public-spirited efforts founding the Cambridge Winter Center to provide sophisticated analysis of financial policy. This story grasps for any actual news to hang itself on -- the piece "illustrates the potential conflicts of interest that can arise" at the CFPB, which is no different from potential conflicts at any other government agency. As Zach Carter points out, people moving from the financial sector to the government and back again is a serious problem, but that's not what Date represents -- he'd already recused himself from any business dealing with the peer-to-peer lending industry.
Meanwhile, there are developments at the CFPB concerning consumer finance and technology that are actually news-worthy. Treasury's Elizabeth Warren, the official charged with setting up the agency, is talking about how to leverage technology to crowd-source the agency's efforts to monitor regulatory problems -- an idea that has important implications not just for consumers but for any regulator trying to adapt to the 21st century. Tonight, she's speaking on the topic at U.C. Berkley after visiting high-tech companies in the Silicon Valley area. These plans seem much more important than the story the Times ran on Date.
If you're interested in learning even MORE about the CFPB and what it can do, let me do a little cheeky self-promotion and recommend this report I wrote for the New America Foundation on the topic.
-- Tim Fernholz
