The Consumer Financial Protection Bureau (CFPB) is going to allocate half its budget to supervision and enforcement of consumer protection laws with a strong emphasis on non-bank lenders. "We can't enforce the law only against banks that are the easiest to find," said Elizabeth Warren, the leader of Treasury Department's CFPB implementation team. "Instead, we will build a strong enforcement arm that will for the first time ever put significant federal resources behind ensuring compliance by non-bank financial companies."
Warren made her comments during a speech to the Independent Community Bankers of America who were holding their national convention in San Diego.
The new agency, which officially opens for business in July, has been allocated $142.9 million for fiscal year 2011, which ends Sept. 30. The 150-staff CFPB implementation team has already received $60 million of the full-year funds. Next year its budget increases to $329 million. (By comparison, the Office of Comptroller of the Currency, which supervises national banks, had a $790 million budget last year.)
Warren pointed out that past government failures to "scrutinize practices of large banks and non-bank lenders has hurt the ability of community banks to compete" in the marketplace.
She said the new agency wants to work with community bankers to ensure they can compete effectively and offer a range of services and options to their customers. "For this consumer bureau to succeed, community banks must remain a major presence in the economy," Warren said.
She also pledged that the CFPB will consult frequently with community bankers for their input on bureau activities.
In February, Warren picked investment banker Elizabeth Vale to serve as CFPB's assistant director to conduct outreach to community banks and credit unions. The former Morgan Stanley managing director has a background in community banking.