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The Consumer Financial Protection Bureau recently announced that it would begin informing individuals or corporations within its purview of any impending investigation or enforcement proceeding. This early warning policy is similar to the standard operating procedures of other federal agencies, particularly those involved in financial oversight. The Bureau would inform the potential target and allow them 14 days to prove that the enforcement is unnecessary.
[Free Tool: Take a look at your Credit Report Card]
“The Early Warning Notice announced today strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers. This process will help us fulfill our commitment to transparency in enforcing the law,” said Raj Date, Special Advisor to the Secretary of the Treasury for the CFPB, in a press release announcing the policy.
Though a two-week hiatus during the course of an enforcement proceeding arguably does little harm to victimized consumers, it does provide the innocent with a way to pre-emptively avoid the costs associated with fighting an enforcement action. When the target happens to be guilty, the two weeks probably will not exacerbate the situation, especially given the fact that for those two weeks the wrongdoers will know that they’re being watched. In any case, the Bureau has not disabled itself from acting more quickly—even instantaneously—if it believes that urgent action is required.
The less jaded among us see this as merely an ordinary step taken by many federal agencies in their youth. However, those a bit more cynical see it as an early concession to the GOP, who you will recall view the Bureau with somewhat less than friendly eyes. Republicans have been taking the position that the Bureau is far too powerful, and because it will be run by a single director instead of a five-person commission (assuming that does not get amended away), Congressional oversight, and its often politicized appropriations process, will be a non-factor.
[Related Article: The Elephants in the Room: The GOP’s War on Consumer Protection]
The nomination of Richard Cordray to be the Bureau’s first director is in limbo (or is that purgatory?) and at the moment Republicans seem successful in delaying the Senate consent to Cordray’s appointment until certain provisions of the Dodd Frank Act, including those relating to the Bureau, can be negotiated away. Given that fact, and given the fact that the budget battle is looming close, it is likely that if the early warning procedure does in fact constitute an olive branch, it will likely have little effect.
Image: rightee, via Flickr.com
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