That’s what happened two years ago when the Federal Reserve’s own consumer advisory council recommended that an independent agency assume oversight of consumer protection, independent of the central bank. Ultimately, lawmakers did just that, creating the new Consumer Financial Protection Bureau, which has taken over responsibilities from the now-dissolved Fed’s council.
The CFPB’s new advisory board is supposed “to advise and consult with” the bureau and provide information about “emerging trends” in consumer finance. Six members of the board — which will have at least 16 members — must be nominated by regional Federal Reserve banks, and all will ultimately be appointed by director Richard Cordray. Judging by the Fed’s former Consumer Advisory Council, the new body is likely to include members of the banking community and the broader financial services industry, but there’s a heavy emphasis on soliciting feedback from community-based advocates and institutions.
“The Director shall seek to assemble experts in consumer protection, financial services, community development, fair lending and civil rights, and consumer financial products or services and representatives of depository institutions that primarily serve underserved communities, and representatives of communities that have been significantly impacted by higher-priced mortgage loans,” according to the Federal Register notice explaining the board’s structure and nomination process. The CFPB has also put out a YouTube video and made a social media push in search of board members. Members of the board will be compensated if they don’t work for the U.S. government, but federal lobbyists aren’t eligible.
Even some opponents of the CFPB’s new oversight and regulations have commented on the bureau’s efforts to solicit feedback from outside groups, and the membership of its first advisory council could give additional credibility to its outreach efforts. It will be worth watching whether the advisory board decides to use the bully pulpit in its new role and whether it breaks from the CFPB in significant ways, as its predecessor did with the Fed over mortgage lending practices. That said, given its lack of binding authority, the CFPB’s advisory board isn’t likely to allay the concerns of Republicans that the bureau lacks appropriate oversight and accountability.