The Wall Street Journal‘s leder today on the Consumer Financial Protection Bureau shows the paper in fine form.
If you want a well-reported explainer on what the CFPB is empowered to do and a narrative on how it came to be—and I do!—this is the place to go. It’s well-timed to the news pegs of the financial-reform law signing and the debate over whether Elizabeth Warren, who had the idea for the bureau in the first place, will head it. And it does an excellent job of explaining the arguments of those who were for and against it—without devolving into he-said/she-said.
The Journal reports on several pivotal moments as the CFPB wound from an idea Warren put forth in a 2007 Democracy essay to law three years later. Here’s a crucial one:
In April 2009, White House chief economic adviser Lawrence Summers and Ms. Warren, longtime acquaintances from Harvard, met for three hours at an Indian restaurant in Washington, hashing out ideas about the possible design of such an agency. Playing a devil’s-advocate role he often employs in policy debates, Mr. Summers questioned how such a bureau could be insulated from political influence. Ms. Warren left with a sense she had Mr. Summers’s support of the agency.
And here’s how the Journal describes what the CFPB, which it reports will have an independent, $500 million annual budget, will do:
The new consumer regulator will be funded by the Federal Reserve and have independent powers to write and enforce rules governing how loans and other financial products are offered, bearing on everything from the type of mortgages people can get to the fees on their credit cards.
The agency will be able to enforce its rules against any bank with more than $10 billion of assets, as well as all large mortgage lenders, student-loan companies and payday-loan firms. It will have an army of examiners to probe these companies’ practices. Small banks will have to follow the new rules written by the agency but they will be examined by other federal regulators.
On the Warren angle, reporter Damian Paletta scoops that she lunched with top Obama adviser Valerie Jarrett after the signing ceremony yesterday.
The CFPB is perhaps the most-critical element of the new law. How it’s implemented will be a major story for years to come. If only all coverage of it could be as good as the Journal‘s here, we’d be in good shape.
— Further Reading:
Where are the Subprime Toasters? Harper’s calls for a Financial Product Safety Commission.
So That’s Why the Press Won’t Cover Elizabeth Warren! NPR badgers oversight panel chair over her legitimacy.
Lowenstein’s Consumer Protection Stinker: Faulty logic and a false choice on banks.
Demolishing the Banks’ Anti-Consumer Spin.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.