Vetting the Consumer Financial Protection Bureau

With a mandate to regulate banks in the name of the American public, Elizabeth Warren and the Consumer Financial Protection Bureau have some lofty goals.

As the Consumer Financial Protection Bureau prepares to open its doors for business on July 21 and, under the auspices of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and begin its mission of regulating consumer financial products, it is looking for a unique partner. The new regulatory body's de facto leader, Elizabeth Warren, assistant to the president and special adviser to the Secretary of the Treasury on the Consumer Financial Protection Bureau, has turned to the public for suggestions.

In all, the Consumer Financial Protection Bureau will serve the public by performing outreach and research, collecting and tracking consumer complaints, ensuring equal opportunity, and providing financial education. In that role, and on a level that directly affects banks -- that is, in monitoring

and acting upon consumer complaints and in collecting research on banking activities -- the CFPB's mission comes down to one thing: how it manages data.

But Warren's ideal of a public-private partnership will create some serious data challenges for the regulator. "If [Warren] has millions of people giving her pieces of information, then that's fantastic," says Ron Ruckh, managing director of financial services for Devon, Pa.-based global expert services and consulting group LECG. "I don't know the technology she's using or how the bureau is going to analyze that data. The amount of data that it can be, I can't even assess a value or number to that."

Warren, a Harvard law professor, author and expert on finance and bankruptcy, has been chief adviser to the National Bankruptcy Review Commission and was the first academic member appointed to the Federal Judicial Education Committee. While Warren's office did not respond to requests for comment for this article, she launched the Consumer Financial Protection Bureau's website in January with a simple message:

"The idea was to put a cop on the beat to enforce the laws on credit cards, mortgages, student loans, prepaid cards and other kinds of consumer financial products and services," Warren said in a video introducing the bureau to the public. "We're also here to be a voice in Washington for you."

While she acknowledged in the video that there's work to be done to get the bureau off the ground, Warren emphasized that it won't be successful without ideas generated by the public. "We are now open for suggestions," Warren continued. "In the coming days and weeks we'll gather all of your ideas for the new consumer bureau. We're going to think through your comments and concerns, and then put together some video responses."

Social Butterflies

To that end, the bureau's website, consumerfinance.gov, appears to have been set up with the social web in mind. On every blog post, video and update, there are social elements encouraging visitors to help broadcast the message virally across Facebook and Twitter. But it also aims to get people to send a message back to the CFPB. "For the first time in many years, we have the opportunity to create a brand-new consumer agency from the ground up," Warren explained in the video. "We want to make sure that you are with us all the way while we build it."

As if channeling the zeitgeist that dictates the general public generally shares its thoughts and feelings through social media, the CFPB doesn't actually list a telephone number on its suggestion solicitation page, but rather takes a more decidedly Web 2.0 approach. The CFPB website looks for suggestions via Twitter (using the #cfpb hashtag), through a YouTube video response or through a built-in e-mail contact form.

Monitoring the entire social web for consumer input is a valiant undertaking, LECG's Ruckh suggests. It opens up an unprecedented amount of transparency and potential for widespread customer insight on what is working and what isn't working in consumer banking. But it also creates a massive amount of data to sort through before the bureau even begins asking for banks' input. And not all of that information will be useful.