Meredith Fuchs '93Meredith Fuchs ’93, general counsel of the Consumer Financial Protection Bureau (CFPB) gave the annual Frank J. Guarini Government Lecture at NYU Law on January 28. Fuchs, who joined the CFPB when the bureau was established by the Dodd-Frank Act in 2010, spoke about the bureau’s evolution from a group of ten people “in the basement of the treasury department,” to an agency of over a thousand people, and discussed the actions that the bureau has taken to protect consumers in the aftermath of the financial crisis.

“This financial crisis reminded us in a very, very hard way that unregulated or poorly regulated financial markets can affect not only the welfare of individuals, not only the welfare of specific financial firms that make poor choices, but the stability of the economy itself,” Fuchs said. “The bureau was created, among other reasons, to try to prevent this from ever happening again. Our mission is pretty straightforward: we make consumer markets work both for responsible businesses and for consumers.”

Because the irresponsible underwriting of mortgages was the principal cause of the financial crisis, the most significant task that the CFPB has taken on so far is the regulation of the mortgage market—the single biggest market for consumer finances. The CFPB was tasked with regulating the problematic practices of mortgage service providers, such as the use of robo-signed affidavits in foreclosure proceedings, deceptive practices in the offering of loan modifications, the failure to process homeowners’ requests for modifications of payment plans, and shoddy documentation. The bureau recently issued its first set of mortgage-servicing rules, which are intended to achieve two objectives: "They'll help prevent borrowers from being caught off guard by surprises, and they provide special protections for borrowers who are having trouble making their mortgage payments," Fuchs said.

Describing the CFPB as a “data-driven agency,” Fuchs emphasized the importance that the bureau has placed on transparency and on the use of data that is both quantitative and qualitative. “We want to make sure that the rules that we write address the problems in the mortgage market, but are grounded in data, and grounded in the actual consumer experience of holding a mortgage,” Fuchs said.

As for what is next on the agenda for the CFPB, Fuchs said, “We still are just at the very, very beginning of our work. The recent mortgage rules, as critical as they are, are just a fraction of what we’re focused on.” The CFPB has many more projects underway, she said, including a study of mandatory arbitration clauses, the compilation of data sets that will allow the agency to better understand consumer debt, and the development of a website that helps students learn how to finance their education. Fuchs also added that the bureau continues to prioritize the education of the public about financial choices, particularly underserved sections of the population.  “As the market continues to change and grow, we have been charged with a duty we take seriously: to protect responsible lending for borrowers and lenders,” Fuchs said. “And we plan to continue to carry out our mission."

Watch the full video of the lecture (48 min):