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AFC Series: CFPB in Turmoil? The Battle for Consumer Protection
The CFPB is at a crossroads. With leadership changes and a shifting political climate, what’s next for consumer protection? We break down the agency’s bold moves on open banking, BNPL, and EWA—and what the future holds as new leadership takes the reins. Tune in for a look at the future of financial rulemaking and the impact on consumers.
Hosts:
Rachel Morrissey, Head of Content, Money20/20 US
Ian P. Moloney, SVP, Head of Policy and Regulatory Affairs, American Fintech Council
Guest: Ashwin Vasan, Partner, FS Vector
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Welcome to the Money Pot. My name is Rachel Morrissey. I am here as the head of content from Money 2020 US and we are going to be investigating some questions around the CFPB. Today, we are doing a series with the American FinTech Council where we are looking at all of the goings on in Washington and what we're anticipating in the regulatory year to come, and as part of that, we have Ian P Maloney. Ian is the Senior Vice President and the Head of Policy and Regulatory Affairs for the American FinTech Council and he is joining me today as a co-host. Welcome, ian, how are you doing?
Ian Moloney:I'm doing great, rachel. I'm really excited to talk about what is probably the hottest topic, or at least close to the hottest topic in financial services.
Rachel Morrissey:Yeah, it's hot enough that I'm like, okay, we're going to handle this and try not to get our fingers burned at the same time. I think that's kind of where we are. And for our guest today, we've got Ashwin Bhasan. He is the partner at FS Vector. He has a long history used to work for the CFPB and we love having Ashwin on our stages. So, ashwin, it's nice to see you today.
Ashwin Vasan:Nice to see you too. It's great to be here, excited to chat about an ever-changing situation.
Rachel Morrissey:An ever-changing situation. We're hoping that when we publish this later this week it's as evergreen as we can make it. You can never seem to tell from data.
Ashwin Vasan:You know what I can do that quickly? The CFPB will always be in chaos. There we go. We can just publish right now. Get it on the site.
Rachel Morrissey:Here we go.
Ashwin Vasan:Podcast over.
Rachel Morrissey:There we go, done. That was the quickest listen we've had all year. Ian, I'm going to throw it to you to kind of kick us off, if you want to.
Ian Moloney:Yeah, well, I mean in the interest of trying to keep this as evergreen as possible. I know you know, ashwin. For a number of years CFPB has been under significant scrutiny faced multiple legal legislative challenges, efforts to end it or significantly curtail it, and you know that's setting aside what's been happening since January. So before we get into that current situation, I think it would be really helpful to get your take on sort of why the Bureau seems to consistently face these efforts to shut it down or to significantly reform its operations.
Ashwin Vasan:You know someone who worked to the inside, you know much of the activities are more boring than the sort of press releases and sort of the kind of narrative and the kind of public arena is. So it is always a little bit confusing, but I think that's how these things go right. The stories people tell on the outside are not always the same as on the inside. I think the answer, anne, is part. I'd say maybe 20% substantive, but 80% just everyone kind of dug in their camps, right? I mean, I think the substantive part is you know, for better or for worse, it kind of arose in a Democratic administration sponsored by Elizabeth Warren. It was staffed up in that era. It tends to do more work in a Democratic administration than it does in a Republican administration and since its founding and the very idea of it has always been something that everyone has had strong feelings about the exact nature of the feelings tend to sort of shift.
Ashwin Vasan:I always joke that first time I was at the Bureau all of the hearings were about and they still say this how it's not accountable. And then CELA law, which is a Supreme Court case, allowed the president to fire the CFPB director and appoint whoever basically they wanted. And then the second time I was there after that court case, all the concerns were you're too politicized. Well, it's like you can't have them both right, like either you're accountable to the president, who is a political actor, or you're not, and suddenly everyone wanted more independence. So you know, it's kind of like the talking points do sometimes shift depending on sort of where it is, and I think, look, I think the basic is I think one party has a more of a regulatory kind of lens and the other has a deregulatory lens and the CFPB structurally can do a lot of things pretty quickly with all of its tools, and I think so as a result you sort of see some of the hyperbole.
Rachel Morrissey:But on the inside.
Ashwin Vasan:Look the bulk of the Bureau's work day to day. I mean, you know it's handling complaints, conducting exams, most of which remain confidential, conducting investigations for sort of bad actors in the marketplace, I mean, and running the place itself. I mean, right there you cover probably 80, 90% of the staff, and so you know most of the work of the Bureau is a little bit more mundane than what I think tends to be the policy related matters.
Rachel Morrissey:Well, let's talk about that a little bit just to kind of give a sense to the, to the people listening about what the actual day to day feels like versus all of these big policy matters, because the big policy matters are what make the news, they are what also drives the politics and it's also what we tend to be focused on at Money 2020. But if you look at the day-to-day workings of the CFPB, what would the people at Money 2020 not particularly understand? Or, even if they understood, it would not have their focus on?
Ashwin Vasan:Yeah, I mean I would focus first on, I think, supervision and second on complaints, right, and I think the former is probably less familiar to the Money 2020 audience unless they're part of the bank, and then the latter is familiar to everyone.
Ashwin Vasan:And both unless they're part of a bank, and then the latter is familiar to everyone and both are kind of designed in a way to sort of further adherence to the laws. The supervisory function is, by design, supposed to cover banks and non-banks. There's nuances around how the non-bank side gets expanded, but the general idea was everyone has to comply with certain consumer protection laws. The Bureau will have an examination force, go in, conduct exams confidentially, give feedback on your compliance around those laws, and for a large part, that has happened for the last 15 years. The Bureau supervises large banks, it supervises credit reporting agencies, it supervises non-bank mortgage lenders, payday companies, remittance companies and a number of others. Now, most large institutions playing in consumer financial services take their consumer compliance obligations much more serially, simply by the possibility that they will get an exam and be reviewed for sort of adherence to those laws and also like whether or not they're running a good organization to catch places where they might be falling short and fix them before they create problems.
Ashwin Vasan:So that kind of deterrence umbrella for the largest institutions is incredibly powerful. It's worth noting. Even after sort of the preliminary injunction on Friday, I still believe as of today Tuesday, I'm not sure exams have still started up yet. So we've now been coming up on two months without exams in the marketplace. That function, I think, is really kind of a core of the agency. And then the second one I just call out, I think in the kind of less you know, I think enforcement and sort of policy making tend to get more kind of spicy.
Ashwin Vasan:But the complaint function is like a core core function of the Bureau as well and was done so by design. I forget the numbers, but it's. Millions of Americans now right, have gone onto the portal. I was part of the team that sort of stood that up in the early days.
Ashwin Vasan:File a complaint, it gets forwarded to an institution, the institution has an opportunity to provide relief and, most importantly, that data is available to the public and internally to the Bureau.
Ashwin Vasan:So if you see trending analysis on that data, if you see a certain entity spike up in complaints, you begin to think, hey, there might be something going on there that warrants a closer look. And so not only does it provide direct relief to consumers, which is you can go and find the testimonials online very powerful but it also creates again a kind of a deterrent umbrella, because everyone knows that the Bureau and stakeholders are watching to see which companies get the most complaints, and again that also creates that additional layer of sort of focus on consumer compliance. And again, by design, none of these things are really particularly the focus of the mortgage lender of 2006, as we all know, and so I think it's a pretty substantial change in terms of how banks treat their compliance obligations and as well as non-banks as well, because, as we know, in the run up to the crisis, non-banks played an important role as well.
Rachel Morrissey:You know it's interesting because you know, in a weird marriage the CFPB and the fintech industry both sort of were born out of the same melee and have sort of matured together or not always as friends, but definitely it's interesting to me that you are looking at both an industry that's basically born out of the same problems that the CFPB was trying to address and that one is. You know, these two different approaches have always been sort of married and intertwined as far as the last 15 years have gone, which is not something that I think most people think about when they think about the birth of an agency and the birth of an industry coming out together. It's not really forefront in the industry's minds. Oh, these were born out of the same instigating circumstances.
Ashwin Vasan:Yeah, they grew up together in certain ways, right, you know, again, I was at the Bureau twice 2011 to 16, and again 2020 to 2023. I think the first time there, you know, we set up kind of an innovation office. We wanted to engage with fintechs, we wanted to understand the potential to competitively disrupt legacy financial services. And Rachel, to your point, yeah, like atmospherically, the mood at that point was still pretty strongly anti-bank. I'm not even sure it's abated a ton, but I think it's still pretty anti-bank.
Rachel Morrissey:On the ground, for sure. On the ground yeah that's right.
Ashwin Vasan:I think what the Bureau had to address this time and I think did, with varying success, but it's a long-term trend regardless is fundamentally for consumers. Today, the vast, vast majority of their consumer touchpoints happen with non-banks, whether it's larger companies or smaller fintechs, or larger fintechs, to put it that way, fintechs, to put it that way. So, and that you know, we'd already seen that shift in mortgage early on and it's almost entirely complete. Auto loans have always been quite diverse in terms of who's originating them. Student loans has become majority of the government and, of course, like you know, now you have BNPL, you have neobanks and you have Ardua Jacksons a number of other products and services that really consumers touch.
Ashwin Vasan:And if you kind of think about how many touch points do consumers actually have with financial institutions, I would guess that maybe the majority now are non-banks, and so the kind of 2011, 2012 mood like hey, we're seeing change in the market, we're going to change in how we oversee, we're going to change in how we disrupt it I think this time back at the Bureau was a little bit more. There's some big companies out there touching a lot of consumers that need to be part of the level playing field, and so many of the efforts the Bureau took in the last administration were to really kind of extend that level playing field and acknowledge the pace with which technology had really changed how consumers get their products and services. Now we'll kind of probably get to the future. Some of that is being unwound, Some of that's being kind of challenged, Some of that probably wasn't nearly as effectively done as it could have been right, and so I think we're sort of at an inflection point again here in 2025.
Ian Moloney:Ashwin, I think about the tools that you'd mentioned, and the CFPB has a ton of tools in its regulatory toolkit. So kind of thinking about that, that future a little bit, and sort of where we've been in the ever-changing landscape of FinTech and ever-changing landscape of regulation like which tools do you think are going to be most effective and most used, kind of moving forward.
Ashwin Vasan:They all sort of have to work together, right? I mean, I'm a strong believer. If you can't tell that supervision should be as level as possible for larger institutions, I think you get the maximum bang for your buck in terms of consumers being able to access good products. I think the challenge there is that the market's changed very quickly and there are big supervisory gaps. A number of institutions that touch consumers are simply not covered and may not be covered for a while. So I think I would start there.
Ashwin Vasan:I think enforcement has a really important role to play as well, because it's public and so it adds that extra level of deterrence. But I think it's probably most effective in places where I think you know whether, without getting into sort of the typical arguments over regulation by enforcement, I think it's just important that when you, when enforcement action is taken, that the public can really understand why right, and that you can kind of explain in plain language what the issue was and what the wrongdoing was that kind of led to a public enforcement action. So I think that is also part of it. You can't have supervision alone without enforcement, because the worst issues found in supervision need to go to enforcement so that the supervision itself works, otherwise you're just guaranteed of always being in a confidential loop. Without chartering authority, which the prudential regulators have they always have that implicit oh, we're just going to pull the charter.
Ashwin Vasan:Without that you need an enforcement, active enforcement tool to create that level of deterrence and incentive to kind of get the exams to be effective. And then again, like I mentioned before, those are then supplemented by sort of this kind of global intelligence of the consumer complaint function which most people assume will lead them nowhere and are quite surprised when magically they get a refund or some sort of restitution from the company because the companies know again that the complaint itself is something that the Bureau is watching and they want to stay out of that public enforcement action. So I think those tools all work really well together, right, and I think the challenge sometimes is just the market moves so fast that you also have to make sure that you're prioritizing the areas that you think are also those of emerging risk. But I think those tools all work together. And then on the other side you've got the policymaking arm, which we haven't touched. But I mean, that's sort of different and looking longer term at what those rules of the road are that you're trying to enforce.
Ian Moloney:That makes a lot of sense and just kind of drilling in a little bit. You had mentioned the consumer complaints database a couple of times and so you know, I know that the current administration has kind of pulled back from it or tried to pull back from usage of consumer complaints, and then the previous administration seemed to use consumer complaints quite a bit. And so do you see any sort of need for reform or changes to how consumer complaints are used within the supervisory function or within the enforcement function?
Ashwin Vasan:Yeah, I mean, I think so. You know the. It's funny the. You know, the first time I was there, like there was a lot of oversight and concern simply about making the narratives and the complaints public, because I think the talking point then was that these are unverified complaints and you know it's basically kind of like, and I think like that is then was that these are unverified complaints and you know it's basically kind of like, and I think like that is sort of toned down. I think people have sort of realized that, like, if you start reading these narratives, I mean there, yes, some people do not have a legal issue and really are just never going to be happy for sure, but a lot of people have legitimate questions about our concerns of how they were treated and the product and service and whether it was marketing around it or, you know, getting their fees refunded or getting their kind of legal rights vindicated.
Ashwin Vasan:So I think there are very real issues all through the complaint database. You know, I think one of the challenges with it, though, is that, you know, I think, I think, ian, I think, maybe, if I were to kind of pick something, I think there are some times when I think, even in the Bureau, it's easy to sort of. You know, when does anecdotes become anecdote, become data kind of situation? Right, I'm not really sure how you design guardrails around that, because sometimes those one complaint is a canary in the coal mine and I think you do want to investigate. Um, but I do think, in general, like the, the, the flow of the information happens so fast that I think that the, like you, realistically seeing real breakages in in trend lines, should tell you something, as well as consistently high levels of complaints that suggest both a broad touch by those companies and an inability to not resolve it Right. And so I think there is sort of for me that's always a North Star, and in fact, sometimes I think even you know, look, this is a bureau, is an organization like all others. You sort of get a theory and you want to run it down, but even then I don't think, like you know, I'd love to.
Ashwin Vasan:You know, congress, for example, you know, could could use their oversight hearings to sort of take their own look at the consumer complaint database and say, hey look, we noticed that these are the top 10 things based on our analysis. These are the companies that are complaining about. What are you doing about that? I think that's a better accountability mechanism to make sure that, like with the limited resources that the Bureau does have, that it's actually focused on the things that the public is constantly complaining about. You know, because I think it's very easy in the moment to you can sort of again there's no, there's no perfect answer here, like I don't want to say that you should only prioritize on that. Internally to the Bureau, they prioritize on a number of factors, that being one of them, but I think it's an important kind of North Star it always drew back to.
Rachel Morrissey:Okay. So we know that there's just been a ton of turmoil around politically around the CFPB always, but lately it's really intensified. There's been a lot of questions around it. Most people that I talk to in DC are fairly confident it will just continue to exist in some form. But we do know that Jonathan McKernan has been nominated. Has he been confirmed yet for CFPB director? Yeah, I didn't know that. It happened last week. You can tell I'm trying to pay attention, but things were moving really fast and I know that we've had a lot of different things going around the nature of what they think he or the direction the CFPB is going to do. So I would be curious as to your take, as to what you're anticipating from his leadership at the CFPB and what you think how these tools are going to be utilized by the next iteration of the CFPB.
Ashwin Vasan:You've asked me to forecast a I am a quarter of the trump administration.
Rachel Morrissey:This is a I am asking you to forecast, but in the nicest way possible, just just, just on the so let's, let's, let's, let's, look I.
Ashwin Vasan:So there are a few strands of philosophy or DNA here to mix metaphors that I think will sort of intertwine in some way to create the Bureau of the next few years. So I think the first is that McKernan, by all accounts, is a thoughtful person. He, he's a lawyer, he served on the fdic board, he served on senate banking, he's been a policy analyst, uh, look I. I think he's going to be keen, to my senses, implement the law. Uh, that is in title 10. Uh, my, my sense also is he is probably, seems, a person who actually wants to do things, not undo things, and there's a lot to do at the Bureau.
Ashwin Vasan:Even if you are a Republican, right, I think, if you have most stakeholders, see value in the open banking 1033 rule. There's a lot of details around it that need to be finalized, cleaned up, and the implementation of industry needs to be sort of supported. Implementation of industry needs to be sort of supported. You know, I think you have certain statutory mandates around. You know 1071 rulemaking obviously being challenged in court, that small business data collection, but you can shape it in a way that you think is truer to the statute and again get us past that. You know, and the enumerated laws. You take Reg E, reg Z, look, I mean these are laws that really haven't changed a lot given the speed of technical change, and I think could both benefit from sort of a comprehensive look that involves all stakeholders to sort of make some sort of changes that may sort of make more sense for innovations going forward. So I mean I haven't done this exercise, but if I were to say I'm, you know, a Republican appointee of the, a Republican director of the CFPB, I mean I think you could very quickly fill up your dance card right With things that are sort of intended to use the Bureau's tool as Congress Bureau's tools as Congress wrote them in a thoughtful way, and you will stay busy. And, by the way, there's plenty of fraudsters and scammers out there. You could use the enforcement tool a lot. You can think about supervision and again the issue of the level playing field we talked about. You can stay busy and, I think, get a lot of really good and important work done, and there are a lot of rules that don't make sense and you could also remove some of those rules if you wanted.
Ashwin Vasan:So that's that kind of one thread and I think the challenge is that back to your original question, rachel is that sort of people's kind of default reaction, for the CFPB is very much now in an extreme camp and I think you know some of that is just its origin, some of that is the actions that different administrations have taken that have kind of frustrated different stakeholders and so everyone's sort of in a camp right now with the Bureau. And you know that I think probably shows up most clearly to current OMB leadership, who you know. I think one will have some level of oversight of the Bureau going forward as well as the administration generally. So you know, so I think you have kind of this, just kind of for lack of a better word you've got a doge and OMB just like let's just reduce the size of it because we're just trying to cut without thinking about what it could be done for, what it could be used for. So I think you'll have some of that show up.
Ashwin Vasan:I think that regardless of who's running the agency so McKernan gets confirmed I still think there's going to be a very strong downsizing push for a while and I think that's just a global thing. We're seeing it across government tension with some of these things because it's hard to do all the stuff you need to do with that downsizing push. And just for context for everyone, I mean Bureau is like 1500 people and like every time I've been there you're like man I, you couldn't possibly get the stuff done that you want to get done because all of the things writing a 1033 rule and enforcement action, going and examining a big bank for compliance, like they take resources and they take you got to be buttoned up about the things and so you're really quite capacity constrained. So if you're gonna reduce that capacity, you're gonna reduce the output which is odd.
Ashwin Vasan:Even if you wanted to be entirely deregulatory, I would keep the entire output right. Personally, like if your entire goal was to sort of really like reshift all of the priorities for the Bureau, I would keep the entire capacity of it. So if you're also going to be shrinking in it, you're necessarily not going to be able to deregulate as fast and you're going to leave sort of stuck at a sort of higher level of regulation, which makes no sense to me. So I think these two things are going to be kind of at odds and I think they're going to. I don't know how, you know how. I don't know McKernan, I don't know how he will resolve that tension, but I think it'll be an interesting thing to watch.
Rachel Morrissey:Yeah, it is an interesting paradox, right, that you might undo your ability to affect some of the more lasting changes that you would want by handicapping your ability to get things done in a way that they've been done in the past.
Ashwin Vasan:And the place that is most stark is in rulemaking, where the last that we were quite active on rulemaking and a lot of the rules and guidance people don't like and they want them gone.
Ashwin Vasan:And yet undoing takes work.
Ashwin Vasan:I mean, I think that's the for people who haven't spent time in government.
Ashwin Vasan:I think that's the challenging thing doesn't always make sense.
Ashwin Vasan:It's like you think if you kind of you can't quite and there are a lot of reasons why, but especially on regulations, you can't just undo them and just say cancel and that's it and it's done, it's easy. And so if you kind of take away the people that would actually do that work, you're kind of stuck with the regulation you don't like and I think that's sort of a very basic point that I think for those of us who've worked in these agencies understand. And yet I still haven't seen the administration operationalize fully around that insight, like if they truly do want to create deregulation of burdensome regs, level playing field, more simplicity, a whole bunch of things that could help across the industry foster a easier regulatory regime that allows for innovation and competition. However you want to see it, the actions to demolish the CFP and dismantle it are literally the opposite of what I would do. I would actually instead make a plan for what you want to do, which just hasn't seemed to have happened yet, and I think that's the missing piece here.
Rachel Morrissey:It's almost like they're starving the other tools of supervision and enforcement and leaving leaving that intact and then that's not. It's not very complete or forward thinking. It leaves a lot of confusion left on the table. That's very interesting. I hadn't really considered that, but that's actually really really. I don't think that's something that everybody has really caught on to or thinks about wholly when it comes to how all of these things work in tandem when it comes to how all of these things work in tandem.
Ian Moloney:So kind of on that point, rachel, I think you know. One of the areas that has been really intriguing to me is kind of the rethink that the administration seems to be having, not only around regulation with, like, the executive orders, around regulatory freezes and things like that, but also the independence of, you know, financial regulators, particularly the CFPB, and so thinking about sort of that interplay with, like, for example, omb and CFPB you know, if McKiernan comes in and is, you know, fully, the director, how is that interplay with the Bureau and OMB going to operationalize from a regulatory standpoint?
Ashwin Vasan:Yeah, you know, I don't know because it's new and it's not entirely clear like to get into the weeds of some of it, like are they going to apply cost-benefit analysis? Are they going to do a review? Like OMB is quite capacity-limited, and so so again back to sort of do you want to get stuff done? And remember undoing is doing. If you want to do a lot of undoing, you need throughput, you need capacity and if you're going to put a layer on top of the capacity of the CFB, you're going to get a bottleneck and you're going to undo less as a result. You know, I think it depends on how that layer is also implemented. Some of it can be, look, if that layer is passing down sort of high-level principles and policy goals from the administration. We don't want an overdraft rule. Well, we don't want changes to Reg Z that allow these products to flourish. If you set high-level product goals like that and let the CFPB do what it needs to do. By the way, the staff there is ready to do any policy direction.
Ashwin Vasan:I think one of the other myths floating out here is that the staff is completely just there like deep state to drag their feet on everything which, frankly, I think they were quite active under Kraninger and they're active under Rohit and they're ready to do work as well, then I think you can get great outcomes. I think if you layer on sort of like process that is sort of grounded in distrust, right, like process that says I'm going to read every read, nothing goes out the front door without nine people signing it and OMB, it's got to go to the White House, whatever Then you're going to slow down your ability to do work, and so I think that's kind of the trade-off that I see in terms of that interface, in terms of, like, this kind of independence versus not independent, and like sometimes people start arguing over that. It never made a ton of sense to me For those of you who aren't sort of steeped in this, when the Bureau was created. It was created very clearly as well, as an independent agency with a single director right, and that term of that director was five years. And so Rich Cordray, the first confirmed director, didn't leave office until well into the first year of the Trump administration and was doing work like writing a payday rule that was clearly against the policy preferences of the Trump administration 1.0. And so in 2019, I believe there was a Supreme Court case that said that structure is unconstitutional. And, to be fair, that was the criticism of the Bureau for a long time that having a single director appointed across administrations, independent and can't be fired but for a sort of cause, was not an appropriate structure for the Constitution.
Ashwin Vasan:And I think, with that restriction on firing the director gone, the director of the CFPB is now always effectively going to be aligned with the administration as a person that the administration picks. And look, when we came in the second time with Director Chopra, that was the world we lived in and I think there's just a reality of what do you get for that? And I think people who work in compliance and financial services are frustrated a bit by the pendulum swing in terms of policy. But the reality is you can't be fireable by someone at will and not kind of always be worried about making that person or that group of people happy. I mean, that's just life right, and so you're just going to get a CFPB director that is sort of look, doing the work of the industry, doing the things that come up day to day. But there's going to be some part of it and this will be the controversial part, whether it's 20 or 40, whatever percent of the work of the industry doing the things that come up day to day.
Ashwin Vasan:But there's going to be some part of it and this will be the controversial part, whether it's 20 or 40, whatever percent of the work that is kind of done for the purpose of the administration's overall success and that's just. That's just. We have to sort of accept that and it's. And I don't really, I don't think you can have it both ways right. You can't have an executive branch that kind of implements policy the way they want and at the same time feel like there's sort of stability across administrations because there's nothing. That's it's all apolitical. It's very hard to, in my mind, square those two things, but it does create more volatility for sure. You know, I think I don't know how that gets resolved. Over time. Maybe the industry picks up more in terms of self-governance in certain ways.
Rachel Morrissey:Perhaps, maybe, but I think that there's just an inevitable, you know, it's just a reality, a political reality that I think everybody probably just needs to accept. I mean, I know that sounds kind of like.
Ashwin Vasan:And the courts play a role right, at least they do for now they play a role in sort of tempering that. So I mean yeah.
Rachel Morrissey:I mean there's ways to challenge what they're doing, like you said, through the courts. So I just think there is a political reality that some of the work of the CFPB is political reality. That some of the work of the CFPB is, I mean it changes under the vision of the administration it's in. So I think that's just. I think most people just accept that as a given.
Ashwin Vasan:But back to and I think that's totally right. But back to the point that you asked what is the next four years going to look like. I think that's the right. But back to the point that you asked what is the next four years going to look like. I think that's the challenge right. So if you have an administration that just has somehow gotten in their head that all the Bureau does is sort of go around debanking crypto founders which is completely not true Then you say just eliminate it, pull the plug and voila, all the crypto founders are not being debanked anymore. Problem solved.
Ashwin Vasan:Obviously, there's like a lot more complexity behind that and I think the challenge is you actually having an administration acting on that kind of philosophy. And going back to my bigger point, you know, then you're just hampering yourself, you're hampering all industry stakeholders from kind of working with the agency leadership to kind of create policies and like approaches to oversight that benefit the industry writ large. I mean that's what we should all be trying to do here and I think like the sort of kind of just simply kind of shutting down kind of energy does not really quite frustrate that. And there's a looming thing which Ian knows well, which we haven't come up with.
Ashwin Vasan:All of the Bureau's regs are enforceable by state AGs, right, and so you even see, right, the Bureau put out the statement on Friday saying you know, we're not going to enforce a component of the payday rule that went into effect and California AG right away said will be so, expect compliance. So you know, for all the folks in the audience who are thinking building FinTechs, you know the Bureau's rules, unfair, deceptive acts and practices, along with Reg E, reg Z, all of the rules. You know they're all enforceable by state attorney generals and so realistically, from a compliance standpoint, hopefully not a ton changes. You obviously don't have the energetic, democratic CFB enforcing the laws, but you're going to have that at the state level. And so you know, even if you kind of again pull the plug on the CFPB, you can't actually begin to shape that federal regulator in a way that works, in a way, and you sort of freeze everything in a moment in time, which is not a great answer for a space that's moving as quickly as ours.
Rachel Morrissey:Right, and it also emphasizes on the fact that you know undoing is doing you have to. You know undoing is doing you have to. You know you can't. Just you can't just pull the plug on it and think that that's undoing it, because there those are still in place and there's other actors that can enforce it. So it's not as simple as just we won't have it.
Ian Moloney:It's just not a real answer it, it's just not a real answer. Yeah, and also Rachel, I think it exemplifies that markets function best with subtle expectations, and also regulatory activities function best when you have a point of contact or a set of folks that you can go to and actually have real discussions, and so creating an environment where you have a dearth of both is going to be very confusing for market participants.
Rachel Morrissey:I used to think about this and I was like people would give me overly simplistic solution. When I worked in government, people would say, well, just do this, and it would be this very simple solution, and I'd be like, well, that's fine, but now you're creating a vacuum over here, and the one thing that never goes unfilled is a vacuum. You know nature of horse vacuum, and so this idea that you can just unravel something without properly unraveling it by just cutting through it, that's not really any kind of solution that makes long-term sense. So I think that's really unless you guys have something more to say, I think that that's actually kind of where we would leave this episode. What do you guys think? Is there something more you'd like to add? No, I mean look.
Ashwin Vasan:to end on a positive note, I will say look, it is still early in the administration. That's not a negative, no, it's still early in the administration. We hope to get a confirmed director. Someone in this seat tends to help a lot of this, because when there's no one in this seat you've got a lot of people with opinions on what needs to happen. And I think hopefully once you get that, and then McKernan can get some staff in, you can get the industry engagement and policy prioritization process that actually gets some things done over the next few years. And again to Ian's point hopefully they create things that are not just about swinging the pendulum but maybe about creating some stability for the longer run in important spaces.
Rachel Morrissey:Yeah, and once we have a new director in them, we will be able to kind of have more of a sense of where we're actually going, because we'll have more of a sense of priorities that that'll be more obvious to the industry, I think that's in everyone's best interest.
Ashwin Vasan:And some of it and back to the previous. I will guarantee you some of the things will sound like. There will be administration priorities, right, and the question is is it 80% or is it 30%? There'll be something probably about debanking and downsizing, whatever. But whatever is the flavor of the month, the question is what's the other component? Is there sort of meaningful work on open banking, on modernizing regs or, you know, monitoring emerging risks to consumers? That'll tell you a lot.
Rachel Morrissey:Yeah, well that, actually that's an excellent forecast. I know that when I asked you that question you were like, are you crazy? But hopefully it wasn't too painful and it was kind of fun for us all to kind of look at what should or could happen and what we're hoping for in the next couple of years. Ian, anything left to add before we close the episode?
Ian Moloney:I just think, Ashwin, you gave some really good points, a really nice forecast, like Rachel said, and the point around durability in regulation. That's really important for the market to function for sure.
Rachel Morrissey:Yeah, absolutely. Thank you guys so much.
Ashwin Vasan:Thank you.
Rachel Morrissey:Thank you for joining me as a co-host. Thank you, Ashwin, for joining me as a guest. We love this and to all of our listeners, thank you so much for joining us. Please make sure to leave a comment or a review of this and tell your friends. That's the way more people can find the show and we hope that with this series with the AFC, has really helped bring you guys some more understanding and some depth of understanding to what we're anticipating is going to happen in Washington DC this year. Have a great day.
