Posted: February 23rd, 2017
By: Anna-Bryce Flowe*| Staff Writer
As part of the Wake Forest Journal of Business and Intellectual Property’s Symposium this year on Banking Law, student Mark Huffman moderated a panel discussion on Consumer Banking. The panel consisted of two speakers, one a practicing attorney and the other an actor in the public sector. The panel discussed the success of the Consumer Financial Protection Bureau (“CFPB”), its failings, and the CFPB’s future in the weeks following President Trump’s taking office. The panel also took questions on litigation surrounding predatory lending and consumer protection lawsuits. Finally, the panel addressed Dodd Frank, the importance of state involvement in ensuring the vitality of the United States financial market, and how the efforts of the State are changing under a new administration.
Of particular interest to many attendees were the expected leadership changes to the CFPB in light of Congress’ efforts to oust the current director. One panelist made clear that although Congress may wish to restructure the organization, starting with its leadership, it would take a long time for such changes to occur. The question was raised as to whether the CFPB’s status as an independent agency would allow President Trump to simply replace the head of the agency. Although no definitive answer was given, one panelist suggested that the President’s priorities lie elsewhere, and that his power to replace does not necessarily equate with his willingness to replace at this time.
The panel also reviewed some of the ways in which the Dodd Frank Wall Street Reform and Consumer Protection Act (the “Act”) has impacted consumer protection in recent years. The Act, which was a response to the financial crises, put in place more stringent regulations that required banks to reduce risk and hold more capital. One panelist noted that because President Trump called for review of Dodd Frank just seven days before the Symposium, he was still hesitant to say how much of Dodd Frank would actually disappear. Indeed, the President went on record numerous times throughout his campaign discussing the need for banks to be able to lend more and worry less; still, according to the panelists, it will be interesting to see if he can actually hold this promise.
The issue was also raised as to whether rolling back pieces of Dodd Frank will lead to frivolous investing and large companies gaining too much power. To one panelist, Trump’s decision to unwind Dodd Frank would cause more chaos than good because many large investors lack the equity capable of surviving another financial crises. Although Dodd Frank may have curtailed smaller institutions from lending money to small actors, the Act has overall instilled a new viewpoint in all financial institutions that lending with caution may prevent misfortune in the future. Trumps announcement that he wanted a review, and likely repeal, of many of the Dodd Frank regulations suggests that there will be more flexibility in lending in the future and that the Volcker rule—a rule prohibiting banks from making speculative investments—will fall by the wayside. One panelist posited that these changes open the door for more billionaires and bankers to invest in the economy, but at what cost? Both panelists and attendees agreed that President Trump’s request was setting the stage for far more deconstruction of current laws in the months ahead. Dodd Frank, the structure of the CFPB, and the industry of consumer banking as a whole will definitely see change in the four years ahead. We are left watching, wondering, and waiting to see if these potential changes will cause another financial crises or allow the United States economy to flourish.
Anna-Bryce Flowe is a second year law student at Wake Forest University School of Law, where she is also a member of the Wake Forest Moot Court Board, Wake Forest AAJ Trial Team and Honor Council Treasurer. She holds a degree in Politics from New York University and worked for AT&T’s Premier Client Group, Corporate Sales before starting law school. Upon graduation, she plans to practice as a civil litigator, with an emphasis on business and international law.