As the Consumer Financial Protection Bureau gears up to write one of its first major rules, it’s trying new things—including the kinds of tools associated with texting tweens.
The agency, created in the wake of the 2008 crash as a sort of consumer watchdog for the financial-services industry, has so far attracted public attention mostly through controversy over its leadership. Only recently has it started focusing on the everyday business of policing financial firms—most notably, at the moment, by overhauling the arcane rules that govern the mortgage-servicing industry.
The CFPB is also trying to solve a problem that’s long bedeviled consumer advocacy groups: getting individuals to chime in on rules that affect big industries like insurance companies and banks. Their experimental solution, this time around, is Regulation Room, an Internet chat room run by Cornell University where the public can air opinions—sometimes with hurried grammar and all-caps script of the Facebook generation—as well as ask questions and “Like” things they see.
Getting the general public involved is more than just a trending topic. Most federal regulations are required by law to be subject to periods of public comment, when those affected are allowed to throw in their two cents. In practice, the vast majority of input comes from lawyers working for big corporations and trade groups with a financial stake in the outcome. “It’s called ‘public,’” says Barry Zigas, director of housing policy at the Consumer Federation of America. “But what’s developed is a class of professionals who specialize in analyzing and commenting on these rules.”
The result, critics say, is a regulatory process that gives industries a thumb on the scale. As their comments shape arcane but critically important details of controversial laws, they give rise to the changes that those outside the Beltway recognize as loopholes.
Regulation Room, which has also run a pilot program with the Department of Transportation, aims to break down conversations over key regulations into plain-English questions–to which the public can post answers. Responses are anonymous to readers. Unlike the regular rule-making process, in which stakeholders post long letters that often resemble position papers, Regulation Room is designed for give and take, with a moderator writing follow-up questions.
Buttons allow readers to “Endorse” and “Share” things they like, options that resemble features on Facebook and Twitter. Since they went live on the site last Friday, the proposed mortgage-servicing rules have received about 110 comments—not much compared with a “Call Me Maybe” lip dub, but still a significant amount of traffic.
In some comments, posters share stories of frustration with the way things have been done in the past: “Hearing someone tell you over the phone that they can’t find a document that you delivered over and over again is about the most frustrating and alienating and helpless shady experience I had while trying to short sale my home,” wrote someone with the screen name “arron banner.”
Others are blunt about rule-making minutiae that carry the whiff of lawyering. On a proposed 45-business-day window for servicers to furnish account information: “The CFPB has been watching too much Mad Men and is attempting to regulate a bank in 1960,” said “Versability.”
While the tone of conversation is generally civil, the rhetorical conventions reflect the age of the Web. One post about how borrowers should ask for and get information consisted of a long list of questions, each of which began, “Why is it. “ Another underlined its argument by noting, “This is CAPITALISM.”
The new effort doesn’t require the industry’s insiders to mix with the hoi polloi. The new comment system will supplement the regular process of posting letters on Regulations.gov, the federal government’s official site. When the comment period closes in mid-October, Regulation Room will summarize the various strands into a memo, which will itself be submitted to Register.
Site designers say this extra step is necessary, given the back-and-forth nature of the discussion and (they hope) the volume of comments. Organizers say the chat-room comments will be on equal legal footing with traditional letters, although it remains to be seen how much the regulators, lawmakers and judges who ultimately set down the rules will look at them.
Even the CFPB admits the effort faces an uphill battle. Asked if the idea was ultimately far-fetched, a CFPB spokeswoman emphasized that the site is just one prong of its outreach program, which also includes town hall meetings in hard-hit areas like Detroit and more traditional meetings with consumer groups and small businesses.
And, of course, as most insiders will admit, comment periods are at least as much about politics as fact-finding. Consumer groups struggle to promote changes that they say will have benefits to the public; businesses claim the same changes will raise prices and cut jobs.
“The more comments, the better,” says Veronica Raphael, director of foreclosure prevention at Westchester Residential Opportunities, a group that helps minorities navigate the housing market in neighborhoods near New York City. “It gives us ammunition.”