Throughout 2010, the Center for Financial Services Innovation (CFSI) engaged in a marketplace-wide research effort to understand how impending changes – in demographics, the macroeconomic environment, regulation and legislation, technology, cultural paradigms, and institutional dynamics – will affect the structure of the financial services industry. On the basis of the findings, CFSI developed a set of recommendations for how organizations focused on asset-building can craft strategies that leverage recent trends influencing the financial services industry. Ray Boshara of the New America Foundation, along with Ben Mangan of EARN, advised this project and spoke on a January 27th webinar at which the findings were released.
Boshara commented on the potential impact of the new Consumer Financial Protection Bureau (CFPB) on financial services policy, and how this impact intersects with CFSI’s recommendations for the asset-building field. He offered five potential impacts of the CFPB, noting that the agency is still young but is poised – provided it receives regular and substantive input from the field – to make significant improvements in the financial lives of low-income families. In his view, the CFPB will:
(a) level the playing field, establishing a national “floor” for consumer protections below which states could not fall;
(b) move toward more traditional and less innovative products, an observation in healthy tension with the further innovation CFSI sees in the financial services field;
(c) propose products and regulations that are good for both consumers and financial institutions – the “double bottom line” approach that is consistent with CFSI’s recommendations;
(d) set higher standards for both consumers and financial institutions to get in the wealth-building game – which, also mirroring CFSI’s recommendations, will probably result in costlier financial services and require potential asset owners to come to the table with more “skin in the game”; and
(e) lead to more financial capability, given that the CFPB’s mandate revolves around both financial products and consumer behavior.
Boshara closed with a call for the field to actively engage in the development of the CFPB – especially in generating and sharing research and data, which will drive the bureau’s rules and regulations.
Click here to watch the webinar.