Academic Research Council

The CFPB has published a Federal Register notice announcing that a meeting of its Academic Research Council (ARC) will be held in Washington, D.C. on May 2, 2018.

Under former Director Cordray’s leadership, behavioral economics, rather than neo-classical or traditional economics, played a central role in the CFPB’s regulatory and enforcement agenda.  Behavioral economics posits that consumers are not rational decision makers and instead have certain frailties or weaknesses that lead them to make decisions that they would later recognize as not in their own best interest.

In addition to hiring behavioral economists, the CFPB has previously appointed behavioral economists to the ARC.  Its prior notices inviting applications for ARC membership specifically indicated that the CFPB was looking for “academics with strong methodological and technical expertise in structural or reduced form econometrics, modeling of consumer decision-making, behavioral economics, experimental economics, program evaluation, psychology, and financial choice.”  The CFPB had not invited any new applications for ARC membership since Mr. Mulvaney was designated Acting Director by President Trump.

The CFPB’s Federal Register notice states that at the May 2 meeting, the ARC will discuss “methodology and direction for consumer finance research at the Bureau.”  Perhaps the role that behavioral economics will continue to play at the CFPB under the leadership of Acting Director Mulvaney or a permanent Director appointed by President Trump will be part of that discussion.

 

The CFPB has published a notice in the Federal Register announcing that it is seeking applications from persons interested in becoming members of its Academic Research Council (ARC). Appointments to the ARC are typically for four years.

The CFPB seeks “tenured academics with a world class research and publishing background, and a record of public or academic service.”  Applicants should be “prominent experts who are recognized for their professional achievement and objectivity in economics, statistics, psychology or behavioral science.”  In particular, the CFPB is looking for “academics with strong methodological and technical expertise in structural or reduced form econometrics, modeling of consumer decision-making, behavioral economics, experimental economics, program evaluation, psychology, and financial choice.”

The CFPB states that it has a special interest in ensuring that women, minority groups and individuals with disabilities are adequately represented on the ARC.  It further states that because it also has a special interest in establishing an ARC that is represented by diverse viewpoints and constituencies, the CFPB encourages applications for ARC membership from candidates who represent U.S. geographic diversity and the interests of special populations identified in Dodd-Frank such as servicemembers and older Americans.

Applicants for the ARC positions must submit a complete application package on or before February 14, 2017 to be considered for membership.  (The application will be available online on January 16, 2017.)  The CFPB expects to announce new ARC members in April 2017.

The CFPB has announced the appointment of new members to its Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council, and Academic Research Council.  In January 2016, the CFPB published a notice in the Federal Register soliciting applications from individuals interested in becoming members.

According to the CFPB, the new members “include experts in consumer protection, financial services, community development, fair lending, civil rights, consumer financial products or services, representatives of community banks and credit unions, and scholars with relevant methodological and subject matter experience.”  New Consumer Advisory Board and Academic Research Council members will serve three-year terms and new Community Bank and Credit Union Advisory Councils members will serve two-year terms.

The new members are as follows:

Consumer Advisory Board Members

  • Lynn Drysdale, Managing Attorney, Consumer Law Unit, Jacksonville Area Legal Aid, Inc., Jacksonville, FL
  • Paulina Gonzalez, Executive Director, California Reinvestment Coalition, San Francisco, CA
  • William Howle, Head of U.S. Retail Bank, Citibank, New York, NY
  • Ruhi Maker, Senior Attorney, Empire Justice Center, Rochester, NY
  • Arjan Schutte, Founder and Managing Partner, Core Innovation Capital, Los Angeles, CA
  • Lisa Servon, Professor, The New School, New York University, New York, NY
  • Raul Vazquez, Chief Executive Officer, Oportun, Redwood City, CA
  • James M. Wehmann, Executive Vice President, Scores for Fair Isaac Corporation, Roseville, MN
  • Chi Chi Wu, Staff Attorney, National Consumer Law Center, Boston, MA

Community Bank Advisory Council Members

  • Melissa A. Ballard, Vice President and Director, First Iowa State Bank, Albia, IA
  • Menzo D. Case, President and Chief Executive Officer, Generations Bank, Seneca Falls, NY
  • Linda Feighery, Vice President and Community Reinvestment Act /Fair Lending Officer for Citywide Banks, Denver, CO
  • Brenda K. Hughes, Senior Vice President and Director of Mortgage and Retail Lending, First Federal Savings Bank of Twin Falls, Twin Falls, IA
  • Dion Kidd Johnson, President, Chief Operating Officer and Chief Risk Officer, Western Bank, Alamogordo, NM
  • Cal Ratcliff, Senior Vice President, Chief Compliance Officer, Bank of North Carolina, High Point, NC
  • Trent Sorbe, President, Central Payments Division, Central Bank of Kansas City, Kansas City, MO

Credit Union Advisory Council Members

  • Faith Lleva Anderson, Senior Vice President and General Counsel, American  Airlines Federal Credit Union, Fort Worth, TX
  • Daniel Berry, Chief Executive Officer, Duke University Federal Credit Union, Durham, NC
  • Patrick F. Harrigan, Chief Risk Officer and General Counsel, Service Credit Union, Portsmouth, NH
  • Ricardo Ledezma, Corporate Compliance Assurance Manager, San Antonio Federal Credit Union, San Antonio, TX
  • Sarah Marshall, Chief Executive Officer, North Side Community Federal Credit Union, Chicago, IL
  • Dayatra T. Matthews, Senior Vice President of Legal & Compliance, Local Government Federal Credit Union, Raleigh, NC
  • Amy Nelson, Chief Executive Officer, Point West Credit Union, Portland, OR
  • Raynor Zillgitt, Vice President Risk Management and General Counsel, Lake Trust Credit Union, Brighton, MI

Academic Research Council Members

  • Ian Ayres, William K. Townsend Professor, Yale Law School, New Haven, CT
  • Brigitte Madrian, Professor, Harvard University, Cambridge, MA

Both Professor Madrian and Professor Ayres hold a Ph.D. in economics.  According to her profile on the website of Harvard’s Kennedy School of Government, Professor Madrian’s current research is focused on “behavioral economics and household finance, with a particular focus on household savings and investment behavior.”  Professor Madrian’s research focus fits within the CFPB’s orientation towards the use of behavioral economics, an economic theory that has been playing a central role in the CFPB’s regulatory and enforcement agenda.  The CFPB seems reluctant to include neo-classical economists who do not subscribe to behavioral economics on its Academic Research Council.

Director Cordray has described Professor Ayres as having “deep experience in analyzing discrimination.  He also had been engaged in careful study of economic and legal issues related to consumer finance.”  Based on our review of Professor Ayres’ CV on the Yale Law School website, it appears he has written extensively on issues relating to gender and race discrimination, including discrimination in auto sales.  A 2014 article in the Michigan Journal of Race and Law described Professor Ayres as having spent much of his career “empirically documenting race and gender discrimination, including in the context of consumer purchasing.”

The CFPB has announced that there will be meeting of its Academic Research Council on May 20, 2016 in Washington, D.C. to discuss methodologies for CFPB research.

The agenda indicates that after welcomes from Director Cordray and Ron Borzekowski, a CFPB Assistant Director, there will be a subcommittee report and discussion followed by a presentation and discussion on the topic “Restoring Rational Choice: The Challenge of Consumer Financial Regulation.”

 

 

 

The CFPB has published notices in the Federal Register announcing that it is seeking applications from persons interested in becoming members of its Academic Research Council (ARC), Consumer Advisory Board (Board), Community Bank Advisory Council (CBAC), or Credit Union Advisory Council (CUAC). Appointments to the ARC and Board are typically for three years and appointments to the CBAC and CUAC are typically for two years.

The ARC currently has six members and the CFPB is seeking to fill three additional seats.  The CFPB seeks “tenured academics with a world class research and publishing background, and a record of public or academic service.”  Applicants should be “prominent experts who are recognized for their professional achievement and objectivity in economics, statistics, psychology or behavioral science.”  In particular, the CFPB is looking for “academics with strong methodological and technical expertise in structural or reduced form econometrics, modeling of consumer decision-making, behavioral economics, experimental economics, program evaluation, psychology, and financial choice.”

Membership in the Board is open to persons with expertise in consumer protection, financial services, community development, fair lending and civil rights, and consumer financial products or services, and representatives of depository institutions that primarily serve underserved communities, and representatives of communities that have been significantly impacted by higher-priced mortgage loans.  The notice indicates that “expertise” depends, in part, on “the constituency, interests, or industry sector the nominee seeks to represent, and where appropriate shall include significant expertise as a direct service provider to consumers.”  Dodd-Frank directs the CFPB to seek Board members who represent the interests of industry and consumers.

Membership in the CBAC is open to individuals (1) with similar expertise or who represent community banks that primarily serve underserved communities or communities that have been significantly impacted by higher-priced mortgage loans, and (2) who are current employees of banks and thrifts with total assets of $10 billion or less that are not affiliates of depository institutions or credit unions with total assets of more than $10 billion.

Membership in the CUAC is also open to individuals (1) with similar expertise or who represent credit unions that primarily serve underserved communities or communities that have been significantly impacted by higher-priced mortgage loans,  and (2) who are current employees of credit unions with total assets of $10 billion or less that are not affiliates of depository institutions or credit unions with total assets of more than $10 billion.

The CFPB states that it has a special interest in ensuring that women, minority groups and individuals with disabilities are adequately represented in all of the advisory groups.  It further states that because it also has a special interest in establishing a Board that is represented by diverse viewpoints and constituencies, the CFPB encourages applications for Board membership from candidates who represent U.S. geographic diversity and the interests of special populations identified in Dodd-Frank such as servicemembers and older Americans.

Applicants for the ARC positions must submit a complete application package on or before February 12, 2016 to be considered for membership.  The CFPB expects to announce new ARC members in April 2016.  Applicants for the other positions must submit a complete application package on or before February 29, 2016 to be considered for membership.  The CFPB expects to announce new Board, CBAC and CUAC members in August 2016.

The CFPB’s Academic Research Council will hold its annual meeting in Washington, D.C. on May 7, 2015.  According to the agenda and event flyer, the Council will discuss trends in consumer finance research, the activities of consumer financial protection agencies in other countries, and recent publications produced by the CFPB’s Office of Research.

The event is open to the public and requires an RSVP.

The CFPB has announced that it is ending its closed-door meeting policy for its four advisory groups and will open the meetings to the public.  Those groups consist of the Community Bank Advisory Council, the Credit Union Advisory Council, the Academic Research Council, and the Consumer Advisory Board. 

The CFPB has stated that the change is intended “to provide more transparency and to be responsive to the requests [for more openness] we’ve received.”  We have long been critics of the lack of transparency surrounding the CFPB’s advisory groups.  In calling for a change in the CFPB’s policy, we were joined by industry as well as by members of the House Financial Services Committee. 

The CFPB also announced that it will implement the new policy beginning with the meeting of its Consumer Advisory Board scheduled for June 18, 2014 in Reno, Nevada.  According to the CFPB, starting with that meeting, the public may attend or watch a livestream of its advisory groups’ meetings.  At the June 18 meeting, Director Cordray will be discussing “trends and themes in the mortgage market and new resources available to consumers looking to buy a home.”

 

 

 

The CFPB has published a notice announcing that it is seeking to fill two vacancies on its Academic Research Council.  The Council is an advisory body that provides the CFPB’s Office of Research with advice and feedback on its research work.   

The notice indicates that the CFPB is looking for “tenured academics, with a world class research and publishing background, and a record of public or academic service.”  More specifically, the CFPB wants academics who are “prominent experts who are recognized for their professional achievements and objectivity in economics, statistics, psychology or behavioral science. In particular, academics with strong methodological and technical expertise in structural or reduced form econometrics, modeling of consumer decision-making, behavioral economics, experimental economics, program evaluation, psychology, and financial choice.” 

The Council has no more than eight members.  There are currently six Council members and the CFPB would like to fill two additional Council seats in 2014.  The CFPB will consider complete application packets that it receives on or before February 11, 2014. 

Based on the summaries posted on the CFPB’s website, the Council has only met twice since its creation.  An inaugural meeting was held in July 2012 and a second meeting was held in December 2012 that focused on small dollar lending and current standard approaches to disclosure development and testing. 

According to the notice, the CFPB expects to announce the new members this March. We have previously voiced concerns about the lack of transparency surrounding the Council’s creation and the CFPB’s decision not to seek public input on the initial Council appointments.  Unfortunately, it appears that the CFPB intends to continue making Council appointments without public input.

 

I have previously voiced concerns about the CFPB’s Academic Research Council, particularly the lack of transparency surrounding the Council’s creation and the CFPB’s decision not to seek public input on appointments to the Council.  My concerns about the Council were heightened by a report appearing earlier this week in the New York Times that the Obama campaign received research-based ideas about how to “get out the vote” from a group of behavioral scientists.  According to the report, one of those scientists was Richard H. Thaler, a professor of behavioral science and economics at the University of Chicago’s business school. (The report indicated that the Obama campaign would neither confirm or deny a relationship with the scientists.) 

Professor Thaler is also one of the six professors appointed to the Academic Research Council and, as we have noted, behavioral economics are playing a central role in the CFPB’s regulatory and enforcement agenda.  We have also observed that the Council is likely to be very influential in connection with empirical studies being conducted by the CFPB regarding a wide array of products (e.g., payday lending) and practices (e.g. arbitration).  Professor Thaler’s reported involvement in the Obama campaign raises new questions about the CFPB’s ability to maintain its independence from the Obama administration.