Everyone it seems is focused on whether and when Elizabeth Warren will be named as the director of the new Consumer Financial Protection Bureau. Today, the reports are that she will not be named either a permanent or interim head, but rather just to install her as a special advisor at the Treasury Department.
The identity of the CPFB director is important, as that person will set the tone and priorities of the new agency, and lend legitimacy to its efforts.
Arguably, however, a more important and looming deadline is the designation by the Treasury Secretary of the date by which the functions of the CFPB are to be transferred from the Treasury Department, the various federal banking agencies, and the FTC (the so-called Designated Transfer Date). This designation is required to be made by the Dodd Frank Act by 60 days from the date of enactment of the Act or by this Sunday, September 19, 2010. The date itself is required to be a date between 180 days and 12 months from the Act’s enactment date, but can be extended by the Treasury Secretary to 18 months from the enactment date.
Designation of this date is important because it will become the inauguration date of the new agency. Existing regulations will come under the purview of the agency as of that date and new regulations can be issued and enforced by it as of that date. Thus, priorities will be set and the effectiveness of the CFPB in meeting those priorities will be measured as of that date.
There is some speculation that, if an interim director is named, or the nomination of a director is postponed, the Treasury Secretary will designate a later Designated Transfer Date, so as to allow the interim or named director time to organize the CPFB and set priorities. However, we do not know what actually is being contemplated as the Designated Transfer Date, and little has been written about it. The Act allows the Secretary to set a date and then change it, upon consultation with heads of the federal banking agencies and the FTC, the Secretary of HUD and the Director of the OMB.
Regardless, the Obama Administration can use this deadline to create some momentum about the CFPB that appears to have been somewhat lost amid the speculation as to its Director.