It seems like we've been talking about the Consumer Financial Protection Bureau for the longest time, even before Dodd-Frank became law. The reality is that the CFPB has yet to even launch. But that will change July 21, when the entity officially starts as the latest financial services industry regulator. Elizabeth Warren, who may or may not lead the new bureau, said in a statement, "Starting on July 21, we will be a cop on the beat, examining banks and protecting consumers."

So what to make of the coming of an aggressive--we have every reason to believe Elizabeth Warren on this--new regulator that could easily overlap the activity of other regulators? It's way to early assess how effective the new bureau will be, but it does seem bent on hitting the ground running.   

Officially, it will have oversight of 111 large banks, with a mandate to look carefully at all bank products with an eye on the risks they pose to retail customers. "Examiners will look at the products and services the institution offers, with a focus on risk to consumers. The institution's compliance with requirements during the entire life cycle of the product or service will be reviewed, including how a product is developed, marketed, sold and managed." The CFPB supervision process will require "pre-examination scoping and review of information, data analysis, on-site examinations, and regular communication with regulated entities, prudential regulators, and as well as follow-up monitoring." For the biggest banks, this will be a year-round process. 

This is a broad mandate to be sure. And to pull it off, the new bureau will require heft. 

By the end of July, the CFPB supervision team alone will include more than 100 staff members, most of whom will transfer directly from the FDIC, the Federal Reserve System, the OCC and OTS. The CFPB says it will eventually have "several hundred examiners on board." You have to wonder if that will be enough. 

Does all this sound ominous?  Something like a compliance officer full employment act? 

Banks would be wise to staff up and make sure they have a formal compliance program in place. The sooner the better. Shortly after July 21, CFPB examiners and managers will start familiarizing themselves with regulated banks, will reach out to other federal and state agencies, and will finalize its plans to conduct formal examinations. 

You will be getting a call soon, if you are one of the 111 largest banks. You'll also get a formal letter introducing the CPFB. At some point, an Examination Manual will be posted on the CFPB web site, which is already up and running. Good luck. - Jim