A key provision of the Dodd-Frank Financial Reform Act is the creation of a Consumer Financial Protection Bureau (CFPB), established as an autonomous part of the Federal Reserve and tasked with regulating financial products and safeguarding consumers. Ironically, some challenges facing the new bureau are very similar to those faced by the very banks and financial institutions that will be regulated.
The bureau will not be entirely new; instead it will take over personnel, responsibilities, and resources from various existing government agencies-including the Fed, FTC and FDIC. Therefore, from an organizational perspective, the bureau's creation is akin to numerous mergers and acquisitions of various consumer protection departments. The global financial meltdown and the wave of consolidation that followed have illustrated examples of how to, and not to, maximize value, minimize cost and tackle governance issues when financial organizations are forced together. Elizabeth Warren has put reaching out to bankers high on her agenda, their lessons learned might be instructive to her. Another challenge that the CFPB shares with the companies it will regulate is the need for comprehensive and innovative data management strategies. Data volumes in commercial enterprises continue to grow exponentially, in some part due to increased financial regulatory requirements-which the Dodd-Frank Act may indeed exacerbate.
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