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Project on Government Oversight

Suggestions for How to Make the Consumer Financial Protection Bureau a Prototype for a More Open, Effective, and Accountable Government

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April 19, 2011

In April 2011, POGO and other open government advocates met with Professor Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau (CFPB), to discuss how the brand new CFPB can meet her call for it to be “a new kind of agency.” To follow up, we’ve put together some of the ideas we discussed with Professor and more. Here’s our draft guide for how to make the Consumer Financial Protection Bureau a prototype for more open, effective, and accountable government.

Open Government Culture and Infrastructure

It is important to create an internal open government culture and a permanent infrastructure to support it, as well as to connect with the burgeoning government-wide network supporting open gov.

  • Create an Open Gov Team at the Bureau: Critical to success in open government is having the right mix of people working together internally in a structured way to ensure leadership buy-in, as well as quality implementation and progress. Many agencies have formalized cross-departmental and leadership teams to meet the requirements of the Open Government Directive, including creating and implementing Open Government Plans. The Bureau already has a great team working on openness, but making that team permanent would be an excellent step.

  • Participate Actively in the Interagency Open Government Working Group: Organized by the White House and OMB, this working group consists of representatives from the Open Government Teams at each agency. Regular meetings and communications have allowed these participants to collaborate and share best practices.

  • Issue and Implement an Open Government Plan: Though the CFPB is not specifically required by the Open Government Directive to issue an Open Government Plan, doing so would help to focus the efforts of the Bureau, allowing for specific input from other open gov colleagues in the White House, Working Group, and stakeholders, in addition to providing the Bureau with a way to measure progress. Other agencies that were not specifically required to create these plans, such as the Merit Systems Protection Board, did so anyway.

Freedom of Information

We recognize the challenges facing the Bureau as it strives to have more openness to better serve consumers and investors when the norm for federal financial regulators has been to provide regulated entities with excessive and unnecessary confidentiality. In the public interest and in service of the Bureau's mission to protect consumers, we hope it will work to change the secrecy status quo.

  • Change the Secrecy Status Quo: POGO has long been concerned with the unnecessary secrecy at the SEC and other financial regulators.  The SEC also sought a blanket FOIA exemption, which was enacted in Dodd-Frank, and later repealed. They claimed to need such an exemption to encourage regulated entities to turn over their records. However, some regulated entities will always resist voluntarily sharing information with regulators, no matter how much confidentiality is promised (see POGO's testimony on secrecy at the SEC). The Bureau should reject excessive confidentiality, and instead should create a new balance in the collecting and the sharing of information to appropriately protect confidential commercial and personal records and serve the public.

  • Post Most Information Proactively: The Bureau should strive to make most FOIA requests irrelevant by posting most agency information online. When thinking about the kind of information the government should be releasing, we like what ProPublica's Jennifer LaFleur had to say: “Information on anything that's inspected, spent, enforced, or licensed.” POGO agrees this is information that the public wants, but also would add that any information that leads to a more ethical, efficient, and effective government, as well as information to hold the government accountable is of high value. This includes the enforcement data and visitor logs below, but also things like contact information for all staff, consultants, and advisors. As with Professor Warren’s calendar, CFPB should create a process by which privacy and other FOIA exemptions are part of the regular processing of documents for proactive posting.

  • Bring FOIA into the Digital Age: We understand the Bureau is already working on ways to bring FOIA into the digital age, which is extremely encouraging. Requesting information via FOIA should be automated and the Bureau should make available online in a common, searchable, sortable database all FOIA logs, make it possible to track requests online, and ensure that all responses and related data and documents are publicly available online. The City of Chicago is one example of posting FOIA logs online.

  • Limit the Use of Exemptions: Federal regulators tend to overuse Freedom of Information Act (FOIA) Exemption 4, which protects “trade secrets and confidential or financial information” and Exemption 8 to allow withholding for “the use of an agency responsible for the regulation or supervision of financial institutions.” The FOIA office should be instructed to limit the use of exemptions, particularly Exemption 2, 4, 5, and 8. If the CFPB seeks special statutory exemptions to FOIA, it is important to consult with the congressional committees of jurisdiction and the stakeholder community to ensure the requests are warranted, narrow, and in balance with the public’s right to know.

  • Ensure the FOIA Office Has Adequate Resources: The new responsibilities of proactive posting will no doubt require more upfront investment for long-term savings.

 

Enforcement Data

The Bureau should explore ways to “crowdsource” enforcement and compliance. The aim here is not only to hold the Bureau accountable, but also to improve information for effective enforcement and allow consumers to participate and receive the information they need.

  • Automate Complaints and Create an Online Database: Allowing the Bureau’s investigators, the public, regulated entities, and other stakeholders to track, sort, search, and download complaints received and addressed by the Bureau will greatly enhance the Bureau’s transparency and effectiveness as a regulator. One example worth examining is the new Consumer Product Safety Commission’s (CPSC’s) complaint database. Perhaps the rulemaking for that database could be helpful as the Bureau thinks about how to collect, organize and present consumer complaints and the Bureau’s actions.
  • Use a Uniform, Standard Data Format: The Bureau should adopt a single data standard for collection, analysis, and dissemination of business and financial information. In the last Congress, legislation was proposed that would have required standardization of all information required to be reported to the federal financial regulators. This data would be a widely accepted, open source, nonproprietary, searchable, computer-readable format for business and financial data. We hope that the Government Information Transparency Act (H.R. 2392/111th) will be reintroduced by Rep. Darrell Issa (R-CA) and enacted in the Congress, but meanwhile, the CFPB should lead the way.
  • Share Results of Investigations and Enforcement: This information should be online and easily searchable, sortable and downloadable. One useful example might be the Department of Labor (DOL) Searchable Enforcement Database, which hosts enforcement data collected by five DOL agencies. Users can search for enforcement data on mining, workplace safety, and more. For more information, please see our blog post, “Open Government Success Stories: Labor’s Online Enforcement Database.

Reporting Lobbyists and Visitors

Professor Warren has stated the importance of “making public to the advocates, the lawyers, to the stakeholders who it is who comes and talks to this agency. And making public that this agency from the beginning belongs to the people who built it...and that they have a seat at the table in every part of the decision-making process.” We are very encouraged by this pledge, as we believe the public has a right to know who is seeking to influence the Bureau and why, particularly when it comes to policy and federal funding.

  • Disclose Meetings on the Transition and Dodd-Frank Implementation: Professor Warren’s calendar already includes some of meetings, but we’d like to see it posted on the website when other staff meet with outside parties about the transition and setup of the Bureau and about implementation of other aspects of Dodd-Frank. Other regulators like the CFTC have been doing this. This would only be necessary until the visitor logs are rolled out (see below).

  • Register Visitors: Every visitor to the CFPB should have to register (or preregister) to receive a unique ID for tracking for possible multiple visits. Information gathered here could include ways of identifying existing bids, contracts or grants, and those associated unique identifiers, such as a DUNS number.

  • Maintain Electronic Visitor Logs Online: This database should follow the White House’s example by making visitor logs searchable, sortable, and downloadable, but could expand the usefulness by capturing high value information about who is visiting the CFPB and why. However, the White House logs, or WAVES, have not been consistently accurate and have lacked critical details. The Bureau should tie the following information to each individual’s unique ID: organizations represented, name of person(s) being visited, purpose of the visit, programs or policies related to the visit, and federal funds such as contracts that are sought (stated explicitly)—similar to the Recovery Act requirements, except the Bureau should go further and provide more complete information and make it available in a database as described above, and not just in .pdf format.

Whistleblower Protections and Compliance

A culture of openness and accountability begins with the Bureau’s employees. Information, guidance, and safe channels are needed to discourage retaliation and encourage employees to come forward when they witness waste, fraud, and abuse.

  • Create a Culture to Encourage Disclosures of Wrongdoing: Professor Warren should officially communicate to all employees that the agency will provide safe channels and the fullest protections under the law for disclosures of wrongdoing and that any discrimination or retaliation for such disclosures will not be tolerated.

  • Provide Guidance to Whistleblowers: In addition to No FEAR Act information, there should be clear guidance on how CFPB employees can anonymously or otherwise make protected disclosures to the Treasury Inspector General, Office of Special Counsel, or Congress.

  • Seek certification from the Office of Special Counsel: The OSC certifies agencies that volunteer for review on compliance with informing employees about their rights under the Whistleblower Protection Enhancement Act and other civil service laws. The Bureau should seek certification, and go further to be a model for empowering employees to improve the agency.

Ethics

There are several ethics laws that apply government-wide. However, these do not go far enough to cover all employees and sufficiently reduce conflicts of interest. The Bureau can ensure it will be more ethical by having tougher rules and being more transparent.

  • Ensure the Agency has Robust Ethics Rules: The CFPB should identify areas for improvement over existing ethics law, including application of conflict of interest rules and cooling-off periods to every employee—top to bottom—and expanding the potential conflicts of interests that should be reported and disclosed to the public.

  • Post Ethics Information Online: Though financial disclosure forms (SF-278s) are publicly available upon request, the CFPB should proactively post these online. All ethics waivers, recusals, and other determinations also should be made available online, as should any reviews of the CFPB by the Office of Government Ethics, and any Inspector General reports involving the CFPB should be easily accessible through the Bureau’s website.

  • Maintain a Revolving Door Database: There have been problems with overly cozy relationships between regulators and the regulated throughout government. Here again, the government-wide restrictions for working on matters regarding former employers for some employees who come to work for the federal government are not sufficient, and information about work regarding federal employees’ former employers is not adequately disclosed. The Securities and Exchange Commission and other regulators require former employees to report to the agency when they work for or are retained by a regulated entity within two years after leaving office. However, because this is not made publicly available, its usefulness is limited.

  • Hire a Full-Time Ethics Officer: At many agencies, the ethics officer is only part-time, and sometimes serves as a rubber stamp for questionable ethics. The CFPB ethics officer should have sufficient independence and training to ensure that the highest ethical standards are met.

Spending Transparency and Accountability

How the CFPB spends money and hires outside help will be of great interest to stakeholders. Though there are some places for posting some of this information such as USASpending.gov, the CFPB can take additional steps to become more transparent in spending.

  • Create a one-stop shop for government officials and the public to view all spending information: This includes posting online to a searchable, public database actual copies of each contract or award document, delivery or task order, modification, amendment, grant, lease, and other transaction agreement.

  • Reverse the philosophy of quantity over quality: Acquisition is now about speed, making competition a burden—a recipe for waste, fraud, and abuse. Cost comparisons should be conducted prior to the award of service contracts to ensure the contractor rates are not unjustifiably higher than the total cost to employ government employees.

Federal Advisory Committees and Boards

The CFPB will undoubtedly rely on experts and advisors to implement their mission. The Federal Advisory Committee Act (FACA) requires agencies to follow some rules in establishing and managing advisory committees. However, agencies have significant leeway in deciding how much and what kind of information to post about their committees. The CFPB should strive to emulate the best practices at other agencies and lead the way in policies and technology to increase transparency and public participation and to reduce conflicts of interest.

  • Make All Advisory Committee Information Available on the Bureau’s Website: We’d like to see timely postings of information about the advisory committees, including notices, agendas, meeting transcripts, forms, webcast meetings and archived video recordings of proceedings, documents, names and brief biographies of representatives and members, as well as any disclosures of conflicts of interest, financial forms, and any ethics waivers or recusals (FDA is an agency that does this).

  • Disclose Conflicts of Interests: In addition to more transparency, we also would ask for additional requirements for public disclosures of conflicts of interest and financial forms.

  • Expand the Pool of Experts: We also believe technology should be used to help recruit a larger pool of experts from across the country and achieve the goal of using as many non-conflicted experts as possible. The public also should have an opportunity to suggest experts and comment on nominees.

  • Increase Efficiency, Participation and Collaboration: We suggest using web meeting technology and other social media to have virtual meetings with synchronous messaging. We’d like to see mostly open meetings, and all open meetings should be webcast. DOE posts webcasts of its committee meetings.

  • Tell Us What You Did: Many agencies don’t publicly disclose how they respond to their advisory committee recommendations. We hope the Bureau will, as the EPA does.

For more ideas about what each agency can do to be transparent, see the Transparency Floor, a project spearheaded by OMB Watch and crafted with input from others in the open government community, including POGO.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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