The Door Revolves at the CFPB

Leonard Chanin, who heads up the rule-writing team at the Consumer Financial Protection Bureau, will be heading back to his old law firm in September where he’ll be working in the financial services group.

It’s of course not uncommon for people to jump between regulatory agencies and industry-side practice, and to some extent it’s necessary and helpful to have people around with experience on both sides of the line. But people rightly worry that “revolving door” practices undermine the missions of regulatory agencies, and I think you see here an example of the sort of difficulties the CFPB will have in building a really effective agency over the long term. After all, if you look at the myriad regulatory failures of the first decade of the 21st century it’s not as if a paucity of regulatory agencies per se was the issue. We had a lack of regulatory efficacy and a lack of political desire to make regulation effective.

That’s all changed somewhat over the past four years, but there are limits to how much it’s changed and we certainly don’t have the kind of enduring bipartisan consensus around the desirability of effective regulation that would be needed to make it work in the long term.