Today, the local .gov startup goes live. While ConsumerFinance.gov went online back in February, today, on the anniversary of H.R.4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Board officially launches today, with Richard Cordray nominated to lead it. The Sunlight Foundation is liveblogging the Senate hearings this morning, for those interested.
Many questions about the future of the agency remain (Wall Street and Republicans have not been sparing offering criticism over the past year) but credit where credit is due: the new consumer bureau has been open to ideas about how it can do its work better. This approach is what led New York Times personal finance columnist Ron Lieber to muse last week that “its openness thus far suggests the tantalizing possibility that it could be the nation’s first open-source regulator.”
When a regulator asks for help redesigning a mortgage disclosure form, something interesting is afoot.
It’s extremely rare that an agency gets built from scratch, particularly in this economic and political context. It’s notable, in that context, that the 21st century regulator has embraced many of the principles of open government in leveraging technology to stand up the Consumer Financial Protection Bureau. Elizabeth Warren, the architect of the agency, spoke to how open government, citizens and technology factor into the bureau’s work earlier this year:
Better government by design
Open government isn’t just about first principles for accountability, open data, social media, transparency, cultural change, citizen participation, innovation or feedback loops, however, though all of those factors matter. As the work of Code For America has shown this year, design matters in open government. Better citizen experience, communication and customer service depends on better design.
Lois Beckett aptly connected how the dots about why design matters to the CFPB’s work this week at ProPublica, where she wrote about the challenges the innovative financial regulator faces as it starts up.
…as the political battle rages on and media scrutiny focuses on Elizabeth Warren’s political future, little attention has been given to what the bureau has actually done. And its initial efforts are interesting, especially because they show a commitment to open government and real public engagement. (Ron Lieber noted that its blog actually accepts comments—”unlike, say, the White House’s.”)
The bureau’s mission is to create transparency in an industry dominated by confusing claims and mouse print. Good design isn’t just a perk here—it’s fundamental to the bureau’s regulatory efforts.
Case in point: One of the CFPB’s top priorities has been streamlining the federally required mortgage disclosure documents. If that sounds like a mouthful, it’s worse on paper: two separate, complicated forms that are confusing for customers and, the bureau contends, also burdensome for many mortgage servicers to fill out.
The goal is to replace them with a single, two-page document that clearly answers the questions: “Can I afford this mortgage?” and “Can I get a better deal somewhere else?”
Two of the potential designs for the new form each have a note at the top, in bold print: “You have no obligation to choose this loan. Shop around to find the best loan for you.”
The bureau’s other projects include improving transparency about credit card prices and fees, the exchange rates used for remittance transfers of money to other countries and the credit scores sold to consumers and creditors.
Using heatmaps and 13,000 clicks to understand pain points for mortgage disclosure? Data-driven government may have legs.
It’s not just the heatmaps: the CFPB reports that they read and analyzed the comments themselves. “There is symmetry here,” write the Web staff. “Heatmaps make it easier to understand and compare data. We want to improve disclosure so it is easier for consumers and lenders to understand and compare when they evaluate mortgage loans.”
As the newest .gov startup continues to scale, we’ll see if more experiments in open government design are given “freedom to fail,” a latitude that the father of the Internet, Vint Cerf, has hailed as an essential ingredient for government innovation. Stay tuned, and keep at eye on the CFPB.