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Elizabeth Warren turns post-2008 mortgage crackdown playbook on crypto

 
 

Elizabeth Warren crypto anger is palpable. But before she was the scourge of crypto, she was the scourge of the mortgage world post-2008. For the entire financial crisis and recovery era, the mortgage industry decried “regulation through enforcement.”

That was when the massive Dodd Frank financial re-regulation was passed, and among many other things, created the Consumer Financial Protection Bureau (CFPB).

Warren called the CFPB a “cop walking the beat” and while that’s proven true as other Dodd Frank regulations went into place and matured, that “cop” was heavy-handed.

The CFPB was created by Dodd Frank in July 2011, and its first director Richard Cordray ran it from 2012 to 2017, during which time he’d issue enforcements known as consent orders.

Each consent order referred to laws but didn’t necessarily say lenders had broken these laws. Lenders just received fines that would hobble but not necessarily break them. And of course they’d be subject to specific corrective actions on issues like loan officer compensation, affiliated business agreements, etc.

Cordray, in public speeches, would say all industry players were expected to abide by corrective actions in consent orders or be subject to the same enforcement fate.

This came to be known as “regulation through enforcement” and like the crypto industry today, the mortgage industry was super pissed.

But the mortgage industry took its lumps and is quite stable now.

Law clarity now outweighs enforcement actions. But it took an entire era.

So to the crypto execs and advocates: you can decry Elizabeth Warren crypto “regulation through enforcement” all you want, but it’s going to take years — and enforcements that eventually lead to laws — to get the clarity you seek.

Until then, you’ll need to get used to Warren’s playbook, and play ball with her (and all your regulators). This ain’t the first beat she’s walked. And now she’s getting some conservative support.

More in the links below, and please reach out with questions.

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Reference:

Elizabeth Warren is building an anti-crypto army. Some conservatives are on board.

Are anti-crypto politicians like Elizabeth Warren right, wrong, or just unproductive?

Crypto markets on edge as U.S. regulatory crackdown on industry intensifies

 

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