People with bad credit have largely welcomed the new Consumer Financial Protection Bureau (CFPB) created by the latest financial reform bill, as the new watchdog agency is set up to protect borrowers from loan sharks and other fraudulent companies while regulating the lending industry as a whole.
The New York Times reports, however, that one of the key advisers to the CFPB, Rajeev Date, was being compensated by a lending company at the same time he was helping to set up the new agency, representing a conflict of interest.
Date was on the payroll of Prosper Marketplace, a company that acts as a link between borrowers and providers of bad credit auto loans and mortgages. A Treasury Department official told the news source that Date resigned from the board of the company before joining the CFPB, although he still advised in creating the bureau during the legislative period and still owns stock in the company. Date will apparently excuse himself from any talks related to peer-to-peer lending as a result.
CFPB spokesman Peter Jackson said that many of its hires would be coming from industry, and it would be impossible for everyone to not have ties to previous companies.
“The CFPB will be stronger and more effective if people who have industry and consumer advocacy experience help shape it, and it’s hard to imagine cutting off that expertise,” he said in a statement.