BOSTON — Massachusetts Commissioner of Banks Steven Antonakes will be heading to Washington to help set up the new Consumer Financial Protection Bureau — the federal watchdog agency Congress created in the wake of the financial crisis.
Antonakes will be responsible for ensuring the nation’s largest banks adhere to new rules, and that they don’t mislead and exploit consumers. Many in the industry are lauding the selection of Antonakes as a strong choice to help head the new agency.
A Big Opportunity And A Big Challenge
This represents a big opportunity for the 42-year-old Antonakes, who has been with the Massachusetts Division of Banks for the past 20 years — rising from an entry level bank examiner to commissioner. Now he’s on his way to Washington.
“It’s really an opportunity to build something from scratch,” Antonakes says. “It’s been 20 years of training for this position, so I feel pretty good about it.”
Antonakes’ new job will be to end the kind of abuse that caused the financial crisis; to ensure that banks and lenders are transparent about terms of credit and to force banks to offer loans and other products that people can actually understand –- and afford.
As the state’s banking commissioner for the past seven years, Antonakes has earned generally good reviews.
“He is very well-respected by consumer groups, which isn’t always the case with a bank regulator,” says Massachusetts Rep. Barney Frank, who co-authored the financial reform bill. “His relationship with the Massachusetts bankers is also good. So he’s an ideal choice.”
Sub-Prime Mortgage: Where Was The State Division Of Banks?
But Antonakes has critics, as well. A study by the New England Center for Investigative Reporting that aired on WBUR last fall concluded that Antonakes’ office was far less aggressive in disciplining abusive mortgage lenders than regulators in other states. According to the study, Massachusetts was “dead last” compared to every other state in New England, and below North Carolina, which has a similar number of brokers.
Antonakes takes issue with the report, and says it compared enforcement in Massachusetts to penalties levied in other states unfairly. Antonakes says his office counted companies that were disciplined, while other jurisdictions counted individuals penalized, which made Massachusetts look much weaker in comparison.
“We had smaller numbers,” Antonakes says, “but if you looked at the substance and the kind of orders we were issuing, I think you would see quite substantive actions that were being taken.”
Nadine Cohen, an attorney with Boston Legal Services who represents people facing foreclosure, says the foreclosure problem is so enormous that no agency has been aggressive enough. But, she says, Antonakes is a good choice for the new federal agency, and that the Massachusetts Division of Banks needs a strong successor.
“I think it’s a great opportunity for the governor to appoint someone else who will be aggressively enforcing the laws and ensuring that the banks are complying with the laws,” Cohen says.
Elisabeth Warren’s Cause
The Consumer Financial Protection Bureau is being set up by Harvard Law School Prof, Elisabeth Warren, who is now an assistant to President Obama. Warren has long pushed for a national consumer watchdog organization to protect consumers from predatory mortgage lenders and credit card companies.
“No one should be confused about which credit card is cheaper or how much a mortgage should cost,” Warren says. “The main job of the Consumer Financial Protection Bureau is to set up basic rules so that no one gets tricked again.”
Antonakes says he will be guided by Warren’s sentiment.
“It’s about ensuring transparency for the American public,” Antonakes says, “and that really will be our role.”
At the new federal agency, Antonakes will ensure that banks and other financial services companies like mortgage lenders, check-cashing companies and payday lenders are all subject to the same level of federal oversight.
Deirdre Cummings, a lawyer with the consumer advocacy group MASSPIRG, says Antonakes will have a lot to offer the new federal agency.
“Massachusetts has been one of those states that has very few of those predatory lenders,” Cummings says. “A lot of that is due to Steve’s aggressive role in ensuring that proper, fair and good business practices by the financial service industry (is) first and foremost.”
Steve Antonakes has a big job ahead of him, and not a lot of time to make the transition. His office in the new Consumer Financial Protection Bureau is supposed to be up and running by this summer.