Comptroller of the Currency John Dugan heads the federal agency that oversees the banks handling much of the nation's consumer lending. Those 1,750 nationally chartered commercial banks include heavyweights like Citibank, Chase, and Bank of America. Dugan's agency just launched a website to guide consumers through disputes with their banks. He told U.S. News that even more needs to be done to help consumers, and he discussed the financial meltdown related to subprime mortgages.
What's the most important advice for bank consumers?
If they have a question or a concern, they need to take it up with their bank, and if they don't get relief, then contact the bank's regulator. That's what this website is all about.
But how do you contact the right regulator?
Because there are so many types of banking institutions in the United States, consumers don't know the difference between a national bank, a state-chartered bank, a credit union, or a savings and loan association or thrift institution. One of the things I've suggested to the other federal bank regulatory agencies and the states is that we try to come up with a single place where consumers can go—that is, one face to the consumers. So that once they look up their bank, it won't make a distinction between a national bank or credit union. It will just find their bank and make it easy for the consumer to route their complaint to the relevant agency. Over time, I'd like to see a common complaint form, a common toll-free number. It's going to take a little time, but I think we can get there.
Why hasn't that happened already?
We have a long-standing fragmentation in our banking industry, among different charters and different regulators. While we are always working on projects in a coordinated way, I can't tell you we always do things in a unified manner. This is an area that kind of calls out to do better. It seems to me that with the Internet, we could use it to have a single, unified place for consumers to go. I think there's been much more focus recently on consumers, and I think the time has come to really push to get this done.
Are people failing to read the fine print, or have bank practices just become so complex it's hard to understand them?
There have been new kinds of products consumers use that have many benefits. But they're also more complicated, and along with different marketing practices, they've led to more consumer complaints. Most consumers would say the credit card as a payment mechanism and as a borrowing mechanism has been a useful thing to them overall. Nobody would want to do without them. But we do get a great number of complaints about credit cards.
Are credit card practices like double-cycle billing and universal default inherently deceptive?
Well, if we thought they were deceptive, we'd take action against them. They are disclosed. The laws that are on the books now really are geared mostly toward disclosure. And the disclosures have not been overhauled for a very long time. The Federal Reserve has come up with a quite extensive new proposal which we believe will be a very important improvement. People have raised the question whether some of these practices ought not to be engaged in even if adequately disclosed. I think Congress is going to look hard and consider that. Given the volume of complaints we've seen and the volume of concerns raised by members of Congress, there is absolutely an appetite to do something in this area. Whether it's in the form of increased disclosures, whether it's in the form of companies themselves changing their behavior because of publicity surrounding it, or whether it even results in legislation, it seems that these are all questions that are very much on the table.
Does the Office of the Comptroller of the Currency have all the power it needs to be an effective regulator?
We did testify it would be useful to write regulations and participate in joint rule making, so that when we see particular kinds of practices that are unfair and deceptive, we can go after it, not just with respect to a particular institution but across the board.
You mentioned double-cycle billing. Even if we wanted to change it or prohibit it, we couldn't do that. It's clearly permissible by the law, and the rules about disclosing it are all set by the Federal Reserve. We can urge them to do something, but we'd like a little more input into that process.
Have there been regulatory failures involved in the subprime meltdown?
The really abusive, aggressive practices have grown up in the non-federally regulated area. I do think the states are now making a concerted effort to raise the standard so it's similar to the federal standard. Whether that will be adequate by itself, I think, is yet to be seen. I think in the subprime area, right now, frankly, the problem is not about consumers trying to get mortgages now. It's more about consumers who have the loans, and they end up facing a foreclosure situation. We have put standards into place affecting future loans, and I think if the market does come back, there will be an effective way that it will be dealt with at the federal level, and the states are trying hard. Whether that will be enough across the board is what Congress is looking at.
The OCC is not the place most bank customers think of when they need help. Sounds like you're trying to increase the agency's consumer protection profile.
Over time, the consumer protection responsibilities have definitely increased for the OCC because so many retail consumer activities have gravitated to the national banks. If you look at helpwithmybank.gov and our customer assistance group in Houston, we have beefed that up very substantially. I don't think many people know we do as much as we do. People are using [the website]; we've put out public-service announcements. And that's all part of an effort to get more visibility—recognizing, however—and this is an important point—that the first place consumers have to go to try to get their matters resolved is to the bank itself. We can't be the first line of defense to try to resolve disputes. It would just overwhelm the agency. But our role and responsibility will frankly increase over time. And we are committed to providing the resources.
