CFPB Supervision Head Vows to Be Fair: 'It's Never Personal'

WASHINGTON — Ask longtime regulator Steven Antonakes what qualities he looks for when hiring a bank examiner, and his description sounds an awful lot like the man himself.

The associate director for supervision, enforcement and fair lending at the Consumer Financial Protection Bureau and a former commissioner for the Massachusetts Division of Banks, Antonakes, 44, estimates that he has conducted more than 2,500 examiner interviews over the course of his 22-year career.

"You need someone, obviously, with strong analytical skills and good communication skills. You want someone who is fair at the end of the day," Antonakes said in an interview in his office last month. "I don't want someone who is going to go in with a preconceived notion, and who's not going to pay attention to the information that's in front of them.

"There are times when there are disagreements, and it's incumbent upon the examiner to always keep cool and just present the information. It's never personal," he added.

Those who have worked with him, both at the CFPB and in Massachusetts, describe a similar person: analytical, calm and unbiased. Speaking softly but quickly, he comes across as a Joe Friday, "Just the facts, ma'am," figure when you meet him.

"He really is a consummate regulator — and coming from my world that's a flattering thing," says John Ryan, president and chief executive of the Conference of State Bank Supervisors.

"He approaches things in a fact-based, fair manner," Ryan adds. "There's a slow, careful build to Steve in certain assessments."

Others describe a reserved but focused leader.

"Steve is a man of few words, but when he speaks, his words are deeply powerful," says Catherine West, who served as associate director and chief operating officer at the CFPB during its infancy, and now works as a managing director at consultancy Promontory Financial.

"He sits back in a meeting and really thinks about things, and he focuses on the central issue," says West. "He's not the guy playing on his BlackBerry or leafing through pages."

Critically, Antonakes' balanced approach — and what he calls a focus on "substantive consumer harm versus ticky-tack, technical compliance issues" — could prove advantageous for an agency repeatedly accused of having a political agenda. Bankers have bristled at CFPB oversight since the bureau's inception, warning that its powers under Director Richard Cordray are unfettered and that new, tougher rules would do more harm than good.

As such, Antonakes' appointment may provide some comfort for an industry facing a host of new compliance challenges. Industry veterans who know him say Antonakes is driven to set rules that help the industry run better, not bog it down.

"He's not a regulator for regulation's sake. He wants to have a set of predictable rules that allow banks to operate in safe and sound manner," says Richard Schaberg, a partner at Hogan Lovells, who represented a number of state chartered banks in front of Antonakes. "He's not for having an apparatus over financial institutions because he thinks they need baby-sitting."

His experiences in Massachusetts, including overseeing more than 200 state-chartered banks and credit unions and 4,500 nonbank financial institutions, may also help guide the bureau as it ramps up supervision of the mortgage industry, including nonbank mortgage lenders and servicers. The agency is also working on a slew of rules, including standards for mortgage servicing and regarding a borrower's ability to repay a mortgage.

"Supervision of nonbank mortgage lenders and servicers is a top priority. Before the creation of the bureau, a significant part of the mortgage market was not subject to federal supervision," Antonakes says. "We are working closely with state regulators in an effort to ensure a level playing field in the nonbank mortgage industry and to closely coordinate our supervisory work."

He notes that as the industry evolves, the bureau will have to stay nimble to address the latest challenges, rather than focus on problems of the past.

"You need to have a supervisory approach that is flexible and adapts to changes in the marketplace in real time so you don't waste resources chasing yesterday's problem," he says. "For example, state legislatures were still tackling predatory lending practices in the refinance market just as new challenges in the purchase money market were coming to the forefront in the form of new high-risk mortgage products."

Not a 'Boyhood Dream'

Antonakes started working as an entry-level bank examiner in Massachusetts in 1990, after graduating from Pennsylvania State University with a liberal arts degree.

Born and raised in Massachusetts, he says the decision to become an examiner was more happenstance than strategy, in part because the state's banking agency was in the process of doubling its corps in the wake of the savings and loan crisis.

"I don't think anybody has a boyhood dream to be a bank examiner someday. I would have much preferred playing first base for the Red Sox. It wasn't a lifelong plan — I just sort of fell into this line of work," he says. "I was just very happy to have a job two weeks out of school and for the opportunity to learn during a challenging period for the banking industry."

But Thomas Curry, who went on to serve as the top banking regulator in the state ahead of Antonakes, notes that even then his temperament made him well suited for the job.

"From the minute I interviewed him I was impressed with him for a lot of the characteristics that he's displayed throughout his career. He's smart, he's thoughtful and he's really a bright, capable guy," says Curry, who now heads the Office of the Comptroller of the Currency.

Antonakes describes his time at the division of banks as a "thorough immersion into all regulatory matters."

"I got to see the process from every aspect possible, from being a front-line examiner, to being in the office reviewing those reports and determining appropriate corrective action, to working on all sorts of operational activities, to reviewing proposed mergers and new bank charter applications, to working on state and federal legislation and rulemaking," he says.

He also furthered his education while at the agency, receiving an MBA from Salem State University and a PhD in law and public policy from Northeastern University.

Antonakes assumed the top role at the Division of Banks when Curry was tapped to join the Federal Insurance Deposit Corp.'s board of directors in late 2003.

Those who knew Antonakes point to several initiatives he embraced as a leader at the agency.

Ryan, head of the CSBS, lauds his efforts to help establish the group's nationwide mortgage licensing system and registry. The database, which was launched in 2008, currently tracks mortgage originators and lenders across the country. "The goal would be and was to come together and create a standard for mortgage originators and how they would license multistate mortgage players in a coordinated fashion," Ryan says. "He knew this was high risk, because CSBS was investing a lot of financial resources, and we had to be able to get states together."

"Steve saw the problem so clearly that he thought that any risk would be worth it," Ryan adds. "He was of the view that sometimes you just have to do the right thing — and that that's worth more than anything."

In November 2006 Antonakes organized a statewide summit, bringing together the mortgage industry, consumer advocates and other stakeholders to address myriad subprime lending and foreclosure concerns.

That's "when we first noted that foreclosure rates started to increase in Massachusetts from almost nothing to starting to see some activity there for the first time," he says.

"The goal of the summit was trying to bring together people who don't necessarily agree but all have a vested interest in ensuring that we could avoid unnecessary foreclosure," Antonakes adds.

The summit and subsequent working group meetings led to foreclosure prevention legislation being filed and enacted in 2007, ahead of the national housing crisis.

"Steve was one of the boots on the ground early in his career, so he was able to learn the income statements and balance sheets on a bank-by-bank basis, and he began to develop a real nose for what some of the real problem areas were," says Daniel Forte, president of the Massachusetts Bankers Association.

Throughout his career, Antonakes' success has also been bolstered by his ability to build a strong team, according to those who know him.

"He surrounds himself with good people. When I think back to his tenure, he did a nice job of relying on his first deputies. He carefully selected them and they were very good at what they did," says Hogan Lovells' Schaberg.

'Historic Opportunity'

The ability to build a team has carried over to his work at the CFPB, where Antonakes was initially tasked with helping fill out the agency's ranks. He was tapped by the Treasury Department to join the CFPB's implementation team as head of bank supervision in November 2010. He rose to chief of supervision, enforcement and fair lending in June 2012.

"Steve's biggest challenge was going from zero to 700 people in a short time frame," says Promontory's West. "He is hands-on, dedicated to ensuring we attracted the right people."

"He works collaboratively with people. He hired terrific direct reports who are now running regions across the country," she adds. "He has a high bar of competency level of people. He personally takes on the challenge of recruiting and is very selective."

Antonakes says his move to Washington was driven by the "historic opportunity" working at the bureau presented: he was drawn to its consumer protection mission, the chance to create a level playing field at the federal level between banks and nonbanks and the ability to "take a fresh look at everything" at a government startup.

As one of the first several dozen hires at the bureau, he calls the early days on the job "fascinating," noting that it was "somewhat akin to what it must have been like working in Steve Jobs' garage — it was a startup in every sense of the word."

And the work is still just as wide-ranging now that the agency is up and running — from executing on its to priorities to managing, grooming and engaging staff.

"We have to manage not only our own folks at headquarters, but a fairly significant population of examiners that are living across the country and perhaps don't feel the same degree of connection with an agency as someone sitting down the hallway," he adds.

But challenges in building up the new agency remain, and Antonakes says his priorities are varied for the coming year.

Apart from ramping up its oversight of nonbank lenders, such as mortgage and payday lenders, the CFPB will also be taking a closer a look at the credit bureaus. Antonakes also aims to continue building up the supervision, enforcement and fair-lending offices, which are roughly two-thirds staffed, and to improve the agency's overall efficiency.

The top priority, though, will always be to make sure that financial firms are doing right by their customers. Part of creating a new agency, he says, "is just being very thoughtful in terms of product, market share, other risk criteria, and where we focus our resources in these early days to ensure we're maximizing protection to consumers."