Patrice Ficklin, who has led the Consumer Financial Protection Bureau's
Ficklin has been the CFPB's only fair lending director through seven acting and permanent directors. She is the founding director who set up the agency's Office of Fair Lending & Equal Opportunity, responsible for the oversight and enforcement of fair lending laws. She has helped coordinate efforts with
Ficklin previously served as Fannie Mae's associate general counsel for nearly a dozen years. She is rejoining the government-sponsored enterprise to serve as its new fair lending officer. Before joining the CFPB, Ficklin worked as an attorney at Relman, Dane & Colfax PLCC.
Under Ficklin's leadership, the CFPB has brought historic fair lending enforcement actions across various sectors of consumer finance and has assessed millions in penalties. Last year,
In its most recent
Ficklin has had a national impact by moving the federal government beyond its initial focus on redlining and fair lending enforcement of banks and mortgage lenders. The CFPB's fair lending oversight now encompasses a broad range of financial products — including credit cards and the use of artificial intelligence and machine learning in underwriting and lending originations.
CFPB Director Rohit Chopra, who has made advanced and emerging technologies a priority, praised Ficklin's leadership. The bureau has yet to name a successor.
"Patrice's leadership has shaped the CFPB's fair lending program from the agency's beginning," Chopra said in an emailed statement. "I'm grateful for everything she has done to fight discrimination and make our markets fairer."
In an interview, Ficklin said it was bittersweet to end her service as a senior executive at the CFPB.
The following transcript is edited for length and clarity.
American Banker: You're the only person to lead the CFPB's Fair Lending Office. What are you the most proud of after 13 years at the agency?
Patrice Ficklin: My work involved not only building the fair lending function, but also really helping to build the agency in the supervision and enforcement functions, because I was part of the governance structure for the whole bureau. It's something else to build a government startup. One of the first things that Elizabeth Warren asked each of us to do as we prepared to build our offices was to sketch out a vision. I had left a private sector job and I came onboard as a Treasury employee on a 30-month appointment.
And the vision that I sketched out was to basically advance the Bureau's responsibility for fair lending — because there had not been much focus on nonbanks — and then also across various business lines to fully utilize all of the tools that Congress had given the agency. [Those include] the laws under our jurisdiction, but also the whole toolkit for education and regulation, guidance, supervision, research and enforcement. You'll remember, back in 2011, fair lending was just considered the province of mortgage origination, right? And it was almost exclusively focused on depositories. But reading the Equal Credit Opportunity Act, there's a whole breadth of authority and responsibility here.
I was a private sector attorney and I can remember hearing at conferences this sort of deep resistance to the idea of compliance management systems existing outside of mortgage origination in other business lines, such as mortgage servicing for auto finance or credit cards. I think one of the things I'm proudest of is that today across stakeholders — whether it's industry or consumers or advocates — there's much more awareness of the Equal Credit Opportunity Act and the protections that it promises. And so many folks in banks and nonbanks have invested significant resources in fair lending compliance. We see fair lending professionals much more deeply embedded in their company's operations and across different business lines. I'm excited about that, and I'm hopeful that that will continue to grow.
The third area I'm proud of is that the bureau's fair lending function is really strong. It's deeply embedded across the entire CFPB. We have really talented, really smart, really kind and humble colleagues. It's a strong program that I'm leaving behind.
AB: How concerned are you that the lawsuit the CFPB filed against
PF: I really can't comment on that. I have always believed that the whole law is on point that the regulations the Federal Reserve Board of Governors promulgated and the bureau adopted have been on point. But I certainly can't predict what the courts might do.
AB: What are your concerns or hopes for artificial intelligence and the use of machine learning in lending and underwriting algorithms?
PF: One of the challenges of the CFPB, as an agency that was born out of a financial crisis, is to be ever-vigilant with regard to emerging challenges and threats. And so we have certainly been focused on data surveillance and the monetization of so much consumer behavioral data, and how they are fueled by the use of these machine learning and other complex computational methods. It was six years ago that the CFPB established our supervision technology program with dedicated experts, so that we can get out in front and understand what is happening as a 21st century agency to really be on top of these kinds of developments.
We have resident experts with diverse technology backgrounds, we have data scientists, designers and software engineers and others, and they're working hand-in-glove with attorneys and examiners to fully understand the companies under our jurisdictions and their use of technology to ensure compliance with consumer financial law. These are collaborative teams that go deeper in their technology assessments, evaluating these complex decision models, reviewing data security practices and exposing dark patterns that can trick consumers into making financial choices that they wouldn't otherwise. In our credit card exam work, we evaluated automated systems and models that are sometimes marketed as AI and machine learning that are being used by credit card issuers.
AB: Can you talk about the CFPB's focus on what you're calling less discriminatory alternatives?
PF: It really is a big focus. Testing for disparate treatment and disparate impact are nuts and bolts in terms of compliance management in terms of fair lending testing. Robust fair lending testing really does include searches for less discriminatory alternative models. And one of the things that the bureau is doing is we have built the technical capacity into our enforcement and supervision work. The ability to actually explore the use of open source automated debiased methods to search for alternative models — models that maintain comparable accuracy but reduce disparities.
AB: Racist emails have played a role in some fair lending cases that were brought by the Department of Justice. Is that something you've seen more frequently?
PF: It's a big deal, and it's something I'm also proud of, because it's a technique that we pioneered in terms of asking institutions to conduct keyword searches. ECOA actually prohibits lenders from discriminating against applicants in any aspect of a credit transaction and also discouraging those applicants. And so this type of intentional discrimination and redlining against a particular neighborhood has always been a top priority for the bureau and continues to be.
Internal emails are one of many factors that the CFPB considers when evaluating a potential fair lending violation. We look at not only emails, but also text messages and chats and other types of electronic communications that may include discriminatory content. The other factors that we look at include the rate of applications that an institution receives from different neighborhoods, where they're locating their branches and offices and where they market. It's all of those different factors together that allow us to ascertain whether these are evidence of a particular view, and whether or not the loan officers or other employees may be fostering a culture that tolerates or embraces discrimination or stereotypes regarding individuals or neighborhoods on a prohibited basis. So they are one component of what we look at.
