Consumer Financial Protection Bureau
|Formed||July 21, 2011
( 3 years, 92 days ago)
|Jurisdiction||Federal Government of the United States|
|Annual budget||US$447.7 million (FY 2013)|
|Agency executives||Richard Cordray, Director
Steven Antonakes, Deputy Director
The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector. Its jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, other financial companies operating in the United States, and virtual currencies.
The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the financial crisis of 2007–08 and the subsequent Great Recession.
According to Director Richard Cordray, the Bureau's most pressing concerns are mortgages, credit cards and student loans. It was designed to consolidate employees and responsibilities from a number of other federal regulatory bodies, including the Federal Reserve, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration and even the Department of Housing and Urban Development. The bureau is an independent unit located inside and funded by the United States Federal Reserve, with interim affiliation with the U.S. Treasury Department. It writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on markets, as well as collects and tracks consumer complaints. Furthermore, as required under Dodd-Frank and outlined in the 2013 CFPB-State Supervisory Coordination Framework, the CFPB works closely with state regulators in coordinating supervision and enforcement activities.
The CFPB opened its website in early February 2011 to accept suggestions from consumers via YouTube, Twitter, and its own website interface. According to the United States Treasury Department, the bureau is tasked with the responsibility to "promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services." According to the bureau's own webpage, "The central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products."
In July 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, during the 111th United States Congress in response to the Late-2000s recession and financial crisis. The agency was originally proposed in 2007 by Harvard Law School professor Elizabeth Warren. The proposed Consumer Financial Protection Bureau was actively supported by Americans for Financial Reform, a newly created umbrella organization of some 250 consumer, labor, civil rights and other activist organizations. On September 17, Obama announced the appointment of Warren as Special Advisor to set up the bureau. The bureau began operation on July 21, 2011, shortly after Obama announced that Warren would be passed over as Director in favor of Richard Cordray, who prior to the nomination had been hired as chief of enforcement for the agency. As Ohio Attorney General from 2009 to 2011, Cordray won $2 billion in settlements from financial companies.
Dispute over director
Elizabeth Warren, who was special consultant in charge of implementing it, was removed from the running for director after Obama administration officials became convinced she "could not overcome strong Republican opposition". On July 17, Former Ohio Attorney General and Ohio State Treasurer Richard Cordray was selected over Warren as the head of the entire CFPB. However, his nomination was immediately in jeopardy due to 44 Senate Republicans vowing to derail any nominee in order to encourage a decentralized structure to the organization. Senate Republicans had also shown a pattern of refusing to consider regulatory agency nominees, purportedly as a method of budget cutting. Due to the way the legislation creating the bureau was written, without a Director the agency is not able to write new rules or supervise financial institutions other than banks.
On July 21, Senator Richard Shelby wrote an op‑ed article for the Wall Street Journal affirming continued opposition to a centralized structure, noting that both the Securities Exchange Commission and Federal Deposit Insurance Corporation had executive boards and that the CFPB should be no different. He noted lessons learned from experiences with Fannie Mae and Freddie Mac as support for his argument. Politico interpreted Shelby's statements as saying that Cordray's nomination was "dead on arrival". Republican threats of a filibuster in the Senate to block the nomination in December 2011 led to Senate inaction.
On January 4, 2012, Barack Obama issued a recess appointment to install Cordray as director through the end of 2013; this was highly controversial move as the Senate was technically in pro-forma session, and the possibility existed that the appointment could be challenged in court.
The constitutionality of Cordray's recess appointment came into question due to a January 2013 ruling by the United States Court of Appeals for the District of Columbia Circuit that Obama's appointment of three members to the NLRB (at the same time as Cordray) violated the Constitution.
On July 11, 2013, the CFPB Rural Designation Petition and Correction Act (H.R. 2672; 113th Congress) was introduced into the House of Representatives. The bill would amend the Dodd-Frank Wall Street Reform and Consumer Protection Act to direct the Consumer Financial Protection Bureau (CFPB) to establish an application process that would allow a person to get their county designated as "rural" for purposes of a federal consumer financial law. One practical effect of having a county designated "rural" is that people can qualify for some types of mortgages by getting them exempted from the CFPB's qualified mortgage rule.
On September 26, 2013, the Consumer Financial Protection Safety and Soundness Improvement Act of 2013 (H.R. 3193; 113th Congress) was introduced into the United States House of Representatives. If passed, the bill would modify the CFPB by transforming it into a five person commission and removing it from the Federal Reserve System. The CFPB would be renamed the "Financial Product Safety Commission." This bill is also intended to make it easier to override the decisions that the CFPB makes. On February 7, 2014, House Majority Leader Eric Cantor announced that H.R. 3193 would be on the House schedule for February 11 or 12th, 2014.
|This section requires expansion. (December 2013)|
|This section requires expansion. (December 2013)|
Regulatory implementation regarding mortgages is covered on the bureau website. Topics provided for consumers include, 2013 mortgage rule implementation, resources to help people comply, quick reference charts, supervision and examination materials, and a link for feedback regarding suggestions. It also provides additional information that covers rural or under-served counties, HUD-approved housing counselors, and Appendix Q.
Appendix Q relates to the debt-to-income ratio that must be possessed for "qualified mortgages" and provides details about how to determine the factors for that calculation. The standard is set at no more than 43 percent.
The CFPB is weighing whether it should take on a role in helping Americans manage retirement savings and regulate savings plans, particularly focusing on investment scams that target retired and elderly people. "That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in a January 2013 interview.  Some conservatives have been critical of this potential role, with William Tucker of the American Media Institute asserting that the agency intends to "control" retirement savings and force people to buy federal debt. The AARP has encouraged the agency to take an active role, arguing that the bureau will help protect elderly Americans from affinity fraud that often targets senior citizens, ensuring that their investments are less likely to be stolen through securities fraud or malpractice.
The CFPB has created a number of personal finance tools for consumers, including Ask CFPB, which compiles plain-language answers to personal finance questions, and Paying for College, which estimates the cost of attending specific universities based on the financial aid offers a student has received.
List of Directors of the CFPB
|No.||Portrait||Name||State of Residence||Took Office||Left Office||President(s)|
|-||Elizabeth Warren||Massachusetts||September 17, 2010||August 1, 2011||Barack Obama|
|-||Raj Date||Washington, D.C.||August 1, 2011||January 4, 2012|
|1||Richard Cordray||Ohio||January 4, 2012||Incumbent|
A lawsuit filed in June 21, 2012, by a Texan bank along with the Competitive Enterprise Institute, challenged the constitutionality of provisions of the CFPB. One year later, in August 2013, a federal judge dismissed the lawsuit because the plaintiffs had failed to show that they had suffered harm.
A lawsuit filed July 22, 2013, by Morgan Drexen Integrated Systems, a provider of outsourced administrative support services to attorneys, and Connecticut attorney Kimberly A. Pisinski, challenged the constitutionality of the CFPB. The complaint, filed in the U.S. District Court for the District of Columbia, alleged that the "CFPB's structure insulates it from political accountability and internal checks and balances in violation of the United States Constitution. Unbridled from constitutionally-required accountability, CFPB has engaged in ultra vires and abusive practices, including attempts to regulate the practice of law (a function reserved for state bars), attempts to collect attorney-client protected material, and overreaching demands for, and mining of, personal financial information of American citizens, which has prompted a Government Accountability Office ("GAO") investigation, commenced on July 12, 2013." On August 22, 2013, one month after Morgan Drexen's lawsuit, the CFPB filed its own lawsuit against Morgan Drexen in the United States District Court for the Central District of California alleging that Morgan Drexen charged advance fees for debt relief services in violation of the Telemarketing Sales Rule (TSR) and engaged in deceptive acts and practices in violation of the Consumer Financial Protection Act (CFPA)
- Financial crisis of 2007–2010
- List of financial regulatory authorities by country
- Regulatory responses to the subprime crisis
- Subprime mortgage crisis solutions debate
- Wall Street reform
- Title 12 of the Code of Federal Regulations
- Volcker Rule
- "2012 CFPB Annual Employee Survey". United States Consumer Financial Protection Bureau. 2012-12-07. Retrieved 2013-07-16.
- "Consumer Financial Protection Bureau - Program Summary by Budget Activity". United States Consumer Financial Protection Bureau. 2013. Retrieved 2013-07-16.
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- Bureau of Consumer Financial Protection, topics.nytimes.com Updated: Dec. 8, 2011
- "Joint CFPB-State Supervision: No one is below the radar". http://www.pwc.com/en_US/us/financial-services/regulatory-services/publications/assets/fs-reg-brief-dodd-frank-act-cfpb-hmda.pdf, November, 2013.
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- Nakamura, David and Sonmez, Felicia (2012-01-04). "Obama to use executive power to name consumer watchdog chief over GOP objections". The Washington Post. Retrieved 2012-01-04.
- Savage, David G. (2013-01-25). "Court rules Obama recess appointments unconstitutional". Los Angeles Times. Retrieved 2013-05-03.
- Peralta, Eyder (2013-07-16). "Cooling Tensions, Senate Confirms Cordray". NPR. Retrieved 2013-07-19.
- "H.R. 2672 - Summary". United States Congress. Retrieved 4 May 2014.
- Marcos, Cristina (2 May 2014). "The week ahead: House to hold ex-IRS official in contempt". The Hill. Retrieved 5 May 2014.
- "Dodd-Frank Dispatch: "Rural Area" Designation Would Provide Consumer Financial Protection Laws Relief". BankersWEB.com. 17 March 2014. Retrieved 5 May 2014.
- "H.R. 3193 - Summary". United States Congress. Retrieved 11 February 2014.
- Kasperowicz, Pete (7 February 2014). "House to take another swing at Dodd-Frank reform". The Hill. Retrieved 11 February 2014.
- "Leader's Weekly Schedule - Week of February 10, 2014". House Majority Leader's Office. Retrieved 11 February 2014.
- Consumer Financial Protection Bureau, Law and Regulation, Mortgage Rule Implementation Regulatory Implementation, retrieved 2014.01.25
- Retirement Savings Accounts Draw U.S. Consumer Bureau Attention, Carter Dougherty, Bloomberg News, 18 January 2013
- Financial Repression From The Obama Administration: How Savers May Be Forced To Buy Federal Debt, William Tucker, Forbes.com, 23 Dec 2013
- 6 Ways the Consumer Financial Protection Bureau Will Fight for You, Carole Fleck, AARP, 1 March 2012
- Maya Jackson Randall (22 March 2012). "Consumer-protection agency launches 'Ask CFPB' tool". The Wall Street Journal. Retrieved 7 August 2013.
- Liberto, Jennifer (11 April 2012). "Compare College Costs with Online Tool". CNNMoney. Retrieved 8 August 2013.
- "Risks to Consumers Posed by Virtual Currencies". Consumer Advisory. 2014-08-01. Retrieved 2014-10-06.
- Hall, Christine. "Dodd-Frank Unconstitutional Power-Grab, Says New Lawsuit". Competitive Enterprise Institute. Competitive Enterprise Institute.
- "Standing Alone, But Firm; Morgan Drexen Presses Forth in Lawsuit Against the Consumer Financial Protection Bureau". GlobeNewswire. 2013-08-02. Retrieved 2014-05-18.
- Pollock, Richard (2013-07-23). "Private firm sues CFPB, challenges board's constitutionality". Washington Examiner. Retrieved 2013-08-11.
- Karmasek, Jessica M. (2013-08-10). "Conn. attorney, support services provider sue CFPB over alleged ‘data mining’". Legal Newsline Legal Journal. Retrieved 2013-08-11.
- "Morgan Drexen Filings". Morgan Drexen. Retrieved 2013-08-11.
- Kaplinsky, Alan (23 Aug 2013). "A tale of two lawsuits: CFPB sues Morgan Drexen". JD Supra Law News. Retrieved 8 Nov 2013.
- Holding the CFPB Accountable: Review Of The First Semi-Annual Report: Hearing before the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Twelfth Congress, Second Session, January 31, 2012
- The Semi-Annual Report of the Consumer Financial Protection Bureau: Hearing before the Committee on Financial Services, U.S. House of Representatives, One Hundred Twelfth Congress, Second Session, September 20, 2012
- The Consumer Financial Protection Bureau’s Semi-annual Report to Congress: Hearing before the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Thirteenth Congress, First Session, April 23, 2013
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