tHe Most CoMPReHensiVe FinAnCiAl
ReGUlAtoRY leGislAtion sinCe tHe
1930s, the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 was signed into
law on July 21, 2010. The Consumer Financial
Protection Act of 2010 is included as Title 10 of the larger act, and it establishes a new bureau within the Federal Reserve
System: the Consumer Financial Protection Bureau (CFPB). The new bureau will be completely independent of the
Fed’s board of governors and other financial regulatory agencies, and its mandate is to focus on issues impacting how
consumers are treated in the marketplace for financial products and services. Congress was specifically concerned about
treatment of servicemembers, the unbanked, and senior citizens.
more red tape for
The creation of the CFPB will clearly impose new obligations on all providers of financial products and services directed to consum- ers for personal, family, or household purposes. Understanding the new bureau’s role and responsibilities will be a major challenge to compliance managers at depository and nondepository institutions during the coming year.
The secretary of the Treasury has set July 21, 2011, as the official date for transferring certain consumer protection functions
from current regulatory agencies to the CFPB. It is anticipated that
significant changes to regulations as well as supervisory procedures
will occur during this transition period. This article provides an
overview of which laws and regulations the CFPB will be responsible
for, and which institutions it will supervise.
The CFPB is an autonomous office within the overall
structure of the Federal Reserve System. The Fed’s board of
governors may delegate to the CFPB authority to examine
persons subject to the jurisdiction of the board for compliance with federal consumer financial laws. The board may
not, however, appoint or remove any employee of the CFPB,
nor can it intervene in any matters before the CFPB, including
examination or enforcement actions. The board is required
to provide funding for the CFPB each year beginning on the
designated date of the transfer of authority to the new bureau.
The CFPB will be headed by a director nominated by the president, subject to confirmation by the Senate, for a term of five years.
Appointed by the director, a deputy director will lead the CFPB in
the director’s absence. The principal office of the CFPB will be in
Washington, D.C., and the bureau may establish regional offices
in order to carry out its responsibilities. The director is authorized
to hire attorneys, compliance examiners, compliance supervision
analysts, economists, statisticians, and other employees as necessary
to conduct the business of the CFPB.
Similar to the board’s Consumer Advisory Council, the CFPB
is directed to establish a Consumer Advisory Board, with members
to be appointed by the director. The membership is to include persons with expertise in consumer protection, fair lending, financial
services, and community affairs, among other backgrounds. The
director is supposed to include at least six persons recommended
by the regional Federal Reserve Banks. The legislation requires the
advisory board to meet at least twice a year.
laws and Regulations
The Dodd-Frank Act transfers regulatory responsibility for
the following consumer laws from the agencies previously
given those tasks:
■ ■ The Alternative Mortgage Transaction Parity Act of 1982
■ ■ The Consumer Leasing Act of 1976
■ ■ The Electronic Fund Transfer Act (with some exceptions)
■ ■ The Equal Credit Opportunity Act
■ ■ The Fair Credit Billing Act
■ ■ The Fair Credit Reporting Act (with some exceptions)