payday loans, loans secured by consumer real estate, or other
loans or services that the CFPB, in consultation with the FTC,
determines need to be covered.
Service providers to the entities subject to CFPB authority will
also fall under the bureau’s oversight and supervision. The CFPB
will coordinate, to the extent possible, with other federal and state
supervisory agencies in conducting any examination program.
The federal banking agencies will continue to examine their
supervised depository institutions having assets of less than $10
billion. Based on the most recent call reports, the Comptroller
of the Currency’s examiners will monitor approximately 2,000
federally chartered institutions for compliance with consumer
protection regulations. The Federal Deposit Insurance Corporation
(FDIC) will be responsible for examining approximately 5,000
state-chartered institutions, and the Federal Reserve Board will
be responsible for examining approximately 800 state-chartered
member banks. The National Credit Union Administration will be
responsible for examining approximately 7,800 federally insured
credit unions. All of these agencies will coordinate examination
and supervision activities with the CFPB on a sampling basis,
including having bureau examiners accompany the agencies’
examiners on selected on-site visits.
The CFPB also has supervisory authority over nondepository
firms that provide origination, brokerage, or servicing of loans
secured by real estate for use by consumers primarily for personal,
family, or household purposes. Firms engaging in loan modifications or foreclosure relief services for consumer real estate loans,
providing payday loans, or making private education loans are also
subject to the CFPB’s supervision. The new bureau may, in consultation with the FTC, make rules requiring other types of consumer
financial products or services to come under the CFPB’s authority.
who Is excluded
Certain businesses are specifically excluded from the CFPB’s
authority and supervision. Generally speaking, the exclusions are focused on activities that are not readily identified
as involving consumer financial products or services. Following are examples of entities that are generally excluded
from the CFPB’s authority:
■ ■ merchants, retailers, and other sellers of nonfinancial goods
■ ■ real estate brokerages
■ ■ manufactured-home retailers and modular-home retailers
■ ■ accountants and tax preparers, as long as they are providing
customary and usual accounting activities (The Dodd-Frank
Act notes that extending or brokering credit is not a customary
and usual accounting activity, nor incidental to that activity.)
■ ■ attorneys who practice under the laws of states where they are
licensed to practice
■ ■ persons regulated by state insurance authorities, unless they are
engaged in the offering or provision of any consumer financial
product or services
■ ■ persons regulated by state securities commissions, the Securities and Exchange Commission, or the Commodity Futures
■ ■ motor vehicle dealers predominately engaged in the sale or
leasing and servicing of motor vehicles
The FTC retains its authority over persons excluded from
the CFPB’s coverage.
The Dodd-Frank Act specifically notes that nothing in the
exclusions affects the provisions of the Fair Housing Act or its
enforcement by the financial regulatory agencies.
when things Change
The CFPB came into existence on July 21, 2010, when
President Obama signed the Dodd-Frank Act into law. The
secretary of the Treasury is given the authority to carry out
the activities of the CFPB, and he has appointed Elizabeth
Warren to exercise that authority pending the president’s
nomination of a director and that person’s confirmation by
the U.S. Senate. Warren was also named as a special advisor
to the president for this activity.
Other major time points for the CFPB are as follows:
■ ■ The CFPB was authorized to administer, enforce, and implement
all the provisions of the designated federal consumer financial
laws on the date of enactment (July 21, 2010). The CFPB’s
authority over the supervision of nondepository institutions
also went into effect on that date, as did coordinated supervision of large depository financial institutions.
■ ■ The secretary was directed to establish an official date for transferring functions from current regulatory agencies to the new
bureau not later than September 20. A Federal Register notice
was published on September 20 designating July 21, 2011, as
the official transfer date.
■ ■ The CFPB’s authority over unfair, deceptive, or abusive acts
or practices takes effect on the designated transfer date of July
■ ■ Not later than one year after the transfer date, the CFPB is to
propose for public comment rules and model disclosures that
integrate TILA and RESPA disclosures for mortgage loans into
a single disclosure. At a recent meeting with representatives of
trade associations, consumer organizations, and other interested
parties, CFPB representatives provided a draft discussion form
that combines many of the above disclosures.
The CFPB has authority to write regulations for all of
the enumerated consumer financial laws that have been
transferred to it. The Dodd-Frank Act also made a number of amendments to the various statutes that are being
transferred. One interesting change was giving the CFPB
authority to issue rules for the Fair Debt Collection Practices Act. Previously the FTC did not have that authority.
Amendments have also been made to the Equal Credit
Opportunity Act, the Home Mortgage Disclosure Act, the
Electronic Funds Transfer Act, the Truth in Lending Act, and
the Real Estate Settlement Procedures Act, among others.
These amendments are substantive and the CFPB will have
to issue proposed regulations to implement these changes.