What are the responsibilities of the newly created Consumer Financial Protection Bureau?

The U.S. Consumer Financial Protection Bureau (CFPB) was established in response to the 2008 financial crisis and resulting economic recession. The CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act and began operation in 2011. Its stated mission is as follows:

The central mission of the Consumer Financial Protection Bureau 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.

The CFPB is an independent bureau funded by the Federal Reserve, tasked with drafting and enforcing regulations for banks, equity markets, credit unions, debt collectors, mortgage lenders, and other entities offering financial goods and services.

Functions and Responsibilities of the CFPB

Essentially, the CFPB is a watchdog agency tasked with protecting consumers from unscrupulous lenders and other financial institutions. While the bureau has some unique responsibilities, the CFPB also will assume existing duties once carried out by the Federal Trade Commission and other government agencies.

The bureau performs the following functions:

• Enforce federal anti-discrimination laws with respect to consumer finance
• Make rules, supervise, and enforce federal consumer financial protection laws
• Alert consumers to possible risks in financial markets
• Place restrictions on abusive, deceptive or otherwise unfair practices
• Conduct research of consumer behavior
• Investigate consumer complaints
• Educate consumers about finance

How to Submit a Complaint with the CFPB

If you suspect a financial institution is practicing deception, fraud or otherwise not operating in a fair and transparent manner (at least in accordance to established laws), you may file a complaint with the CFPB.

The best way to do this is through the complaint section of the CFPB's Website. You will be asked to select either mortgage; credit card; bank account or service; vehicle loan or consumer loan; or student loan. After you make your selection, you will be guiding through a series of questions.

Introduction

Title X of the Dodd-Frank Act (aka: Consumer Financial Protection Act of 2010), created the Consumer Financial Protection Bureau (CFPB or Bureau) as an independent agency within the Board of Governors of the Federal Reserve System (Federal Reserve).  The CFPB regulates the offering and provision of consumer financial products and services under federal consumer financial laws.

Title 12, Chapter 53, Subchapter V of the U.S. Code contains the legislation that created and regulates the Bureau. 

PURPOSE of the CFPB:

CFPB ensures that the federal consumer financial laws are enforced consistently so that consumers may access markets for financial products, and so that these markets are fair, transparent, and competitive. 

Provisions

Organization of Bureau

The Bureau is headed by a Director who is required to establish the following four offices: 

• The Office of Fair Lending and Equal Opportunity;
• The Office of Financial Education;
• The Office of Servicemember Affairs; and 
• The Office of Financial Protection for Older Americans (12 U.S.C. § 5493).  

The Director is also required to establish a Consumer Advisory Board to advise the Bureau (12 U.S.C. § 5494).  

Bureau Powers & Authority

The Bureau has the authority to administer, enforce, and otherwise implement federal consumer financial laws, which includes the power to make rules, issue orders, and issue guidance (12 U.S.C. § 5511). The Financial Stability Oversight Council (FSOC) has the power to set aside any of the Bureau’s regulations if the FSOC decides that the regulation would endanger the safety of the banking system or the stability of the U.S. financial systems (12 U.S.C. § 5513).   

The Bureau engages in investigations and requests information from covered persons, issues subpoenas or civil investigative demands, conducts hearings and adjudication proceedings, and commences civil actions in federal court seeking any appropriate or equitable relief against any person that violates a federal consumer financial law. (12 U.S.C. §§ 5562–65). The CFPB has exclusive authority to enforce federal consumer laws against non depository covered persons (12 U.S.C. § 5514). The Bureau also has exclusive federal consumer law supervisory authority and primary enforcement authority over insured depository institutions with over $10 billion in assets (12 U.S.C. § 5515). 

Preservation of State Law 

Title X also deals with the role of state law and state intervention in the operation of federally-chartered depository institutions.  The statute is not meant to preempt state consumer financial protection laws, as long as the state laws do not conflict with federal laws or regulations (12 U.S.C. § 5551). State consumer protection laws that offer greater protection than federal law are not considered to be conflicting with federal laws. State Attorneys General and state regulators can bring civil actions to enforce provisions of Title X (12 U.S.C. § 5552). 

State consumer financial laws are preempted for national banks, federal thrifts, and their subsidiaries only if: 

• The application of the state law would have a discriminatory effect on the national bank or thrift; 
• The state law prevents or significantly interferes with the exercise of the national bank’s or thrift’s powers (codifying the Supreme Court’s decision in Barnett Bank v. Nelson, 517 U.S. 25 (1996)); or 
• The state consumer law is preempted by another federal law other than this title (12 U.S.C. § 25b, 12 U.S.C. § 1465). 

In accordance with the Supreme Court decision in Cuomo v. Clearing House Assn., LLC, 129 S. Ct. 2710 (2009), the Office of the Comptroller of the Currency’s visitorial authority over national banks and federal thrifts is not to limit or restrict the authority of any state from bringing an enforcement action against a national bank or federal thrift (12 U.S.C. § 25b). Finally, Title X does not preempt the applicability of state law to any subsidiary, affiliate, or agent of a national bank (12 U.S.C. § 25b). 

Transfer of Functions

The consumer financial protection functions of the Federal Reserve, Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, and National Credit Union Administration are transferred to the Bureau (12 U.S.C. § 5581). The consumer financial protection functions of the Department of Housing and Urban Development that arise under the Real Estate Settlement Procedures Act, Secure and Fair Enforcement for Mortgage Licensing Act of 2008, and the Interstate Land Sales Full Disclosure Act are also transferred to the Bureau (12 U.S.C. § 5581). The Federal Trade Commission retains its jurisdiction in implementing the Federal Trade Commission Act (12 U.S.C. § 5581).

Further Reading

For more on Title X of Dodd Frank, see this Cornell Law Review article, University of Utah Law Scholarship article, and this Gibson Dunn article. 

[Last updated in October of 2022 by the Wex Definitions Team]

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