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1 1 (November 25, 2020)

handle is hein.crs/govdcqp0001 and id is 1 raw text is: Updated November 25,2020 Introduction to Financial Services: The Consumer Financial Protection Bureau (CFPB) The 2010 Dodd-Frank W all Street Reformand Consumer Protection Act (Dodd-Frank; P.L. 111-203) established the Consumer Financial Protection Bureau (CFPB) to implement and enforce federal consumer financial law while ensuring that consumers can access financial products and services. The CFPB also aims to ensure that markets for consumer financial services and products are fair, transparent, andcompetitive. Dodd-Frankconsolidated in the CFPB certain consumer-finance-related responsibilities previously covered by other regulators and created new authorities unique to theCFPB, as discussed below. Strctre- of th FP The CFPB is headed by a director appointedby the President with the advice and consent of the Senate for a five-year term. It is located within the Federal Reserve System(Fed), although the Federal Reserve Board does not influence the CFPB's budget orpersonnel decisions. The Federal Reserve Board cannotveto arule issuedby the CFPB, but the Financial Stability Oversight Council, of which the Fed chairman is a member, can overturn a CFPB rule with the consent of two-thirds ofits members. The CFPB is funded through the earnings of the Fed, not through appropriations. The CFPB requests monetary transfers fromthe Fed to the extent needed to fund its operations, subject to acap based on a statutory formula. ForFY2020, the CFPB's $580 million budgetwasbebwits $696 million cap. CF2PB Regultry AutKority The CFPB is statutorily charged with implementing and enforcing consumer protection laws, leading financial education initiatives, collecting consumer complaints, and conducting consumer financeresearch.The CFPB has regulatory authority overproviders of an array of consumer financialproducts andservices, includingdeposit taking, mortgages, credit cards and other extensions ofcredit, loan servicing, collectionofconsumerreporting data, and consumerdebt collection. The authorities thatthe CFPB may exercise and the breadth of products, services, and entities that fall within its jurisdiction are considerable, but they are also subject to certain statutory exceptions and limitations. The CFPB's regulatory authorities fall into three broad categories: supervisory, including thepower to examine and impose reporting requirements on financial institutions; enforcement of various consumer protection laws; and rulemaking. The CFPB is authorized to prescriberegulations to implement 19 federal consumer protection laws that largely predate Dodd-Frank. These enumerated consumer laws govern a broad and diverse set ofconsumer financial services and generally apply to any entity engaged in the businessof offering those services. Dodd-Frankalso provided CFPB new power to is sue rules declaring acts or practices associated with consumer financial products and services to be unlawfulbecausethey are unfair, deceptive, or abusive. Otheraspects ofthe CFPB's regulatory power-particularly the scope of its supervisory and enforcement authority-vary depending on an institution's size and whetherit holds abankcharter. Banks. Banks (which include institutions with a bank, thrift, or credit union charter) are regulated for both safety and soundness and consumer compliance. Safety and soundness, orprudential, regulationis conducted by bank regulators and is intended to ensure that banks are managed to maintain profitability and avoid failure. Consumer compliance regulation is intended to ensure that banks conformto applicable consumer protection and fair-lending laws and, for banks above a certain size, is primarily the responsibility of the CFPB. The CFPB's regulatory authority overbanks varies based on whether a bankholds more or less than $10billion in assets (a common threshold for what qualifies as a small bankor a community bank). Forbanks with more than $10 billion in as sets, the CFPB is the primary regulator for consumer compliance. For b anks with $10 billion or less in assets, the rulemaking, supervisory, and enforcement authorities for consumer protection are dividedbetween the CFPB and the prudentialbankregulators. The rules that the CFPB issues to implement the enumerated consumer laws apply to s maller banks, but b ankregulators hold primary supervisory and enforcement authority for consumer compliance regulation of these smaller banks. Nonbanks. A nonbankfinancial institution is an institution that provides financial services butdoes not have a bank, thrift, or credit union charter. The CFPB may issue and enforce rules that affectmany nonbankfinancial institutions, but the CFPB's supervisory authority over these institutions varies based on their activities and s ize. The CFPB is authorized to supervise three groups of nonbanks. First, the CFPB supervises nonb anks, regardless of size, in three specific markets-mortgage companies (such as lenders, brokers, and s ervicers), payday lenders, and private education lenders. Second, the CFPB may supervise larger participants in certain consumer financial markets. The CFPB has some discretion to determine what those markets are and what constitutes a larger participant. Third, the CFPB may supervise a nonbank if, based on consumer complaints or other s ources, the CFPB has reasonable cause to determine thatthe nonbank's financial products or services pose risks to consumers. \ Q

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