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1 1 (January 13, 2022)

handle is hein.crs/goveglr0001 and id is 1 raw text is: Congre s&onaI Research Sernt informing Ih Iegislaive dIbate soc 1914 Updated January 13, 2022 Introduction to Financial Services: The Consumer Financial Protection Bureau (CFPB) In 2010, the Dodd-Frank Wall Street Reform and 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 maintaining consumer access to financial products and services. Dodd-Frank consolidated in the CFPB certain regulatory authorities related to consumer finance that were previously held by other agencies and created new powers not previously held by federal regulators. Dodd-Frank authorizes the CFPB to exercise these powers with the goal of promoting fair, transparent, and competitive markets for consumer financial products and services. Structure of the CFPB Dodd-Frank established the CFPB as an independent bureau within the Federal Reserve System (Fed). The CFPB is headed by a single director, appointed by the President with the advice and consent of the Senate for a five-year term. The Fed's Board of Governors does not influence the CFPB's operations other than through the Fed chairman's role as a member of the Financial Stability Oversight Council (FSOC), which can overturn a CFPB rule with the consent of two-thirds of its members. (The CFPB director is also a voting member of FSOC.) Rather than being funded through regular appropriations, the CFPB funds its operations through monetary transfers from the Fed. The Fed must transfer amounts requested by the CFPB director based on the director's determination of need, subject only to a cap based on a statutory formula. For FY2021, the CFPB received approximately $596 million, which was below its $718 million limit. CF PB Regulatory Authority Dodd-Frank charges the CFPB to implement and enforce consumer protection laws, lead financial education initiatives, collect consumer complaints, and conduct consumer finance research. The CFPB has broad regulatory authority over providers of an array of consumer financial products and services, including deposit taking, mortgages, credit cards and other extensions of credit, loan servicing, collection of consumer reporting data, and consumer debt collection. Although the scope of the CFPB's regulatory power is considerable, it is also subject to certain statutory exceptions and limitations. The CFPB's regulatory authorities fall into three broad categories: supervision (including the power to examine and impose reporting requirements on financial institutions), enforcement of various consumer protection laws, and rulemaking. The CFPB may issue regulations to implement 19 federal consumer protection laws that largely predate Dodd-Frank. These enumerated consumer laws govern a broad and diverse set of consumer financial services and providers. Dodd-Frank also empowers the CFPB with new authority to issue rules declaring acts or practices associated with consumer financial products and services to be unlawful because they are unfair, deceptive, or abusive. Other aspects of the CFPB's regulatory power-particularly the scope of its supervisory and enforcement authority-vary depending on an institution's size and whether it holds a bank charter. Banks. Banks (i.e., institutions with bank, thrift, or credit union charters) are regulated for both safety and soundness and consumer compliance. Bank regulators conduct safety and soundness (prudential) regulation with the goal of ensuring that banks maintain profitability and avoid failure. Consumer compliance regulation is designed to ensure that banks comply with applicable consumer protection and fair- lending laws. The CFPB and the federal banking regulators (i.e., the Fed, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and National Credit Union Administration) share consumer compliance regulation over banks, with their authorities varying depending on the bank's size. The CFPB holds primary consumer compliance regulatory authority over larger banks with more than $10 billion in assets. Smaller community banks must comply with CFPB's rules on implementing enumerated consumer laws, but the bank regulators hold primary supervisory and enforcement authority for issuing consumer compliance regulation for smaller banks. Nonbanks. Nonbank financial institutions provide financial services but do not have bank, thrift, or credit union charters. The CFPB may issue and enforce rules that affect these nonbank financial institutions, but the CFPB's supervisory authority over these institutions varies based on the nonbank's activities and size. First, Dodd-Frank expressly authorizes the CFPB to supervise three categories of financial institutions regardless of size-mortgage companies (including lenders, brokers, and servicers); payday lenders; and private education lenders. Second, the CFPB may supervise nonbank institutions the CFPB determines are larger participants in consumer financial markets. Third, the CFPB may supervise a nonbank that, based on consumer complaints or other sources, the CFPB has reasonable cause to determine ... is engaging, or has engaged in, conduct that poses risks to consumers.... Exempted Institutions. Dodd-Frank exempts some industries from the CFPB's regulatory jurisdiction. The CFPB generally does not have rulemaking, supervisory, or

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