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1 1 (January 4, 2021)

handle is hein.crs/goveant0001 and id is 1 raw text is: Updated January 4, 2021 Introduction to Financial Services: The Consumer Financial Protection Bureau (CFPB) The 2010 Dodd-Frank Wall 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 ens uring that consumers can access fmancial products and services. The CFPB also aims to ensure that markets for cons umer fmancialservices and products are fair, transparent, andcompetitive. Dodd-Frank consolidated in the CFPB certain consumer-finance-related responsibilities previously covered by otherregulators and created new authorities unique to the CFPB, as discussed below. Structure of the CFPB The CFPB is headed by a director appointed by the President with the advice and consent of the Senate for a five-year term. It is located within theFederal Reserve System(Fed), although the Federal Reserve Board does not influence the CFPB's budget or personnel 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 a cap based on a statutory formula. ForFY2020, the CFPB's $580 million budgetwas bebwits $696 million cap. CFPB Regulatory Authority The CFPB is statutorily charged with implementing and enforcing consumer protection laws, leading financial education initiatives, collecting consumer complaints, and conducting consumer fmanceresearch.The CFPB has regulatory authority overproviders of an array of consumer financial products and s ervices, including deposit taking, mortgages, credit cards and other extensions of credit, loan servicing, collectionofconsumer reporting data, and cons umer debt collection. The authorities th at the 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 ofvarious consumerprotection laws; and rulemaking. The CFPB is authorized to prescriberegulations to implement 19 federal cons umer protection laws thatlargely predate Dodd-Frank. These enumerated consumer laws govern abroad and diverse set ofconsumer financial services and generally apply to any entity engaged in the https://crsrepo businessof offering those services. Dodd-Frankalso provided CFPB new power 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 ofthe CFPB's regulatory power-particularly the s cope 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, regulation is conductedby bank regulators and is intended to ensure thatbanks 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 orless than$10billion in as sets (a common threshold for what qualifies as a small bank or a community bank). Forbanks with more than $10 billion in as sets, the CFPB is the primary regulator for cons umer 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, butbankregulators hold primary supervisory and enforcement authority for consumer compliance regulation of these smallerbanks. Nonbanks. A nonbankffmancial 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 nonbankffmancial institutions, but the CFPB's supervisory authority over these institutions varies based on their activities and size. The CFPB is authorized to supervise three groups of nonbanks. First, the CFPB supervises nonbanks, 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 cons umer complaints or other sources, the CFPB has reasonable cause to determine thatthe nonbank's financial products or services pose risks to consumers. .conress.qov

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