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1 1 (January 8, 2019)

handle is hein.crs/govxxt0001 and id is 1 raw text is: Congressional Research Sertdce Informing the legislative debate since 1914 Updated January 8, 2019 Introduction to Financial Services: The Bureau of Consumer Financial Protection (CFPB) The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203) established the Bureau of Consumer Financial Protection (CFPB) to implement and enforce federal consumer financial law while ensuring consumers can access financial products and services. The CFPB also aims to ensure that markets for consumer financial services and products are fair, transparent, and competitive. Dodd-Frank consolidated certain consumer finance-related responsibilities previously covered by other regulators in the CFPB 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 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 or personnel decisions. The Federal Reserve Board also cannot veto a rule issued by the CFPB, but the Financial Stability Oversight Council can overturn a CFPB rule with the vote of two-thirds of its members. The CFPB, which is not subject to congressional appropriations, is funded through the earnings of the Fed. The CFPB requests monetary transfers from the Fed with a cap on the amount of these transfers based on a formula set in statute. For FY2018, the CFPB's funding cap was $663 million, while the agency's net operating costs were $523 million. CFPB Regulatory Authority The CFPB generally has 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 debt collection associated with consumer financial products. The authorities that the CFPB may exercise and the breadth of products, services, and entities that fall within its jurisdiction are considerable, but Dodd-Frank imposes some important exceptions to and limitations on those powers. The CFPB's authorities fall into three broad categories: supervisory, including the power to examine and impose reporting requirements on financial institutions; enforcement of various consumer protection laws and regulations; and rulemaking. The CFPB is authorized to prescribe regulations to implement 19 federal consumer protection laws that largely predated Dodd-Frank. These enumerated consumer laws govern a broad and diverse set of consumer financial services and generally apply to any entity engaged in the business of offering those services. Dodd-Frank also provided CFPB new power to issue rules declaring certain acts or practices associated with consumer financial products and services to be unlawful because they are https://crsreport 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 (which include institutions with a bank, thrift, or credit union charter) are regulated for safety and soundness as well as for consumer compliance. Safety and soundness, or prudential, regulation is intended to ensure an institution is managed to maintain profitability and avoid failure. The focus of consumer compliance regulation, by contrast, is to ensure institutions conform to applicable consumer protection and fair-lending laws. Pursuant to Dodd-Frank, the CFPB acquired certain consumer compliance powers over banks that vary based on whether a bank holds more or less than $10 billion in assets (a common threshold for what qualifies as a small bank or a community bank). For banks with more than $10 billion in assets, the CFPB is the primary regulator for consumer compliance, whereas safety and soundness regulation continues to be performed by the bank regulator. For banks with $10 billion or less in assets, the rulemaking, supervisory, and enforcement authorities for consumer protection are divided between the CFPB and a bank regulator. The CFPB may issue rules that would apply to smaller banks, but bank regulators hold primary supervisory and enforcement authority for consumer compliance regulation of smaller banks. Nonbanks. A nonbank financial institution is an institution that provides financial services but does not have a bank, thrift, or credit union charter. The CFPB may issue and enforce rules that affect many nonbank financial 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 servicers), 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 sources, the CFPB has reasonable cause to determine that the nonbank poses risks to consumers in offering its financial services or products. Exempted Institutions. Dodd-Frank exempts some industries from the CFPB's regulatory jurisdiction. The CFPB generally does not have rulemaking, supervisory, or .congressgov 0

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