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1 [1] (May 9, 2025)

handle is hein.crs/itntdnclss0001 and id is 1 raw text is: Congressional Research Service ^Inforrning the legislative debate since 1914 Updated May 9, 2025 Introduction to Financial Services: The Consumer Financial Protection Bureau (CFPB) In 2010, through enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank, P.L. 111-203), Congress established the CFPB to implement and enforce federal consumer financial law for certain financial products and institutions. Dodd-Frank consolidated in the CFPB certain consumer financial regulatory authorities that other agencies previously held and provided the CFPB with new powers not previously held by federal regulators. Structure of the CFPB Congress structured the CFPB as an independent bureau within the Federal Reserve System (Fed). The CFPB is headed by a single director, appointed by the President for a maximum of a five-year term with the advice and consent of the Senate. The Supreme Court held in Seila Law v. CFPB that the President may fire the director at will, concluding that the express statutory protection to the contrary was unconstitutional. The Fed's Board of Governors does not influence the CFPB's operations other than through the Fed chair'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's board must transfer amounts requested by the CFPB director based on the director's determination of need, subject to a statutory funding cap. For FY2024, the CFPB requested approximately $729 million, which was below its $785 million funding cap. CFPB 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. https://crsreport 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. 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-those with more than $10 billion in assets. Banks with $10 billion or less in assets must comply with CFPB's rules implementing various consumer laws, but the bank regulators, rather than the CFPB, hold primary consumer compliance supervisory and enforcement authority over these smaller institutions. Nonbanks. Nonbank financial institutions provide financial services but do not have bank, thrift, or credit union charters. Nonbanks have traditionally dominated third-party debt collection, payday lending, credit reporting, and certain other consumer financial markets. Since the Great Recession, nonbanks have also become increasingly important in the small business lending and mortgage origination and servicing markets. The CFPB may issue and enforce rules that affect these nonbank financial institutions, but the CFPB's supervisory authority over them varies based on their activities and size. First, Dodd-Frank expressly authorizes the CFPB to supervise three categories of nonbank 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 a consumer financial market. 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. For .congress.gov S

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