|Consumer Financial Protection Bureau|
|Formed||July 21, 2011
( 2 years, 141 days ago)
|Jurisdiction||Federal Government of the United States|
|Annual budget||US$447.7 million (FY 2013)|
|Agency executives||Richard Cordray, Director
Steven Antonakes, Deputy Director
|Parent agency||Federal Reserve System|
The Consumer Financial Protection Bureau (CFPB) is an independent federal agency that holds primary responsibility for regulating consumer protection with regard to financial products and services in the United States.
The CFPB was created in 2011 after its conception was included as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which passed as a response to the financial crisis of 2007–08 that played a significant role in creating the Great Recession and was signed into law by President Barack Obama.
The jurisdiction of the bureau includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies, and its most pressing concerns are mortgages, credit cards and student loans, according to Director Richard Cordray. It was designed to consolidate employees and responsibilities from a number of other federal regulatory bodies, including the Federal Reserve, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration and even the Department of Housing and Urban Development.The bureau is an independent unit located inside and funded by the United States Federal Reserve, with interim affiliation with the U.S. Treasury Department. It writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on markets, as well as collects and tracks consumer complaints.
The CFPB opened its website in early February 2011 to accept suggestions from consumers via YouTube, Twitter, and its own website interface. According to the United States Treasury Department, the bureau is tasked with the responsibility to "promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services." According to the bureau's own webpage, "The central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products."
In July 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, during the 111th United States Congress in response to the Late-2000s recession and financial crisis. The agency was originally proposed in 2007 by Harvard Law School professor Elizabeth Warren. The proposed Consumer Financial Protection Bureau was actively supported by Americans for Financial Reform, a newly created umbrella organization of some 250 consumer, labor, civil rights and other activist organizations. On September 17, Obama announced the appointment of Warren as Special Advisor to set up the bureau. The bureau began operation on July 21, 2011, shortly after Obama announced that Warren would be passed over as Director in favor of Richard Cordray, who prior to the nomination had been hired as chief of enforcement for the agency. As Ohio Attorney General from 2009 to 2011, Cordray won $2 billion in settlements from financial companies.
Dispute over directorEdit
Harvard Law School professor and bankruptcy expert Elizabeth Warren, who was special consultant in charge of implementing it, was removed from the running for director after Obama administration officials became convinced she "could not overcome strong Republican opposition". On July 17, Former Ohio Attorney General and Ohio State Treasurer Richard Cordray was selected over Warren as the head of the entire CFPB. However, his nomination was immediately in jeopardy due to 44 Senate Republicans vowing to derail any nominee in order to encourage a decentralized structure to the organization. Senate Republicans had also shown a pattern of refusing to consider regulatory agency nominees, purportedly as a method of budget cutting. Due to the way the legislation creating the bureau was written, without a Director the agency is not able to write new rules or supervise financial institutions other than banks.
On July 21, Senator Richard Shelby wrote an op‑ed article for the Wall Street Journal affirming continued opposition to a centralized structure, noting that both the Securities Exchange Commission and Federal Deposit Insurance Corporation had executive boards and that the CFPB should be no different. He noted lessons learned from experiences with Fannie Mae and Freddie Mac as support for his argument. Politico interpreted Shelby's statements as saying that Cordray's nomination was "dead on arrival". Republican threats of a filibuster in the Senate to block the nomination in December 2011 led to Senate inaction.
On January 4, 2012, Barack Obama issued a recess appointment to install Cordray as director through the end of 2013; this was highly controversial move as the Senate was technically in pro-forma session, and the possibility existed that the appointment could be challenged in court.
The constitutionality of Cordray's recess appointment came into question due to a January 2013 ruling by the United States Court of Appeals for the District of Columbia Circuit that Obama's appointment of three members to the NLRB (at the same time as Cordray) violated the Constitution.
List of Directors of the CFPBEdit
|No.||Portrait||Name||State of Residence||Took Office||Left Office||President(s)|
|-||Elizabeth Warren||Massachusetts||September 17, 2010||August 1, 2011||Barack Obama|
|-||Raj Date||Washington, D.C.||August 1, 2011||January 4, 2012|
|1||Richard Cordray||Ohio||January 4, 2012||Incumbent|
A lawsuit filed in 2012 challenged the alleged unconstitutional formation and operation of the Consumer Financial Protection Bureau.
A lawsuit filed July 22, 2013, by Morgan Drexen Integrated Systems, a provider of outsourced administrative support services to attorneys, and Connecticut attorney Kimberly A. Pisinski, challenged the constitutionality of the CFPB. The complaint, filed in the U.S. District Court for the District of Columbia, alleged that the "CFPB's structure insulates it from political accountability and internal checks and balances in violation of the United States Constitution. Unbridled from constitutionally-required accountability, CFPB has engaged in ultra vires and abusive practices, including attempts to regulate the practice of law (a function reserved for state bars), attempts to collect attorney-client protected material, and overreaching demands for, and mining of, personal financial information of American citizens, which has prompted a Government Accountability Office ("GAO") investigation, commenced on July 12, 2013." On August 22, 2013, one month after Morgan Drexen's lawsuit, the CFPB filed its own lawsuit against Morgan Drexen in the United States District Court for the Central District of California alleging that Morgan Drexen charged advance fees for debt relief services in violation of the Telemarketing Sales Rule (TSR) and engaged in deceptive acts and practices in violation of the Consumer Financial Protection Act (CFPA)
- "2012 CFPB Annual Employee Survey". United States Consumer Financial Protection Bureau. 2012-12-07. Retrieved 2013-07-16.
- "Consumer Financial Protection Bureau - Program Summary by Budget Activity". United States Consumer Financial Protection Bureau. 2013. Retrieved 2013-07-16.
- Eaglesham, Jean (2011-02-09). "Warning Shot On Financial Protection". The Wall Street Journal. Retrieved 2011-02-10.(subscription required)
- Warren, Elizabeth (2010-09-14). "FACTBOX-New US consumer financial bureau has wide powers". Reuters. Retrieved 2011-02-10.
- Bureau of Consumer Financial Protection, topics.nytimes.com Updated: Dec. 8, 2011
- "Consumer Financial Protection Bureau Website Launched and Open for Suggestions". Mybanktracker.com. 2011-02-07. Retrieved 2011-02-10.
- "Learn About the Bureau". United States Consumer Financial Protection Bureau. Retrieved 2011-02-10.
- Mogilnicki EJ, Malpass MS. The First Year of the Consumer Financial Protection Bureau: An Overview. The Business Lawyer.
- Kirsch, Larry; Mayer, Robert (2013). Financial justice : the people's campaign to stop lender abuse. Santa Barbara: Praeger. ISBN 1440829519.
- Obama names Warren as special adviser. CNN Money.
- Appelbaum, Binyamin (2011-07-17). "Former Ohio Attorney General Picked to Lead Consumer Agency". New York Times. Retrieved 2011-07-17.
- Bennett D, Dougherty C. (2011). Elizabeth Warren’s Dream Becomes a Real Agency She May Never Get to Lead. Bloomberg.
- Puzzanghera, Jim (September 07, 2011). "GOP stalls confirmation of consumer agency nominee". Los Angeles Times.
- Appelbaum, Binyamin (2011-07-17). "Former Ohio Attorney General Picked to Lead Consumer Agency". The New York Times. Retrieved 2011-07-17.
- Wyatt, Edward (2011-07-18). "Dodd-Frank Under Fire a Year Later". New York Times. Retrieved 2011-07-22.
- Shelby, Richard (2011-07-21). "The Danger of an Unaccountable 'Consumer-Protection' Czar". The Wall Street Journal. p. A17. Retrieved 2011-07-22.(subscription required)
- Epstein, Reid J. (2011-07-21). "Richard Shelby: Richard Cordray is DOA". Politico. Retrieved 2011-07-22.
- Nakamura, David and Sonmez, Felicia (2012-01-04). "Obama to use executive power to name consumer watchdog chief over GOP objections". The Washington Post. Retrieved 2012-01-04.
- Savage, David G. (2013-01-25). "Court rules Obama recess appointments unconstitutional". Los Angeles Times. Retrieved 2013-05-03.
- Peralta, Eyder (2013-07-16). "Cooling Tensions, Senate Confirms Cordray". NPR. Retrieved 2013-07-19.
- Hall, Christine. "Dodd-Frank Unconstitutional Power-Grab, Says New Lawsuit". Competitive Enterprise Institute. Competitive Enterprise Institute.
- Pollock, Richard (2013-07-23). "Private firm sues CFPB, challenges board's constitutionality". Washington Examiner. Retrieved 2013-08-11.
- Karmasek, Jessica M. (2013-08-10). "Conn. attorney, support services provider sue CFPB over alleged ‘data mining’". Legal Newsline Legal Journal. Retrieved 2013-08-11.
- "Morgan Drexen Filings". Morgan Drexen. Retrieved 2013-08-11.
- Kaplinsky, Alan (23 Aug 2013). "A tale of two lawsuits: CFPB sues Morgan Drexen". JD Supra Law News. Retrieved 8 Nov 2013.
|Wikinews has news related to:|
- ConsumerFinance.gov, official website
- Holding the CFPB Accountable: Review Of The First Semi-Annual Report: Hearing before the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Twelfth Congress, Second Session, January 31, 2012
- The Semi-Annual Report of the Consumer Financial Protection Bureau: Hearing before the Committee on Financial Services, U.S. House of Representatives, One Hundred Twelfth Congress, Second Session, September 20, 2012
- The Consumer Financial Protection Bureau’s Semi-annual Report to Congress: Hearing before the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Thirteenth Congress, First Session, April 23, 2013