The Consumer Financial Protection Bureau

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CHAPTER V

THE CONSUMER FINANCIAL

PROTECTION BUREAU

Congress established the Consumer Financial Protection Bureau

(CFPB) with the passage of the Dodd-Frank Wall Street Reform and

Consumer Protection Act of 2010 (Dodd-Frank Act or Dodd-Frank),

signed into law by President Obama on July 21, 2010.1 The Dodd-Frank

Act established the CFPB as an independent federal agency within the

Federal Reserve System tasked with regulating the offering and

provision of consumer financial products and services. The CFPB has six

divisions: Supervision, Enforcement, and Fair Lending; Operations;

Consumer Education, and Engagement; Research, Markets, and

Regulations; External Affairs; and Legal. The consumer financial

products or services subject to the CFPB’s authority include, but are not

limited to, the origination and servicing of certain loan products,

including mortgages and credit cards;2 real estate settlement services;3

deposit products;4 check cashing;5 debt collection;6 and consumer

reporting.7 The CFPB generally has jurisdiction over large banks,

(depository institutions) and nonbanks when these institutions offer or

provide consumer financial products or services.

Prior to the enactment of the Dodd-Frank Act, the federal

government’s oversight of these products was spread among seven

different federal agencies, and nonbank institutions offering these

products were subject to limited federal supervision. In an effort to

address the perceived shortcomings of this regulatory scheme, Congress

transferred to the CFPB certain authority related to the regulation of

consumer financial products and services previously exercised by these

1. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L.

No. 111-203, 124 Stat. 1376 (2010) (codified in scattered sections of

U.S.C.) (hereinafter “Dodd-Frank Act” or “Dodd-Frank”).

2. 12 U.S.C. § 5481(15)(A)(i).

3. Id. § 5481(15)(A)(iii).

4. Id. § 5481(15)(A)(iv).

5. Id. § 5481(15)(A)(vi).

6. Id. § 5481(15)(A)(x).

7. Id. § 5481 (15)(A)(ix).

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agencies,8 and vested the CFPB with newly-established authority,

including supervisory authority over certain nonbank institutions.9 The

Federal Trade Commission continues to have co-extensive enforcement

authority as to nonbanks; the CFPB and the FTC share this jurisdiction.10

To this end, in January 2012 the FTC and CFPB took action through a

Memorandum of Understanding to coordinate efforts to protect

consumers and avoid duplication of federal law enforcement and

regulatory efforts.11

The CFPB is charged with implementing and, where appropriate,

enforcing “Federal consumer financial law” with the goal of “ensuring

that all consumers have access to markets for consumer financial

products and services and that markets for consumer financial products

and services are fair, transparent, and competitive.”12 “Federal consumer

financial law” is a defined term that includes eighteen enumerated

consumer laws enacted prior to the Dodd-Frank Act,13 Title X of the

Dodd-Frank Act, the laws for which authorities were transferred under

subtitles F and H of Title X, and all rules and orders prescribed by the

CFPB under this authority.14 Congress also vested the CFPB with

8. Id. § 5581.

9. Id. § 5514.

10. Id. § 5583(c).

11. Memorandum of Understanding Between the Consumer Financial

Protection Bureau and the Federal Trade Commission (Jan. 2012),

available at http://ftc.gov/os/2012/01/120123ftc-cfpb-mou.pdf.

12. Id. § 5511(a).

13. Id. § 5481(12). The “enumerated consumer laws” are the Alternative

Mortgage Transaction Parity Act of 1982, the Consumer Leasing Act of

1976, the Electronic Fund Transfer Act, the Equal Credit Opportunity

Act, the Fair Credit Billing Act, the Fair Credit Reporting Act (except

with respect to sections 615(e) and 628 (15 U.S.C. § 1681m(e), 1681w),

the Home Owners Protection Act of 1998, the Fair Debt Collection

Practices Act, subsections (b) through (f) of section 43 of the Federal

Deposit Insurance Act, sections 502 through 509 of the Gramm-Leach-

Bliley Act (except for section 505 as it applies to section 501(b)), the

Home Mortgage Disclosure Act of 1975, the Home Ownership and

Equity Protection Act of 1994, the Real Estate Settlement Procedures Act

of 1974, the S.A.F.E. Mortgage Licensing Act of 2008, the Truth in

Lending Act, the Truth in Savings Act, section 626 of the Omnibus

Appropriations Act of 2009, and the Interstate Land Sales Full Disclosure

Act. Id.

14. 12 U.S.C. § 5481(14).

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CONSUMER FINANCIAL PROTECTION BUREAU 613

authority to enforce the FTC’s Telemarketing Sales Rule15 and certain

rules promulgated under the Federal Trade Commission Act,16 although

the FTC otherwise retains full authority over these rules.

The Division of Supervision, Enforcement, and Fair Lending (SEFL)

has the primary responsibility for ensuring compliance with and

enforcement of the federal consumer financial laws. Among those

supervised by the CFPB are large banks, thrifts, and credit unions with

over $10 billion in assets, and their affiliates.17 In addition, the CFPB

supervises certain nonbanks that offer or provide certain consumer

financial products or services. Specifically, the CFPB has supervisory

authority over certain categories of nonbanks that provide three

enumerated types of consumer financial products or services: (1)

origination, brokerage, or servicing of residential mortgage loans, or loan

modification or foreclosure relief services related to residential mortgage

loans;18 (2) private education loans;19 and (3) payday loans.20 The CFPB

also has supervisory authority over “larger participant[s] of a market for

other consumer financial services,” as the CFPB defines that market

through rulemaking.21

A. Investigations by the Office of Enforcement

The Dodd-Frank Act authorizes the CFPB to conduct investigations

to ascertain whether “any person” is or has been engaged in conduct that,

if proved, would constitute a violation of the federal consumer financial

law.22 Section 1052 of the Act governs these investigations.23 On June

15. Id. § 1100C(d).

16. Id. § 5581(b)(5)(B)(ii) (authorizing the Bureau to enforce a rule

prescribed under the FTC Act “with respect to an unfair or deceptive act

or practice to the extent that such rule applies to a covered person or

service provider with respect to the offering or provision of a consumer

financial product or service”).

17. Id. § 5515(a).

18. Id. § 5514(a)(1)(A).

19. Id. § 5514(a)(1)(D).

20. Id. § 5514(a)(1)(E).

21. Id. § 5514(a)(1)(B). In addition to larger nonbank participants, the

Bureau may supervise any other nonbank if it has reasonable cause to

determine, after notice and a reasonable opportunity to respond, that the

nonbank is engaging, or has engaged, in conduct that poses risks to

consumers with regard to the offering of consumer financial products or

services. Id. § 5514(a)(1)(C).

22. Id. § 5562(c).

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