The Consumer Financial Protection Bureau ( CFPB ) is a United States government agency responsible for consumer protection in the financial sector. CFPB jurisdictions include banks, credit unions, securities firms, payday loans, mortgage-servicing operations, foreclosure assistance services, debt collectors and other financial firms operating in the United States.
The creation of the CFPB is authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, whose share in 2010 is the legislative response to the 2007-08 financial crisis and the next Great Recession. The status of CFPB as an independent institution has been confirmed by the US Court of Appeals.
Video Consumer Financial Protection Bureau
Roles
According to former Director Richard Cordray, Bureau priorities are mortgages, credit cards, and student loans. The CFPB is designed to consolidate its 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 within and funded by the United States Federal Reserve, with an interim affiliation with the US Treasury.
CFPB writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on the market, as well as collects and tracks consumer complaints.
The CFPB opened its website in early February 2011 to receive consumer advice via YouTube, Twitter, and its own website interface. According to the US Treasury Department, the bureau is tasked with the responsibility to "promote justice and transparency for mortgages, credit cards, and other consumer financial products and services". According to its website, CFPB's "central mission" is to make the market for consumer finance products and services work for Americans - whether they are applying for a mortgage, choosing between credit cards, or using some other consumer finance product. "In 2016 alone a large numbers of hundreds of thousands of consumer complaints about their financial services - including banks and credit card issuers - are accepted and compiled by CFPB and made publicly available in federal government databases.
Maps Consumer Financial Protection Bureau
History
In July 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, during the 111th US Congress in response to the recession and financial crisis of the late 2000s. The agency was originally proposed in 2007 by Harvard Law School professor Elizabeth Warren. The proposed CFPB is actively supported by America for Financial Reform, a newly formed umbrella organization of about 250 consumers, laborers, civil rights and other activist organizations.
On September 17, 2010, President Obama announced the appointment of Senator Warren as Assistant President and Special Adviser to the Minister of Finance at the Consumer Finance Bureau of Consumers to establish a new institution. Because the way the law was enacted, until the first Director in place, the agency can not write new rules or oversee financial institutions other than banks.
On July 21, 2011, Senator Richard Shelby wrote an open opinion to the Wall Street Journal that underscored his ongoing refusal of a centralized structure, noting that both the Securities Exchange Commission and the Federal Deposit Insurance Corporation had an executive board and that the CFPB should not be different. He recorded lessons from experience with Fannie Mae and Freddie Mac as support for his argument. Politico interprets Shelby's assertion that Cordray's nomination is "dead on arrival". The Republican threat of filibuster to block the nomination in December 2011 caused the absence of the Senate.
The CFPB officially commenced operations on July 21, 2011, shortly after President Obama announced that Senator Warren would be authorized as Director who supported Richard Cordray, who before his candidacy had been employed as head of law enforcement for the agency.
Elizabeth Warren, who proposed and founded the CFPB, was removed from consideration as the bureau's first formal director after Obama administration officials became convinced Warren could not overcome the strong Republican opposition. On July 17, President Obama nominated former Ohio Attorney and Ohio State Treasurer Richard Cordray to become the first formal director of CFPB.
However, the Cordray nomination was immediately in jeopardy because the Senate's 44 Senate swore to frustrate every candidate to push for a decentralized organizational structure. The Republican Senate has also shown a pattern of refusing to consider the nomination of regulatory agents.
Since the CFPB database was established in 2011, over 730,000 complaints have been published. Supporters of the CFPB include the Consumer Union claim that it is "a vital tool that can help consumers make decisions". CFPB critics argue that the CFPB database is in a "gotcha game" and that there is already a database maintained by the Federal Trade Commission even though the information is not publicly available.
On January 4, 2012, Barack Obama issued a recess promise to install Cordray as a director until the end of 2013. This is a very controversial move because the Senate is still holding a pro forma session, and it is likely that the appointment could be challenged in court.
The constitutionality of the appointment of the Cordray recess was questioned following a decision in January 2013 by the US Court of Appeals for the Circuit District of Columbia that President Obama's appointment of three members to the NLRB (at the same time as Cordray) violated the Constitution.
On July 16, 2013, the Senate confirmed Cordray as director in a 66-34 vote.
The Financial CHOICE Act, proposed by the House Financial Services Committee Jeb Hensarling, to revoke the Dodd-Frank Wall Street Reform and Consumer Protection Act, endorsed the House on June 8, 2017. Also in June 2017, the Senate is drafting its own reform bill.
Testimony to the US Congressional hearing in 2017 has raised concerns that major publications of consumer complaints are misleading and detrimental to consumer markets. Rep. Barry Loudermilk, R-Ga., Told one of the congressional hearings, "Is the purpose of the database just for the name and the company embarrassed? Or should they have a disclaimer there that says it is a fact-free zone, or this is false news "That's really what I see happening here." In response to Bill Himpler, executive vice president of the American Financial Services Association, a trading group representing banks and other lenders: "Something must be done." "Once the damage happens to the company, it's hard to restore your reputation.
Proposed amendment
On July 11, 2013, the CFPB Rural Appeal and Conflict (H.R. 2672; 113th Congress) was introduced to the House of Representatives. The bill will alter the Dodd-Frank Wall Street Reform and Consumer Protection Act to direct the CFPB to create an application process that will allow one to designate their territory as "rural" for federal consumer financial law purposes. One practical effect of having a rural designated village is that people can qualify for some type of mortgage by getting them exempt from the CFPB qualified mortgage rules.
On 26 September 2013, the Consumer Protection Protection and Improvement Health Protection Act of 2013 (H.R. 3193; 113th Congress) was introduced to the United States House of Representatives. If adopted, the bill would modify the CFPB by turning it into a five-person commission and removing it from the Federal Reserve System. CFPB will be renamed "Financial Product Safety Commission". The bill is also intended to make it easier to override the CFPB decision. It was ratified in the House of Representatives on 27 February 2014 and accepted by the Senate on 4 March. It was never considered in the Senate which is controlled by the Democratic Party.
2017 director disputes acting
On November 24, 2017, Director Cordray appointed Leandra English to the position of deputy director, and announced that he would leave the office at the close of business that day. Cordray indicated that it would make Britain as a director acting after his resignation, citing the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act which provides that the CFPB's deputy director becomes the acting director in the director's "nonexistent or unavailable". Later in the same day, however, President Donald Trump appointed director of the Office of Management and Budget, Mick Mulvaney, as acting director, citing the Federal Vacancies Reform Act of 1998.
On November 25, the Office of Legal Counsel issued an opinion, written by Assistant Attorney General Steven Engel, asserting that the President has the authority under FVRA to appoint the acting CFPB Director. Memo OLC states that "both the Vacancies Reform Act and [Ã,§1011 (b) (5) from Dodd-Frank] are available to fill the acting base as vacancies resulting from the resignation of the CFPB Director" but that "when the President appoints someone.... beyond the usual succession sequence, the appointment of the President should be controlled. "This position is also supported by the CFPB General Counsel, Mary E. McLeod.
On 26 November, the United Kingdom filed a lawsuit in the United States District Court for the District of Columbia seeking an order of temporary detention and a declarative decision to prevent Mulvaney becoming acting director, which was rejected by a federal judge on November 28, 2017. Mulvaney was granted access by an unnamed individual with a key to the director's office on 27 November and ordered all CFPB employees to ignore any claims from the English language that he is acting director. Both English and Mulvaney emailed all 1,600 CFPB staff members, each of whom signed as "Acting Director" of the agency. On November 28, 2017, US District Judge Timothy J. Kelly denied the British movement for an initial court order and allowed Mulvaney to begin serving as CFPB Managing Director.
Settings Activity
Since its formation until 2017, the CFPB "has restricted its cruel debt collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from customers of disadvantaged financial institutions, and spent nearly $ 12 billion on 29 million consumers in refunds and canceled debts. "
Mortgage
Implementation of regulations on mortgages is included in the bureau's website. Topics provided to consumers include, implementation of 2013 mortgage rules, resources to help people comply, quick reference diagrams, surveillance and inspection materials, and links for feedback. It also provides additional information covering rural or underserved areas, HUD approved housing counselors, and Annex Q.
Appendix Q deals with the debt-to-earnings ratio that must be held for "eligible mortgages" and provides details on how to determine factors for the calculation. Standards set no more than 43 percent.
Pension and investment insurance
The CFPB is considering whether it should take a role in helping Americans manage retirement savings and set up savings plans, especially focusing on investment fraud targeting pensioners and the elderly. "It's one of the things we're exploring and interested in what and what authority we have," bureau director Richard Cordray said in an interview in January 2013. Some conservatives have been critical of this potential role, with William Tucker of the American Media Institute stating that the agency intends to "control" pension savings and force people to buy federal debt. AARP has encouraged the agency to take an active role, arguing that the bureau will help protect the elderly from affinity scams that often target senior citizens, ensuring that their investments are less likely to be stolen through securities or malpractice fraud.
The main organizers of pension and benefits programs set up by employers and private industry are the US Department of Labor, which enacts major laws (ERISA, COBRA and HIPAA), pension plans (including 401 (k), SIMPLE, 403 (b) and traditional benefit-defined pensions) as well as many aspects of the employer's group-health plan. The Affordable Care Act, building a market that sells health plans directly to consumers, adopts the ERISA style setting model, which requires all plans to have standard documents such as "summary plan documents" (SPD), but the market has been regulated by individual insurance. commissioner of every state, with several states having multiple regulators (California maintaining the Insurance Department and the Managed Care Department). The IRA, also directed to the consumer, is governed by a type of custodian (FDIC governing the bank guard, IRS governing non-bank custodians). Annuities, life insurance, and disability insurance purchased directly by consumers, are regulated by each state insurance commissioner. Marketing to consumers is generally governed by the FCC and various state laws.
Since the state commissioner is the main regulator, CFPB is unlikely to take a leadership role in pension investment regulations without further legislation and the possibility of a US constitutional amendment transferring the power of making the insurance legislation to the federal government. In 2011, the National Association of Insurance Commissioner identified "one of the most significant challenges for state insurance regulators is to be vigilant in protecting consumers, especially given the changes occurring in the financial services market", and CFPB can help fill in this void. Many argue that state-managed insurance systems (including products such as insurance such as annuities) are very economically inefficient, resulting in an uneven and non-portable insurance plan, artificially shrinking the risk pool (especially in smaller countries) to produce higher premiums. , limiting the mobility of brokers to be re-certified in new countries, complicating the needs of multi-state businesses, and should be replaced by national insurance regulators or national insurance charter options as has happened with securities and banking regulations.
Public reach
The CFPB has created a number of personal finance tools for consumers, including Ask CFPB, which compiles simple language answers to personal finance questions, and Paying for College, which estimates the fees for attending certain universities based on the financial assistance the student offers has earned.
CFPB has also been trying to help consumers understand virtual currencies like Bitcoin.
List of directors
- Status
Legal challenge
Two lawsuits were filed in the early years of the CFPB; they were both dismissed by a federal court, but one appeal and still going on. The first, filed on June 21, 2012, by a Texas bank jointly with a Competitive Enterprise Institution, challenged the constitutionality of the CFPB provisions. One year later, in August 2013, a federal judge dismissed the lawsuit because the plaintiff had failed to show that they had suffered a loss. In July 2015, the Court of Appeals for the Circuit District of Columbia confirmed partially and partially reversed, stating that the bank, but not a state that later joined the lawsuit, has stood up to challenge the law, and return the case to further. process.
A lawsuit filed July 22, 2013, by Morgan Drexen Integrated Systems, a provider of administrative support services that is diverted to lawyers, and Connecticut lawyer Kimberly A. Pisinski, challenges the CFPB's constitutionality. The complaint, filed in the US District Court for the District of Columbia, alleges that "the CFPB structure crosses it from political accountability and internal checks and balances in violation of the US Constitution." Uncontrolled accountability is constitutionally mandated, CFPB has been involved in ultra vires and practices, including attempts to regulate legal practice (a function that is reserved for state bars), attempts to collect lawyer-client-protected material, and exceed the demands for, and mining, personal financial information of Americans, who have requested a Government Accountability Office ("GAO") investigation, beginning on July 12, 2013. "In October, the case was dismissed by the Federal Court of DC On August 22, 2013, one month after the Morgan Drexen 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 up fees for debt relief services that violated Telemarketing Sales Rules and engaged in actions and practices who cheats in violation of the Consumer Financial Protection Act (CFPA). The CFPB won the lawsuit and Morgan Drexen was ordered to pay $ 132,882,488 in civil damages and penalties of $ 40 million.
In October 2016, the United States Court of Appeal for the Circuit District of Columbia ruled that it was unconstitutional for the Director of CFPB to be released by the President of the United States simply for reasons such as "inefficiency, negligence of duties or irregularities." Circuit Judge Brett Kavanaugh, joined the Senior Circuit Judge A. Raymond Randolph, wrote that the law was "a threat to individual freedom" and instead found that the President could remove the CFPB Director at will. The ruling basically made the CFPB a part of the federal executive department of the United States. Circuit Judge Karen L. Henderson agreed that the Director of CFPB had been wrong in adopting a new interpretation of the Housing Settlement Procedure Act, finding the restriction legislation not applicable to the CFPB, and a mortgage fraud mortgage company PHH Corporation $ 109 million, but he did not agree to give President of the new powers to get rid of the Director, by reason of the avoidance of the constitution. The US Court of Appeals for the District of Columbia Circuit cleared the decision and ordered a review of en banc . On January 31, 2018, Circuit en banc D.C. found that the CFPB structure is constitutional by voting 7-3. Judge Cornelia Pillard, writing for the majority, found that the Take Care Clause did not prohibit independent institutions, while each circuit judge from the previous panel wrote a different opinion.
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Controversy
The 2013 press release from the US House Financial Services Committee criticized the CFPB for what is described as a "radical structure" that is "controlled by an individual who can not be dismissed for poor performance and who holds sole control over the agency, hire and budget." In addition, the committee accused the lack of financial transparency and lack of accountability to Congress or the President. Vice Chairman of the Committee of Patrick McHenry, expressed particular concern about travel costs and renovation of $ 55 million CFPB headquarters, stating "$ 55 million more than the overall construction budget and annual earnings for GSA for the totality of federal buildings." In 2012, most of the GSA's Federal Building Fund is used for rental fees, totaling $ 5.2 billion. $ 50 million is budgeted for construction and facility acquisition.
In 2014, several employees and former CFPB employees testified before Congress about the alleged cultural racism and sexism at the agency. Former employees testified that they were rewarded for bringing problems to their boss.
CFPB has been criticized for the methodology used to identify examples of racial discrimination among automated lenders. Due to legal constraints, agencies use systems to "guess" races of auto loan borrowers based on their last name and zip code. Based on that information, the agency accused some lenders of discriminating against minority applicants and levying large fines and settlements against those companies. Ally Financial pays $ 98 million in fines and settlement fees in 2013. Because the agency's methodology means only guessing who the victims of discrimination are entitled to completion funds, by the end of 2015 CFPB has not compensated every individual who is the victim of Ally's alleged discriminatory practice.
Cordray was accused of several violations of the Hatch Act as Director of CFPB and was investigated by the Office of Special Advisers (OSC), which found no offense.
In a 2014 interview with Credit Union Times, CFPB's current head Mick Mulvaney said the CFPB was "a sick and sad joke" and that it was run by "basically a one man dictator."
Partial Blocking
On May 21, 2018, the bureau weakened after US President Donald Trump signed a law on Congress laws that canceled the enforcement of car loan rules. On May 24, 2018, Trump signed further legislation from Congress laws that exempted dozens of banks from CFPB regulations.
See also
- List of regulatory authorities by country
- Regulatory response to subprime crisis
- Debate over subprime mortgage crisis solutions
- Title 12 of the Federal Regulatory Code
- Volcker Rule
- Wall Street Reform
References
Further reading
- Holds CFPB Accountability: Review of the First Semi-Annual Report: Hearing before the Banking, Housing and Urban Affairs Committee, United States Senate, One Hundred Twelve Congresses, Second Session, January 31, 2012
- Semi-Annual Report from Consumer Financial Protection Bureau: Hearing before the Financial Services Committee, US House of Representatives, One Hundred Twelve Congresses, Second Session, 20 September 2012
- Semi-annual Report of the Consumer's Consumer Protection Bureau to Congress: Hearing before the Banking, Housing and Urban Affairs Committee, United States Senate, One Hundred Seventeen Congress, First Session, April 23, 2013
External links
- Official website
- Consumer Financial Protection Bureau in Federal List
Source of the article : Wikipedia
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