We have provided numerous updates about the Consumer Financial Protection Bureau since its establishment as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Act, usually referred to simply as Dodd-Frank, after the congressmen who were responsible for the law, has been a hot topic as of late. There have been many questions, perhaps generated by the Bank of America’s decision to add $5 per month fees to all who use the ATM cash machines. From the perspective of a Massachusetts bankruptcy lawyer and a Massachusetts consumer lawyer, we see the Dodd-Frank Act as a positive step in bringing these consumer banking questions to light.
The Agency claims that its mission is to help “consumer financial markets” by “making rules more effective” and by working to “fairly enforce” the rules. The goal is to empower consumers with respect to their economic lives.
Over a year ago, President Obama named Elizabeth Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury for the CFPB. We write about Professor Warren, who is a Massachusetts bankruptcy professor at Harvard Law School, in our blog, http://www.bostobankrutpcylawyerblog.com on occasion. Professor Warren was largely responsible for getting the new consumer agency on the books, and off the ground. Unfortunately, even before President Obama could nominate Professor Warren, she withdrew. Perhaps she withdrew because of the current climate in Washington. Presently, Ms. Warren is running for United States Senate, for the seat formerly occupied by Ted Kennedy and currently occupied by Scott Brown. We try to avoid politics, however, so our focus goes back to the CFPB.
Professor Warren noted that the statutory objectives of the Agency were to get consumers timely and easy to understand information about the financial decisions they would make, including mortgages, credit cards, and loans. The Agency was to be a watchdog over unfair and deceptive practices by financial institutions, large and small. Further, the Agency was to help REDUCE regulations.
For example, the Agency working toward reducing the mortgage disclosure documentation to one, easy to read “know before you owe” document. Considering that the mortgage crisis caused or largely contributed to the financial crisis, this could prove a helpful step for future homebuyers.
Another example is their work on the Credit Card Accountability Responsibility Act, the CARD law, of 2009. The CARD law provides consumers with all of the costs of obtaining and using credit cards, in a more up-front and consumer friendly fashion. Thus, everyone knows upfront about how the Bank of America $5 charges will affect them. You may not like the new fees, but you know about them…and you can make decisions before they go into effect.
As a Massachusetts bankruptcy lawyer, for over 25 years, I’m often asked about credit scores. The CFPB is required by law to study the fairness of credit reporting.
The current administrator of the CFPB is Raj Date, however, the president has nominated Richard Cordray, the current head of the Bureau’s Enforcement Division, to be the first director. He is the former Attorney General of Ohio. While it is not clear of Mr. Date or Mr. Cordray will work to stop the $5 fee, the CFPB has been a flashpoint to focus the question. They certainly can review the effects of the fee on consumers. It’s a large Agency, but not likely to take on every battle that hits the news.
The Bureau has the following divisions: Chief Operating Officer, which cover consumer response and operations; Consumer Education and Engagement, which covers financial education and consumer education, including education for elders, students, and US service members; Research, Markets and Regulations, which oversees research and regulations, including mortgages, installment loans, and credit markets; Supervision and Enforcement, which covers fair lending and equal opportunity, including overseeing large banks and non banks; and a legal, or General Counsel, office.