The Consumer Financial Protection Bureau (CFPB) is officially open for business as of July 21, 2011, opening with the launch of a new resource for consumer to file credit card complaints.
On the same day as the launch, the House passed H.R. 1315 a bill designed to increase accountability and oversight over the bureau. The bill seeks to delay the CFPB's ability to assume their full regulatory authority until a Senate confirmed director is in place, while also striving to change the leadership from a single director to a five-person commission. It also provides for a regulatory review process that will allow other agencies to consider how rules issued by the CFPB could danger the safety and soundness of financial institutions.
Leading up to the official launch, Elizabeth Warren, special assistant to the treasury (and unofficial acting director of the bureau) issued a progress report, Building the CFPB. In the release, she states that the bureau has been set-up to ensure that consumers are provided with an honest marketplace that provides the necessary information to make the best decisions.
"Americans aren’t looking for a free ride," Warren said. "They expect to be held responsible for their debts and purchases. And they understand that there are consequences to not keeping up with payments. When consumers are presented with a choice between two financial products, and they know the true costs, the actual benefits, and the real risks of those products, they will be better able to make good decisions for themselves and their families. A level playing field encourages personal responsibility and smart decision-making.
The progress report highlights the mission and vision of the bureau and lays out the work that has already been done to accomplish the objectives. The CFPB's goal is to enforce a market place where prices and risks of financial products are clearly presented and where companies are held accountable for their actions where unfair, deceptive or abusive practices are quashed.
Pointing to the "Know Before You Owe" project that is working publicly to revise and simply mortgage disclosure forms related to the Good Faith Estimate and Truth in Lending. A process that is expected to include five rounds of public comment before the CFPB issues final rules on the disclosure reform.
The bureau is also focusing on their larger institutions bank and non-bank supervision. It has launched a public comment request to help determine the definition of a "large participant" for the purposes of this supervision. Immediately launching their examination of depository institutions, the CFPB is already in the process of sending announcement letters to chief executives of those institutions subject to supervision by the bureau and has released initial plans for the examination process.
Additional investigation responsibilities will also be assumed by the agency. With the launch, the CFPB is assuming the investigation of over 1,500 cases involving RESPA violations.
By the end of summer, the CFPB projects to have over 550 employees working in six divisions. The agency still lacks a confirmed director, but President Obama recently announced the nomination of former Ohio State Attorney General Richard Cordray as the first director. The budget for the bureau for fiscal year 2011 is 10% of the Federal Reserve System expenses, or about $498 million. The budget increases to 12% in fiscal year 2013, estimated at almost $600 million.
In first forming the CFPB, Warren announced that there is a "New cop on the beat." Now that the organization is officially open, the progress report states, "It will start supervising the activities of financial services providers, examining banks and other companies to ensure that they are following the law. It will enforce Federal consumer financial law against providers that violate it. And it will provide information and tools to consumers to help them make the financial choices that are right for them. In all of these activities, the CFPB will drive toward its vision of a consumer financial market that works for American consumers, responsible providers, and the economy as a whole."