Dodd-Frank: Title X - Bureau of Consumer Financial Protection

 

INTRODUCTION

Title X of the Dodd-Frank Act (aka: "Consumer Financial Protection Act of 2010"), created the Consumer Financial Protection Bureau ("CFPB" or "Bureau") as an independent agency within the Board of Governors of the Federal Reserve System ("Federal Reserve").  The CFPB regulates the offering and provision of consumer financial products and services under federal consumer financial laws.

Title 12, Chapter 53, Subchapter V of the U.S. Code contains the legislation that created and regulates the Bureau. 

PURPOSE of the CFPB:

CFPB ensures that the federal consumer financial laws are enforced consistently so that consumers may access markets for financial products, and so that these markets are fair, transparent, and competitive. 

Provisions:

Organization of Bureau

The Bureau is headed by a Director who is required to establish the following four offices:  (1) the Office of Fair Lending and Equal Opportunity; (2) the Office of Financial Education; (3) the Office of Service Member Affairs; and (4) the Office of Financial Protection for Older Americans (12 U.S.C. § 5493).  The Director is also required to establish a Consumer Advisory Board to advise the Bureau (12 U.S.C. § 5494).  
Bureau Powers & Authority

The Bureau has the authority to administer, enforce, and otherwise implement federal consumer financial laws, which includes the power to make rules, issue orders, and issue guidance (12 U.S.C. § 5511). The Financial Stability Oversight Council (FSOC) has the power to set aside any of the Bureau’s regulations if the FSOC decides that the regulation would endanger the safety of the banking system or the stability of the U.S. financial systems (12 U.S.C. § 5513).   

The Bureau engages in investigations and requests information from covered persons, issues subpoenas or civil investigative demands, conducts hearings and adjudication proceedings, and commences civil actions in federal court seeking any appropriate or equitable relief against any person that violates a federal consumer financial law. (12 U.S.C. §§ 5562–65). The CFPB has exclusive authority to enforce federal consumer laws against nondepository covered persons (12 U.S.C. § 5514). The Bureau also has exclusive federal consumer law supervisory authority and primary enforcement authority over insured depository institutions with over $10 billion in assets (12 U.S.C. § 5515). 

Preservation of State Law 

Title X also deals with the role of state law and state intervention in the operation of federally-chartered depository institutions.  The statute is not meant to preempt state consumer financial protection laws, as long as the state laws do not conflict with federal laws or regulations (12 U.S.C. § 5551). State consumer protection laws that offer greater protection than federal law are not considered to be conflicting with federal laws. State Attorneys General and state regulators can bring civil actions to enforce provisions of Title X (12 U.S.C. § 5552). 

 

State consumer financial laws are preempted for national banks, federal thrifts, and their subsidiaries only if: (1) the application of the state law would have a discriminatory effect on the national bank or thrift; (2) the state law prevents or significantly interferes with the exercise of the national bank’s or thrift’s powers (codifying the Supreme Court’s decision in Barnett Bank v. Nelson, 517 U.S. 25 (1996)); or (3) the state consumer law is preempted by another federal law other than this title (12 U.S.C. § 25b, 12 U.S.C. § 1465). 

 

In accordance with the Supreme Court decision in Cuomo v. Clearing House Assn., LLC, 129 S. Ct. 2710 (2009), the Office of the Comptroller of the Currency’s visitorial authority over national banks and federal thrifts is not to limit or restrict the authority of any state from bringing an enforcement action against a national bank or federal thrift (12 U.S.C. § 25b). Finally, Title X does not preempt the applicability of state law to any subsidiary, affiliate, or agent of a national bank (12 U.S.C. § 25b). 

 

Transfer of Functions

The consumer financial protection functions of the Federal Reserve, Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, and National Credit Union Administration are transferred to the Bureau (12 U.S.C. § 5581). The consumer financial protection functions of the Department of Housing and Urban Development that arise under the Real Estate Settlement Procedures Act, Secure and Fair Enforcement for Mortgage Licensing Act of 2008, and the Interstate Land Sales Full Disclosure Act are also transferred to the Bureau (12 U.S.C. § 5581). The Federal Trade Commission retains its jurisdiction in implementing the Federal Trade Commission Act (12 U.S.C. § 5581).

 

Further Reading

For more on Title X of Dodd Frank, see this Berkeley Business Law Journal article, this Cornell Law Review article, and this University of Utah Law Scholarship article