Wireless Access Code:
9166703926
Download the agenda PDF at:
www.cwagweb.org/Disneyland/agenda.html
Introduction of the Consumer Financial
Protection Bureau (CFPB)
Nick Rathod
Assistant Director for Intergovernmental Affairs
A (very brief) timeline
2007
• The United States starts facing its most significant financial crisis since the
Great Depression.
2009
• President Obama proposes a consumer-protection bureau as part of Wall
Street reform.
July 21, 2010
• The Dodd-Frank Wall Street Reform and Consumer Protection Act
becomes law. Implementation of CFPB begins immediately under the
Treasury Department.
July 21, 2011
• The CFPB becomes a bureau.
3
Timeline cont.
January 4, 2012
• Richard Cordray appointed as first Director of the CFPB;
CFPB begins non-bank supervision program.
July 18, 2012
• The CFPB announces its first enforcement action, an
order requiring Capital One Bank to refund
approximately $140 million to consumers and pay an
additional $25 million fine for deceptive marketing of
credit card “add-on products.”
July 21, 2012
•
CFPB marks its first anniversary.
4
Our Vision
A consumer finance marketplace…
where customers can see prices and risks up front and where
they can easily make product comparisons;
in which no one can build a business model around unfair,
deceptive, or abusive practices;
that works for American consumers,
responsible providers and the economy as a whole.
5
Our Mission
The consumer bureau is a 21st Century agency that helps make
consumer finance markets work for all consumers -- whether they
are applying for a mortgage, choosing among credit cards, or
using any number of other consumer financial products.
Among other things, the Bureau is working to:
– Educate: An informed consumer is the first line of defense against abusive
practices.
– Enforce: The CFPB supervises banks, credit unions, and other financial
companies, and we will enforce Federal consumer financial laws.
– Study: The Bureau gathers and analyzes available information to better
understand consumers, financial services providers, and consumer financial
markets.
6
CFPB
The Toolbox
7
CFPB Organizational Units
The CFPB Toolbox:
Many Different Approaches
Supervision/Examination
Consumer Response
Enforcement
Consumer Engagement
Research, Markets & Regulations
External Affairs
9
Consumer Response
www.consumerfinance.gov
• As of July 21, 2011, began receiving credit card-related
complaints and now taking complaints on all consumer finance
related products.
• Receive information from consumers for all matters via Tell
Your Story portal
• Call centers provide services for hearing and speech-impaired,
accommodate public in 189 languages
• (855) 411-CFPB (2372) (Eng./Esp.)
• TTY/TDD (855) 729-CFPB (2372)
10
Specialized Functions and Offices
Office of Students
Office of Servicemember Affairs
Office of Older Americans
Fair Lending
11
External Affairs
Engages with external stakeholders on information sharing,
collaboration, coordination, and other initiatives.
 Intergovernmental Affairs
 Community Affairs
 Legislative Affairs
 Media
 Community Banks and Credit Unions
 Intergovernmental Affairs
 Attorneys General
 Governors
 State Legislatures
 Local government (cities, towns, counties)
 Tribal governments

12
External Affairs

Attorneys General
 Essential partners who let us know what we should be watching—
where our supervision and enforcement teams should focus their
attention and what works in improving consumer education—and
what our policymaking staff should consider.
 As law enforcement closest to consumers, Attorneys General have
the opportunity to educate, empower, and protect their citizens.
 IGA is your front door to the CFPB
13
External Affairs
 Field Events
 Birmingham, Alabama- Payday Lending (January 19, 2012)
 New York, New York- Checking Accounts (February 22,
2012)
 Durham, North Carolina- Prepaid Cards (May 23, 2012)
 Tampa, Florida- Reverse Mortgages (June 25, 2012) (rained
out)
 Detroit, Michigan- Credit Reporting (July 16, 2012)
14
The Creation of the CFPB … One Year Later
• Voters favor the Dodd Frank financial reform law by
a 53-point margin (73-20).
• Voters support the CFPB by a 40-point margin. Twothirds (66 percent) of voters overall agree that the
CFPB is needed.
15
Cooperative Consumer Protection:
The CFPB and State Attorneys General
Christopher L. Peterson
Senior Counsel for Enforcement Strategy, West Region
CFPB Office of Enforcement
John J. Flynn Endowed Professor of Law
University of Utah
George Washington on Consumer Finance
“There is no practice more dangerous than
borrowing money … for when money
can be had in this way, repayment is
seldom thought of in time … Exertions
to raise it by dint of industry ceases. It
comes easy and is spent freely and
many things indulged in that would
never be thought of, if to be purchased
by the sweat of the brow. In the mean
time, the debt is accumulating like a
snowball in rolling.”
George Washington on Consumer Finance
“There is no practice more dangerous than
borrowing money … for when money
can be had in this way, repayment is
seldom thought of in time … Exertions
to raise it by dint of industry ceases. It
comes easy and is spent freely and
many things indulged in that would
never be thought of, if to be purchased
by the sweat of the brow. In the mean
time, the debt is accumulating like a
snowball in rolling.”
George Washington on Consumer Finance
“There is no practice more dangerous than
borrowing money … for when money
can be had in this way, repayment is
seldom thought of in time … Exertions
to raise it by dint of industry ceases. It
comes easy and is spent freely and
many things indulged in that would
never be thought of, if to be purchased
by the sweat of the brow. In the mean
time, the debt is accumulating like a
snowball in rolling.”
George Washington on Consumer Finance
“There is no practice more dangerous than
borrowing money … for when money
can be had in this way, repayment is
seldom thought of in time … Exertions
to raise it by dint of industry ceases. It
comes easy and is spent freely and
many things indulged in that would
never be thought of, if to be purchased
by the sweat of the brow. In the mean
time, the debt is accumulating like a
snowball in rolling.”
George Washington on Consumer Finance
“There is no practice more dangerous than
borrowing money … for when money
can be had in this way, repayment is
seldom thought of in time … Exertions
to raise it by dint of industry ceases. It
comes easy and is spent freely and
many things indulged in that would
never be thought of, if to be purchased
by the sweat of the brow. In the mean
time, the debt is accumulating like a
snowball in rolling.”
George Washington on Consumer Finance
“There is no practice more dangerous than
borrowing money … for when money
can be had in this way, repayment is
seldom thought of in time … Exertions
to raise it by dint of industry ceases. It
comes easy and is spent freely and
many things indulged in that would
never be thought of, if to be purchased
by the sweat of the brow. In the mean
time, the debt is accumulating like a
snowball in rolling.”
Overview
An introduction to the CFPB’s
Department of Supervision,
Enforcement and Fair Lending
2. A very short primer on law relevant to
the CFPB
3. CFPB Office of Enforcement
Cooperation with State Attorneys
General
1.
23
CFPB’s Department of Supervision, Enforcement
and Fair Lending
CFPB’s Department of Supervision, Enforcement
and Fair Lending
This department is divided into four
offices:
1.Depository Institution Supervision
2.Non-Depository Institution Supervision
3.Fair Lending and Equal Opportunity
4.Office of Enforcement
25
Depository Institution Supervision
 CFPB
has authority to supervise and examine banks and
credit unions with assets exceeding $10 billion, their
affiliates and their service providers. CFPB currently has
identified 111 such entities.
 Dodd-Frank defines "affiliates" to include any person that
controls, is controlled by, or is under common control with
another person. (Sec. 1002(1))
 "Service providers" are defined as companies providing a
material service to a covered institution. (Sec. 1002(26))
 "Material services" include designing, operating, or
maintaining a consumer financial product or service and
processing related transactions.
26
Non-Depository Supervision
Firms Subject to CFPB’s Nonbank Supervision Program Under Section 1024
The Office of Non-Depository Supervision has
jurisdiction over all sizes of nonbank firms that
offer or provide:
• Origination, brokerage, or servicing of
residential mortgage loans, or loan
modification and foreclosure relief services
related to such loans
• Payday loans
• Private education loans
27
Non-Depository Supervision
Firms Subject to CFPB’s Nonbank Supervision Program Under Section 1024
The Office of Non-Depository Supervision has also has
jurisdiction over a “larger participants” in other markets of
consumer financial products or services.
These participants are still being defined, but will include:
•Credit Reporting Agencies with more than $7 million in
annual receipts from consumer reporting activities,
•Large third party debt collection agencies.
Other entities which may be posing risks to consumers when (if
the CFPB has reasonable cause to determine, after notice and
opportunity to respond, that the company has engaged in
conduct that poses risks to consumers)
28
Office of Fair Lending and Equal Opportunity
 Leads
the CFPB’s efforts to ensure fair, equitable, and
nondiscriminatory access to credit for both individuals and
communities
 Working with other CFPB units, this office:
 Reviews lenders’ policies, procedures,
and lending
activity to detect and address potential
discriminatory practices.
 Brings enforcement actions to stop discriminatory
practices and remedy harm to consumers.
29
Office of Enforcement: Powers
 Investigations:
Power to issue civil investigative demands
(CIDs) for the production of documents or oral testimony
 Rules: 12 CFR part 1080
 Modeled on FTC Act and FTC Rules
 Administrative Hearings: Ability to hold hearings and
adjudication proceedings to obtain cease and desist orders,
penalties, or equitable relief
 Rules: 12 CFR part 1081
 Expedited procedures; affirmative disclosure; no
discovery depositions
 Litigation: Power to commence civil actions for legal and
equitable relief
30
Office of Enforcement: Remedies
• Sec. 1055 allows for “any appropriate legal or
equitable relief with respect to a violation of Federal
consumer financial law.”
• Relief includes, but is not limited to:









Rescission or reformation of contracts
Refund of money or return of real property
Restitution
Disgorgement for unjust enrichment
Payment of damages or other monetary relief
Public notification regarding the violation
Limits on the activities or function of the person
Civil monetary penalties
Recovery of costs
31
Enforcement Office Civil Money Penalties
Section 1055(c)
• Civil money penalties available both administratively and in
federal court.
• Three tiers of penalties:
• Up to $5,000/day
• Up to $25,000/day for reckless violations
• Up to $1,000,000/day for knowing violations
• Statutory factors :
• Size, resources, and good faith
• Gravity of violation
• Severity of consumer risks or losses, including number of
products/services sold/provided
• History of previous violations
• “other such matters as justice may require”
32
A (very brief) Primer on CFPB-related law
1. Title X of the Dodd Frank Act: Unfair,
Deceptive, Abusive Acts and Practices.
2. Enumerated consumer protection
statutes.
6
Unfair, Deceptive, or Abusive Acts and Practices
 UDAAP: Title X prohibits any covered person or
service provider from engaging in unfair, deceptive,
or abusive acts or practices relating to consumer
financial products and services. Sec. 1031, 1036.
 Aiding and abetting liability: For “knowingly or
recklessly provid[ing] substantial assistance” to a
covered person or service provider in violation of
1031. Sec. 1036(a)(3).
 Regulations: The Bureau may also promulgate
regulations under Title X to define UDAAP acts and
practices. Sec. 1031.
6
Covered Persons or Service Providers
• Covered Persons: any person that engages in
offering or providing a consumer financial product
or service; and affiliates of such a person if the
affiliate acts as a service provider. Sec. 1002(6).
• Service Provider: any person that provides a
material service to a covered person in connection
with the offering or provision of a consumer
financial product or service. Sec. 1002(26).
35
18 Enumerated Statutes










Alternative Mortgage Transaction
Parity Act
Consumer Leasing Act
Electronic Fund Transfer Act
Equal Credit Opportunity Act
Fair Credit Billing Act
Fair Credit Reporting Act
Home Owners Protection Act
Fair Debt Collection Practices Act
Federal Deposit Insurance Act
(selected sections)
Gramm-Leach-Bliley Act (selected
sections)








Home Mortgage Disclosure Act
Home Ownership and Equity
Protection Act
Interstate Land Sales Full Disclosure
Act
Omnibus Appropriations Act of 2009
(section 626)
Real Estate Settlement Procedures
Act
S.A.F.E. Mortgage Licensing Act
Truth in Lending Act
Truth in Savings Act
36
Scope of Enforcement
10 of these statutes directly effect the residential mortgage market










Alternative Mortgage Transaction
Parity Act
Consumer Leasing Act
Electronic Fund Transfer Act
Equal Credit Opportunity Act
Fair Credit Billing Act
Fair Credit Reporting Act
Home Owners Protection Act
Fair Debt Collection Practices Act
Federal Deposit Insurance Act
(selected sections)
Gramm-Leach-Bliley Act (selected
sections)








Home Mortgage Disclosure Act
Home Ownership and Equity
Protection Act
Interstate Land Sales Full Disclosure
Act
Omnibus Appropriations Act of 2009
(section 626)
Real Estate Settlement Procedures
Act
S.A.F.E. Mortgage Licensing Act
Truth in Lending Act
Truth in Savings Act
37
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• Congress has given state Attorneys General new
enforcement authority as a matter of federal law.
• 12 USC § 5552:
“[T]he attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State in
any district court of the United States in that State or in
State court that is located in that State and that has
jurisdiction over the defendant, to enforce provisions of
this title or regulations issued under this title, and to
secure remedies under provisions of this title or
remedies otherwise provided under other law.”
38
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• Congress has given state Attorneys General new
enforcement authority as a matter of federal law.
• 12 USC § 5552:
“[T]he attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State in
any district court of the United States in that State or in
State court that is located in that State and that has
jurisdiction over the defendant, to enforce provisions of
this title or regulations issued under this title, and to
secure remedies under provisions of this title or
remedies otherwise provided under other law.”
39
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• Congress has given state Attorneys General new
enforcement authority as a matter of federal law.
• 12 USC § 5552:
“[T]he attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State in
any district court of the United States in that State or in
State court that is located in that State and that has
jurisdiction over the defendant, to enforce provisions of
this title or regulations issued under this title, and to
secure remedies under provisions of this title or
remedies otherwise provided under other law.”
40
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• Congress has given state Attorneys General new
enforcement authority as a matter of federal law.
• 12 USC § 5552:
“[T]he attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State in
any district court of the United States in that State or in
State court that is located in that State and that has
jurisdiction over the defendant, to enforce provisions of
this title or regulations issued under this title, and to
secure remedies under provisions of this title or
remedies otherwise provided under other law.”
41
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• Congress has given state Attorneys General new
enforcement authority as a matter of federal law.
• 12 USC § 5552:
“[T]he attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State in
any district court of the United States in that State or in
State court that is located in that State and that has
jurisdiction over the defendant, to enforce provisions of
this title or regulations issued under this title, and to
secure remedies under provisions of this title or
remedies otherwise provided under other law.”
42
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• State Attorney Generals now have the authority to
bring enforcement actions against national bank or
Federal savings association.
• 12 USC § 5552:
“The attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State
against a national bank or Federal savings association in
any district court of the United States in the State or in
State court that is located in that State and that has
jurisdiction over the defendant to enforce a regulation
prescribed by the Bureau under a provision of this title.”
43
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• State Attorney Generals now have the authority to
bring enforcement actions against national bank or
Federal savings association.
• 12 USC § 5552:
“The attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State
against a national bank or Federal savings association in
any district court of the United States in the State or in
State court that is located in that State and that has
jurisdiction over the defendant to enforce a regulation
prescribed by the Bureau under a provision of this title.”
44
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• State Attorney Generals now have the authority to
bring enforcement actions against national bank or
Federal savings association.
• 12 USC § 5552:
“The attorney general (or the equivalent thereof) of any
State may bring a civil action in the name of such State
against a national bank or Federal savings association in
any district court of the United States in the State or in
State court that is located in that State and that has
jurisdiction over the defendant to enforce a regulation
prescribed by the Bureau under a provision of this title.”
45
Cooperation with Attorneys General: Dodd-Frank
Grants new Federal Power to State A.G.s
• To bring an action under the Dodd-Frank UDAAP rules,
the State Attorney General simply needs to provide
notice of the action to the CFPB.
• “The notification required under this paragraph shall, at a
minimum, describe—
i. the identity of the parties;
ii. the alleged facts underlying the proceeding; and
iii. whether there may be a need to coordinate the prosecution
of the proceeding so as not to interfere with any action,
including any rulemaking, undertaken by the Bureau.”
• CFPB has the option of intervening as an additional party in a
state action.
46
George Washington on Consumer Finance
It is important, likewise, that the habits of thinking
in a free country should inspire caution, in
those entrusted with its administration, to
confine themselves within their respective
constitutional spheres, avoiding in the exercise
of the powers of one department to encroach
upon another. The spirit of encroachment
tends to consolidate the powers of all the
departments in one, and thus to create,
whatever the form of government, a real
despotism. . . . [L]et there be no change by
usurpation; for, though this, in one instance,
may be the instrument of good, it is the
customary weapon by which free governments
are destroyed. The precedent must always
greatly overbalance in permanent evil any
partial of transient benefit, which the use can at
any time yield.
George Washington on Consumer Finance
It is important, likewise, that the habits of thinking
in a free country should inspire caution, in
those entrusted with its administration, to
confine themselves within their respective
constitutional spheres, avoiding in the exercise
of the powers of one department to encroach
upon another. The spirit of encroachment
tends to consolidate the powers of all the
departments in one, and thus to create,
whatever the form of government, a real
despotism. . . . [L]et there be no change by
usurpation; for, though this, in one instance,
may be the instrument of good, it is the
customary weapon by which free governments
are destroyed. The precedent must always
greatly overbalance in permanent evil any
partial of transient benefit, which the use can at
any time yield.
George Washington on Consumer Finance
It is important, likewise, that the habits of thinking
in a free country should inspire caution, in
those entrusted with its administration, to
confine themselves within their respective
constitutional spheres, avoiding in the exercise
of the powers of one department to encroach
upon another. The spirit of encroachment
tends to consolidate the powers of all the
departments in one, and thus to create,
whatever the form of government, a real
despotism. . . . [L]et there be no change by
usurpation; for, though this, in one instance,
may be the instrument of good, it is the
customary weapon by which free governments
are destroyed. The precedent must always
greatly overbalance in permanent evil any
partial of transient benefit, which the use can at
any time yield.
George Washington on Consumer Finance
It is important, likewise, that the habits of thinking
in a free country should inspire caution, in
those entrusted with its administration, to
confine themselves within their respective
constitutional spheres, avoiding in the exercise
of the powers of one department to encroach
upon another. The spirit of encroachment
tends to consolidate the powers of all the
departments in one, and thus to create,
whatever the form of government, a real
despotism. . . . [L]et there be no change by
usurpation; for, though this, in one instance,
may be the instrument of good, it is the
customary weapon by which free governments
are destroyed. The precedent must always
greatly overbalance in permanent evil any
partial of transient benefit, which the use can at
any time yield.
George Washington on Consumer Finance
It is important, likewise, that the habits of thinking
in a free country should inspire caution, in
those entrusted with its administration, to
confine themselves within their respective
constitutional spheres, avoiding in the exercise
of the powers of one department to encroach
upon another. The spirit of encroachment
tends to consolidate the powers of all the
departments in one, and thus to create,
whatever the form of government, a real
despotism. . . . [L]et there be no change by
usurpation; for, though this, in one instance,
may be the instrument of good, it is the
customary weapon by which free governments
are destroyed. The precedent must always
greatly overbalance in permanent evil any
partial of transient benefit, which the use can at
any time yield.
CFPB Enforcement Office Regional
Structure and Cooperation
Manuel Alvarez
Enforcement Attorney, West Region
CFPB Office of Enforcement
PARTNERSHIPS:
Collaboration and Cooperation
30
Enforcement Opportunities to Coordinate and Partner:
Law Enforcement
 Joint
interest agreements for enforcement actions
 Market Sweeps and other market-wide coordinated actions
 Complimentary investigations/actions to comprehensively
address problems
 Joint investigations (Sec. 1052(a))
 Bureau may intervene into lawsuits brought by State
Attorneys General or State Regulators (Sec. 1042(b)(2)(A))
 Non-profit/Industry/Advocacy outreach and coordination
36
CFPB’s Regions
55
Other Opportunities to Coordinate and Partner
Providing referrals and information regarding consumer complaints
 Providing comments on rulemaking and subjects and ideas for
research
 Partnership with consumer engagement to expand reach of consumer
education
 Provide policy input and research findings to Research & Markets
groups
 Other opportunities for coordinated outreach and coordination

37
Partnership in Action
CFPB PROBE INTO CAPITAL ONE CREDIT CARD
MARKETING RESULTS IN $140 MILLION
CONSUMER REFUND
Misinformed
Enrolled
Misled
about cost of the products
without their consent
about eligibility
Misinformed
Enrolled
about cost of the products
without their consent
Coordination
with Office of the Comptroller of the Currency (OCC)
37
Nicholas Rathod
Assistant Director, Intergovernmental Affairs
Nicholas.Rathod@cfpb.gov
(202) 435-7796
Christopher Peterson
Senior Counsel for Enforcement Strategy, West Region
Office of Enforcement
Christopher.Peterson@cfpb.gov
(202) 754-0176
Manuel P. Alvarez
Enforcement Attorney, West Region
Office of Enforcement
Manuel.Alvarez@cfpb.gov
(202) 384-7976
www.ConsumerFinance.gov
Wireless Access Code:
9166703926
Download the agenda PDF at:
www.cwagweb.org/Disneyland/agenda.html